I 


JliWHl! 


51 IV 


UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 


SI]Li:CT    CASKS 


AM) 


OTHER  Al  TIIOIMTIKS 


(>X  THE 


LAW  OF  MORTGAGE 


BY 

GEOKCUO  \V.    KIKCIIWEY 

NASIl   I'UOFKSSOU  or   LAW    IN   (  ni.rMIlIA    I  NIVKi:-ITT 


PARTS  L,  II.,  AND  III. 


BAKEIJ,  VOOKIIIS  &  COMPANY 
1  oo-i 


T" 


CoPYRionT,  1900,  1601,  1902 
By  GEORGE  W.  KIRCIIWEY 


TABLE    OF    CONTENTS 

OK 

PARTS    I,    II.,   AND   III. 


BOOK  I. 

INTKODUCTIOX— riJOPKlJTY   SEn'niTY   FOIJ   DEBT. 

TACiK 

(,i)  I'lt'due  and   II\  pot  liocatiuii 1 

(  /y )  Early  Statutory  Securitie.s " 

(  r  y  'riie  Conimon    Law  Mortgage '-* 

(il )  The  EqiiitaJjle  >Iortgage ^-i 

l^OOK   II. 

ESSENTIAL   ELEMENTS   OF   MORTGAGE 

CHAPTER  I. 

COXVKYANCE. 

See.    1 .      Mortgage.  I'ledge  ami  Lien 28 

2.  After- Acquired  Property 40 

^^.     InfonnaMfortguges 11'"^ 

(ilAl'TLi:   II. 
Skci'kity. 

Sec.    1.      Mortgage  aud  Conditional  Sale 1"4 

•.*.     Absolute  Deed  —  Tarolc  Evidence 175 

(  llALri'.K   III. 

Tin:    OlU.KiATION     Sr.CfKKI). 

Sec.   1.     Is  an  Obligation  Necessary 202 

".>.      IlK'gal  Oldigalions 2LS 

3.  Future  Advances 2G5 


GlIOT^ 


iv  TABLE    OF    COXTENTS. 

BOOK   III. 

NATURE  AND  INCIDENTS  OF  THE  MORTGAGE 
RELATION 


CHAPTER  I. 
Common  Law  Relations. 

PAOE 

Sec.  ].     Title 28G 

2.  Possession 31  tJ 

3.  Dower  and  Cm  tesy   344 

4.  Fixtnies 377 

5.  Waste  and  Repai  i- 410 

CHAPTER  IL 

Equity  Relations. 

Sec.  1.     Once  a  Mortgage,  ahvMvs  a  Mortgage ^oO 

2.  Release  of  the  Equit}-  of  Redemption 445 

3.  Agreements  for  Collateral  Advantage 401) 

4.  Tacking  Collateral  Claims 501) 

CHAPTER  n.— (Continued). 
Equity  Relations. 

Sec.  5.     Mortgagee's  Account 

( a )     Waste,  Repair  and  Improvements 50^ 

( 1/ }    Rents  and  Profits — Annual  Rests 543 

( c  )     Superior  Liens 5(!3 

{(l)     Mortgagee,  How  far  a  Trustee 500 

CHAPTER  III. 
ExTKNsroN  OF  Mortgage GO'Z 

CHAPTER  IV. 
Assignment  of  Mortgage. 

Sec.   1 .     Mode  of  Transfer . .    G21 

2.     Effect  of  Transfer 043 

CHAPTER  V. 
Discharge  of  Mortgage. 

Sec.   1 .     Tender  and  Payment C95 

( (I )     In  (loiieral 005 

(  /j )     After  Default 704 

Sec  -'.     Other  I  )ischarge  of  1  )ebt 704 


SELKCT    CASKS 


AND    OTIIKU    ArTII()inTIF:S 


ON    TILE    LAW    OF    MOiniiACiT 


BOOK   I. 

INTRODUCTION:  PROPERTY  SECURITY  FOR  DEBT. 

(a)   Plcdfje  and  II ypolliccation. 

Langdell,  Classification  of  Rights  and  Wuokgs,  13  IIakv. 
\j.  R.  539,  540.  An  obligation  is  either  personal  or  real,  according 
as  the  obligor  is  a  person  or  a  thing.     .     .     , 

A  real  obligation  is  untloubtcdly  a  legal  fiction,  but  it  is  a  very 
useful  one.  It  was  invented  by  the  Romans,  from  whom  it  has 
been  inherited  by  the  nations  of  modern  Europe.  That  it  would 
ever  have  been  invented  by  the  latter  is  very  unlikely,  partly 
l)ecausc  they  have  needed  it  less  than  did  the  ancients,  and  partly 
because  they  have  not,  like  the  ancients,  the  habit  of  personifying 
inanimate  things.  The  invention  was  used  by  the  Romans  for  tlic 
accomplishment  of  several  important  legal  objects,  some  of  which 
no  longer  e.xist,  but  others  still  remain  in  full  force.  It  was  by 
mi'ans  of  this  that  one  person  acquired  rights  in  things  belonging 
to  others  {jura  in  rcfnis  alienis).  Such  rights  were  called  i>erv{- 
hites  (i.  e.,  states  of  slavery)  in  respect  to  the  thing  upon  whicii 
the  obligation  was  imposed,  and  they  included  every  right  whicii 
one  could  have  in  a  thing,  short  of  owning  it.  These  servitudes 
were  divided  into  real  and  personal  servitudes,  being  called  real 
when  the  obligee  as  well  as  the  obligor,  i,  e.,  the  master  {(lominns) 
as  well  as  the  slave (srryt/.s-),  was  a  thing,  and  personal  when  the 
obligee  was  a  person.  The  former,  which  may  be  termed  servi- 
tudes projHT,  have  ])asscd  into  our  law  under  the  names  of  ease- 
ments and  profits  a  pmulrc.  The  latter  included  the  pii/nufi  and 
the  hypnlhcni.  t.  e.,  the  Roman  mortgage — which  was  called  pignn.s- 
when  the  thing  mortgaged  was  delivered  to  the  creditor,  and 
1 


2  PROPERTY     SECURITY     FOR     DEBT.  [dook  I. 

hypolheca  when  it  was  constituted  by  a  mere  agreement,  the  tiling 
mortgaged  remaining  in  the  possession  of  its  owner.  Originally, 
jiossession  by  the  creditor  of  the  thing  mortgaged  was  indispen- 
sable, and  so  the  pignus  alone  existed;  but,  at  a  later  period,  the 
parties  to  tlie  transaction  were  permitted  to  choose  between  a 
pignus  and  a  hypotheca.  So  long  as  the  pignus  was  alone  in  use, 
it  is  obvious  that  the  obligation  could  be  created  only  by  the  act 
of  the  parties,  as  they  alone  could  change  the  possession  of  the 
property.  But  when  the  step  had  been  taken  of  permitting  the 
mere  agreement  of  the  parties  to  be  substituted  for  a  change  of 
jiossession,  it  was  another  easy  step  for  the  law,  whenever  it  saw 
fit,  to  substitute  its  own  will  for  the  agreement  of  the  parties;  and 
hence  hypothecations  came  to  be  divisible  into  such  as  were  cre- 
ated l)y'the  acts  of  the  parties  (conventional  hypothecations),  and 
such  as  were  created  by  the  act  of  the  law  (legal  or  tacit  hypothe- 
cations). Again,  so  long  as  a  change  of  possession  was  indispen- 
sable, it  is  plain  that  the  obligation  could  attach  only  upon  prop- 
crtv  which  was  perfectly  identified,  and  that  there  could  be  no 
change  in  the  property  subject  to  the  obligation,  except  by  a  new 
change  of  possession.  But  when  a  change  of  possession  had  been 
disjK'nsod  with,  and  particularly  when  legal  or  tacit  hypotheca- 
tions had  been  introduced,  it  became  perfectly  feasible  to  make 
the  obligation  attach  upon  all  property,  or  all  property  of  a  certain 
description,  either  then  belonging  to  the  debtor  or  afterward  ac- 
(|uired  by  him,  or  upon  all  property,  or  all  property  of  a  certain 
(lescription,  belonging  to  the  debtor  for  the  time  being;  and  hence 
hypothecations  came  to  be  divided  into  those  which  were  special 
and  those  which  were  general. 

The  pignus  has  passed  into  our  law  under  the  name  of  pawn,  or 
])k'dge,  as  to  things  movable,  but  has  been  wholly  rejected  as  to 
land.  The  conventional  litipoilieca  has  been  wholly  rejected  by 
our  common  law,  though  it  has  passed  into  our  admiralty  law. 
'I'hc  legal  or  tacit  hypothecation,  on  the  other  hand,  has  been 
admitted  into  our  common  law  to  some  extent,  though  under  the 
name  of  lien  (a  word  which  has  the  same  meaning  and  the  same 
derivation  as  "obligation").  Thus,  by  the  early  statute  of  13  E. 
7..  (;.  18,  a  judgment  and  a  recognizance  (the  latter  being  an  ac- 
knowledgment of  a  debt  in  a  court  of  record,  of  which  acknowl- 
<'flgmcnt  a  record  is  made)  are  a  general  lien  on  all  the  land  of 
the  judgment  debtor  and  recognizor  respectively,  whether  then 
owned  by  them  or  afterwards  acquired.  So  also,  in  many  cases, 
llie  law  gives  to  a  creditor  a  similar  lien  on  the  debtor's  movable 
properly,  already  in  the  creditor's  possession  when  the  debt  ac- 
crups,  though,  in  respect  to  the  creditor's  possession,  this  lien  has 
tiie  features  of  a  pignus  rather  tlian  of  a  hypotheca. 


HouK  1.1  I'LEDiir:   AND    ll^  roiiiiccATiox.  6 

JrsT.,  Inst  ,  Lilt.  IV.,  c  G,  §  7.  Again,  the  Servian  and  (juasi- 
Servian  aetiims.  (lie  latter  of  which  is  also  called  "hypothecary," 
are  derived  wholly  from  the  Praetor's  jurisdiction.  Tlie  Servian 
action  is  that  l»y  which  a  landlord  sues  for  his  tenant's  property, 
over  whicli  he  has  a  rijrhl  in  the  nature  of  a  pledge  (inrjuus)  as 
security  for  his  rent.  The  quasi-Servian  action  is  a  similar  remedy 
open  to  any  creditor  for  the  purpose  of  enforcing  his  pledge  or 
luipoiheca.  So  far  tlien  as  this  action  is  concerned,  there  is  no  dif- 
ft-reneo  between  a  pledge  and  a  hi/potheca;  and,  indeed,  when- 
<'ver  a  debtor  and  a  creditor  agree  that  certain  property  of  the 
former  shall  be  the  hitter's  security  for  his  debt,  the  transaction 
is  called  by  either  name.  In  other  respects,  however,  there  is  a 
distinction  between  them;  for  the  term,  pledge,  is  properly  used 
only  where  possession  of  the  propert}'  in  question  is  delivered  to 
the  creditor,  especially  if  such  property  be  movable;  whereas  by 
the  term  hi/pollirm,  strictly  speaking,  we  signify  a  right  arising 
by  mere  agreement  without  delivery  of  possession. 

MoYLi:,  I.Mi'.  Jl'st.  Ixst.,  Excur.  II.,  p.  G.  The  latest  and  most 
rctlned  form  of  i)ledge  is  In/potheca,  in  which  there  was  no  con- 
veyance of  either  ownership  or  possession ;  it  was  effected  by  a 
bare,  formless  agreement  between  the  debtor  and  creditor,  that 
certain  specific  property  of  the  former  should  be  liable  in  full  for 
his  del)t  to  the  latter,  who  should  be  entitled  to  sell  in  default  of 
])ayment  within  a  prescribed  time:  '^  CuntniJiltiir  hi/potheca  per 
pactum  convcntum,  cum  fjuis  paciscalur,  ut  res  eius  propter 
(tli(juam  ohligationem  siut  Jiifpothecae  nomine  ohlif/atae:  nee  ad 
ri'in  per'inef,  quihus  ft  verbis"  (Dig.  20,  I.  1).  Such  an  agree- 
ment, in  itself,  was  inoperative  to  create  rights,  either  real  or 
jK-rsonal ;  it  was,  however,  enforced  by  the  praetor,  who  treated 
the  right  of  sale  as  a  ius  in  re  aliena,  of  whicli  the  creditor  couhl 
not  be  deprived  by  any  subsequent  act  of  the  debtor,  and  which 
he  could  successfully  assert  (by  remedies  of  his  own  introduction) 
against  any  other  ]K'r.son  whatsoever,  whether  the  creditor,  hi-; 
successor,  alienee  or  trustee  in  bankruptcy.    .    .    . 

Ilypotheca  possessed  great  advantages  over  the  earlier  foiins  of 
ph'dg(%  of  which  /iducid  was  quite  obsol(>te  in  the  time  of  Justinian, 
'['he  pledgor  was  never  deprived  of  the  use  and  possession  of  his 
jiroperty,  and  yet  the  creditor  was  al>solutely  secured.  The  class 
of  pledgable  objects  was  largely  augmented:  ^foney  could  now 
bo  lent  on  the  security  of  things  not  yet  in  existence,  e.  g.,  future 
crops  and  exp<>ctations  ("  et  quae  nondum  sunt,  future  tamen  sunt, 
hifpothecae  dari  possunt,  ut  fructus  pendentes,  partus  anciUae.  fetus 
pecorum."  Dig.  20.  1.15)  or  of  mere  incorporeal  rights,  real  and 
personal  (Dig.  20,  9,  I.;  ih.  11,  2;  Dig.  13,  7,  18  pr.).     Moreover 


4  TROrKKTY     SECriUTY     FOR     DEBT.  [BOOK  I. 

it  became  possible  to  ereale  a  general  mortgage,  which  v.as  done 
by  statute,  in  favor  of  many  classes  of  persons :  e.  g.,  of  a  wife  or 
other  person  who  gave  a  dos  over  the  property  of  her  husband,  to 
secure  its  return,  and  of  pupils  over  that  of  their  guardians. 

Glanville.  Lib.  X.,  c.  G  (Beames).  A  Loan  is  sometimes  made 
\ipon  the  Credit  of  a  putting  in  Pledge.  When  a  Loan  of  this  de- 
scription takes  place,  sometimes  moveables,  as  Chattels,  are  put  in 
l)ledge;  sometimes  immoveables,  as  Lands  and  Tenements,  and 
Kent's, 'whether  consisting  in  Money  or  in  other  things.  When 
a  Compact  is  made  between  a  Creditor  and  Debtor,  concerning  the 
l)utting  anything  in  pledge,  then,  whatever  be  the  mode  of  pledg- 
ing, the  Debtor  upon  his  receiving  the  thing  lent  to  him,  either 
immediately  delivers  possession  of  the  Pledge  {vad'd  seisinam)  to 
the  Creditor,  or  not.  Sometimes  also  a  thing  is  pledged  for  a  cer- 
tain period,  sometimes  indefinitely.  Again,  sometimes  a  thing  is 
pledged  as  a  Mortgage  (in  mortuo  radio),  sometimes  not.  A 
pledge  is  designated  by  the  term  Mortgage  when  the  fruits  and 
Rents,  which  are  received  in  the  interval,  in  no  measure  tend  to  re- 
duce the  demand  for  which  the  pledge  has  been  given.  When, 
therefore,  moveables  are  put  in  pledge,  so  that  possession  be  de- 
livered to  the  Creditor  for  a  certain  period,  he  is  bound  to  keep  the 
pledge  safely,  and  neither  to  use  it,  nor  in  any  other  manner 
employ  it,  so  as  to  render  it  of  less  Value.  But  should  it,  wdiilst  in 
Custody  and  within  the  Term,  suffer  deterioration,  hy  the  fault  of 
the  creditor,  a  Computation  shall  be  made  to  the  extent  of  the 
detriment  and  deducted  from  the  Debt.  But  if  the  thing  be  of 
such  a  description  that  it  necessarily  requires  some  expense  and 
cost,  for  Example,  that  it  might  be  fed  or  repaired,  then  the  stipu- 
lation of  the  parties  on  that  subject  shall  be  abided  by.  In  addi- 
tion— when  a  thing  is  pledged  for  a  definite  period,  it  is  either 
agreed  between  the  Creditor  and  Debtor,  that  if,  at  the  time  ap- 
jjointed,  the  Debtor  should  not  redeem  his  pledge,  it  should  then 
belong  to  the  Creditor  so  that  he  might  dispose  of  it  as  his  own ;  or 
no  such  agreement  is  entered  into  between  them.  In  the  former  case, 
the  Agreement  must  be  adhered  to ;  in  the  latter,  the  Term  being 
unexpired  without  the  Debtor's  discharging  the  Debt,  the  Creditor 
may  complain  of  him,  and  the  Debtor  shall  be  compelled  to  appear 
in  Court,  and  answer  by  the  following  Writ. 

c.  7.  "The  King  to  the  SherifT,  Health:  Command  N.  that 
justly  and  without  delay,  he  redeem  such  a  thing  which  he  has 
pledged  to  R.  for  a  hundred  Marks,  for  a  Term  which  is  past,  as  he 
Hays,  and  of  which  he  complains  that  he  has  not  redeemed  it;  and,, 
unless  he  does  so,  &c." 

c.  H.  .  .  .    Wlien  a  Compact  is  entered  into  between  a  Debtor 


ituoK  I.]  i'i.i;i)(;i:    and    m  i-ui  iii;(ati(»x.  5 

;iiul  Civililor,  coiuiTiiiii^^  the  jilcd^Mn;,'  (tf  a  |)articular  lliin;r,  if  llif 
hthtor,  artcr  having  ri-ceived  IIr-  Loan,  slionld  not  deliver  the 
jikdyi',  it  may  be  asked,  what  step  shoukl  the  Creditor  have  rc- 
tourso  to  in  such  a  ease,  especially  as  the  same  thing  may  be 
|»U'dged  to  many  other  Creditors,  both  previously  and  subse- 
<|Uently  ?  Upon  this  subject,  it  should  be  remarked,  that  the  King's 
Ctturt  is  not  in  the  habit  of  giving  protection  to  or  warranting 
private  Agreements  of  this  description,  concerning  the  giving  or 
accepting  things  in  pledge,  or  others  of  this  kind,  made  out  of 
Court,  or  even  in  any  other  Court  than  that  of  the  King.  If, 
therefore,  such  Compacts  are  not  observed,  the  King's  Court  does 
not  interfere;  and  hence  it  is  not  bound  to  answer  concerning  the 
right  of  difTercnt  Creditors,  as  prior  or  siibscquont.  or  respecting 
their  privileges. 

But,  when  an  immoveable  thing  is  put  into  pledge,  and  Seisin  of 
it  has  been  delivered  to  the  Creditor  for  a  delinite  term,  it  has 
either  been  agreed  between  the  Creditor  and  Debtor,  tliat  the  pro- 
ceeds and  rents  shall  in  the  moan  time  reduce  the  Debt,  or  that  they 
shall  in  no  measure  be  so  applied.  Tlu'  former  Agreement  is  just 
and  binding;  the  other,  imjust  and  di.shoncst,  and  is  that  called 
a  Mortgage,  but  this  is  not  prohibited  by  the  King's  Court,  al- 
though it  considers  such  a  pledge  as  a  species  of  Usury.  Hence,  if 
any  one  die  having  such  a  pledge,  and  this  be  proved  after  his 
death,  his  property  shall  be  disposed  of  no  otherwise  than  as  the 
IvlTects  of  a  Usurer.  In  other  respects,  the  same  Rules  should  b(^ 
observed  as  in  pledges  of  moveables,  concerning  which  we  have 
already  spoken.  But  it  must  be  remarked,  that  if,  after  any  one 
has  paid  his  Debt,  or  has  in  a  proper  manner  tendered  it,  the  Cred- 
itor should  maliciously  detain  the  ])ledge,  the  Debtor  npon  com- 
plaining to  the  Court  shall  have  the  following  Writ  : 

c.  9.  "The  King  to  the  Sheriff,  Health:  Command  N.  that 
j\islly  and  without  delay  he  render  to  R.  the  whole  Lands,  or  such 
Lands,  in  such  a  Vill,  which  ho  has  pledged  to  him  for  a  Hundred 
Marks  for  a  term  which  is  past,  as  he  says,  and  has  nx-eived  his 
Money,  or  which  he  has  redeemed,  as  he  says ;  and.  unless  he  does 
f-o,  Summon  him  by  good,  etc." 

c.  H.  If  the  Cri'ditor  lose  his  Seisin,  either  by  means  of  the 
Hebtor,  or  any  other  jn-rson.  he  cannot  recover  it  through  the 
assistance  of  the  Court;  not  even  by  a  Recognition  of  Novel  Dis- 
seisin, l-'or  if  he  was  unjustly  and  without  a  judgment  disseised 
of  his  ])ledge.  by  any  otluT  jierson  than  the  Debtor  himself,  the 
Debtor  may  hav(»  an  Assi.se  of  Novel  Disseisin.  If,  however,  the 
Creditor  was  disseised  by  the  Debtor  himself,  the  Court  will  not 
assist  him  against  the  Debtor,  in  recovering  his  ])ledge.  or  in  giv- 
ing a  Re-entry,  unless  through  the  Debtor  himself;    for  the  Crcd- 


C,  PROPERTY     SECURITY     FOR     DEBT.  [djoz  I. 

itor  should  resort  to  an  original  Plea  of  Debt,  in  order  that  the 
Debtor  may  be  compelled  to  render  him  satisfaction  for  his  Debt. 
In  such  case  the  debtor  shall  be  summoned  by  the  foregoing  Writ 
of  first  summons. 

Chaplin,  Story  of  Mortgage  Law,  4  Harv.  L.  R.  6.  Using 
the  word  vadium,  gage,  whether  the  possession  was  to  be  turned 
over  to  the  pledgee  or  not,  the  Norman  judges  recognized  gages 
or  pledges  of  land,  either  with  or  without  transfer  of  possession. 
If  the  pledgee  took  possession,  the  transaction  was  a  pawn;  if  not, 
it  was  a  hypothecation. 

It  would  be  the  greatest  mistake  to  suppose  that  feudal  seisin 
was  essential  to  an  effectual  pledge  of  land  in  feudal  times.  The 
pledgee  might  leave  the  pledgor  in  possession,  and  still  be  secure 
by  recording  a  written  contract  of  pledge  in  the  King's  Court : 
precisely  as,  under  Justinian,  such  a  contract  would  have  been 
registered  in  a  public  office,  or,  under  the  Saxon  laws,  in  a  county 
court  or  a  monastery.  This  provision  for  registration  was  a  mere 
adaptation  to  English  ground  of  the  Roman  system. 

Even  when  the  pledgee  of  land,  in  feudal  times,  took  possession, 
he  did  not  take  a  full  feudal  seisin;  he  took  only  a  '^  quasi "  seisin, 
a  seisin  "  de  radio,"  as  it  was  called — a  "  pledgee's  seisin'' — a  seisin 
distinct  from  a  general  seisin,  not  exclusive  of  that  of  the  pledgor, 
but  consistent  with  and  dependent  upon  it — a  parasitic  seisin.  The 
word  "  seisin,"  of  course,  was  not  exclusively  applied  to  freehold 
estates  in  land,  but  was  used  of  chattels  and  of  chattel  estates  in 
land,  as  leaseholds.  And  just  as  a  lessee  of  land  had  not  a  seisin 
of  his  own,  but  had  his  landlord's  seisin,  so  in  the  case  of  a  pledge, 
even  with  the  possession,  the  freehold  was  deemed  to  remain  in 
the  pledgor,  and  the  pledgee  was  said  to  be  seised  "  through  "  the 
owner  of  the  fee — to  be  seised  not  in  his  own  name,  but  in  the 
name  of  another.  The  heirs  of  the  pledgee  who  died  in  possession 
were  spoken  of  in  contradistinction  from  the  "  verus  hoires."  The 
fact  that  the  land  so  in  pledge,  and  even  in  the  possession  of  the 
pledgee,  was  still  viewed  as  in  the  seisin  of  the  pledgor,  appears 
from  the  fact  tliat  it  was  subject  to  dower,  not  of  the  pledgee's, 
but  of  the  pledgor's  widow ;  and  there  could  be  no  dower  without 
seisin.  If  a  pledgee  in  possession  were  ousted  by  a  stranger,  he 
could  not  maintain  a  writ  of  novel  disseisin  to  recover  possession ; 
the  pledgor  had  to  bring  the  action,  counting  on  his  own  seisin. 
And  where  one  seised  as  pledgee  died  in  possession,  and  his  heir, 
being  excluded,  brought  a  writ  of  mort  d'ancestor,  to  get  posses- 
.'^ion,  he  was  provided,  not  with  the  ordinary  writ  of  mort  d'an- 
rpstor,  counting  upon  seisin  generally,  but  with  a  special  Avrit,  al- 
leging in  his  ancestor  a  seisin  de  vadio. 


HOOK   1.]  KAHLY    STATfTOHY    SECURITIES.  7 

The  legal  remctly  Tor  cnrorcin":  a  sinijilc  ^m^'c  or  plodgc  of  LiimI 
in  the  time  of  (Jlanvillo,  so  far  from  luivin<,'  those  harsli  features 
whicli  we  are  wont  to  attrihute  to  our  early  law,  followed  tliat  just 
and  equitahle  system  of  Roman  law  which  was  the  cradle  of  our 
equity.  Wlu'n  a  debt  secured  upon  land  was  due,  the  pledgee  had 
a  writ  expressly  framed  for  foreclosure.'  substantially  identical 
with  the  Massachusetts  writ  of  entry  for  foreclosure  of  a  mortgage. 
The  process  could  be  enforced  by  the  courts  by  a  seizure  of  ihe 
])roperty  pledged,  if  it  remained  in  the  pledgor's  possession,  or  by 
other  distraint ;  and  there  was  a  conditional  judgment,  precisely  a< 
there  is  upon  the  ^lassachusetts  writ  of  entry  for  foreclosure,  that 
the  debtor  should  still  have  a  reasonable  time  to  pay  before  the  fore- 
closure should  become  absolute. 


(h)    Enrhj  Statutory  Securities. 

2  Blackstoxe,  Co:m.,  IGO.  A  fourth  species  of  estates,  defeas- 
ible on  condition  subsequent,  are  those  held  by  statute  merchant. 
and  statute  staple;  which  are  very  nearly  related  to  the  vivum 
radium  before  mentioned,  or  estate  held  till  the  profits  thereof 
shall  discharge  a  del)t  licpiidated  or  ascertained.  For  both  the 
statute  merchant  and  statute  staple  are  securities  for  money;  the 
one  entered  into  before  the  chief  magistrate  of  some  trading  town, 
pursuant  to  the  statute  13  Edw.  I.,  De  Mercatorihus,  and  thence 
called  a  Statute  Merchant ;  the  other  pursuant  to  the  statute  ?7 
Edw.  III.,  c.  0,  before  the  Mayor  of  the  Staple,  that  is  to  say,  the 
grand  mart  for  the  ])rincipal  commodities  or  manufactures  of  the 
kingdom,  formerly  held  by  act  of  Parliament  in  certain  trading 
towns,  from  whence  this  security  is  called  a  Statute  Staple.  They 
are  both,  I  say,  securities  for  del)ts  acknowledged  to  be  du(^;  and 
originally  permitted  only  among  traders,  for  the  benefit  of  com- 
merce; whereby  not  only  the  body  of  the  debtor  may  be  impris- 
oned, and  his  goods  seized  in  satisfaction  of  the  debt,  but  also  his 
lands  may  be  delivered  to  the  creditor,  till  out  of  the  rents  and 
]trofits  of  them  the  debt  may  be  satisfied;  and,  during  such  lime 
as  the  creditor  so  holds  the  lands,  he  is  tenant  by  statute  merchant 
or  statute  staple.  There  is  also  a  similar  .^security,  the  recogniz- 
ance in  the  nature  of  a  statute  staple,  acknowledged  before  either 
of  the  chief  justices,  or  (out  of  term)  before  their  substitutes,  th«' 
Mayor  of  the  Staj)le  at  Westminster  and  the  Recorder  of  T.ondoii ; 
whereby  the  benefit  of  this  mercantile  transaction  is  extended  to 
all  the  King's  subjects  in  general,  by  virtue  of  the  statute  23  Ili^n. 

'  rilanv.,  1.  X,  c.  7;  pngo  4,  sui>ia. 


S  PROrERTY     SECURITY     FOR     DEBT.  [EOOK  I. 

A'lII.,  c.  G,  amended  by  8  Geo.  I.,  c.  25,  which  directs  such  recog- 
nizances to  be  enrolled  and  certified  into  chancery.  But  these,  by 
the  statute  of  frauds,  29  Car.  II.,  c.  3,  are  only  binding  upon  the 
lands  in  the  hands  of  bona  fide  purchasers,  from  the  day  of  their 
enrollment,  which  is  ordered  to  be  marked  on  the  record. 

Another  similar  conditional  estate,  created  by  operation  of  law, 
for  security  and  satisfaction  of  debts,  is  called  an  estate  by  elegit. 
What  an  elegit  is,  and  why  so  called,  will  be  explained  in  the  third 
part  of  these  commentaries.  At  present  I  need  only  mention,  that 
it  is  the  name  of  a  writ,  founded  on  the  statute  of  Westm.  2,  by 
which,  after  a  plaintiff  has  obtained  judgment  for  his  debt  at  law, 
the  sheriff  gives  him  possession  of  one-half  of  the  defendant's 
lands  and  tenements,  to  be  occupied  and  enjoyed  until  his  debt  and 
damages  are  fully  paid ;  and  during  the  time  he  so  holds  them,  he 
is  called  tenant  by  elegit.  It  is  easy  to  observe  that  this  is  also  a 
mere  conditional  estate,  defeasible  as  soon  as  the  debt  is  levied. 
But  it  is  remarkable  that  the  feudal  restraints  of  alienating  lands, 
and  charging  them  with  the  debts  of  the  owner,  were  softened 
much  earlier  and  much  more  effectually  for  the  benefit  of  trade 
and  commerce,  than  for  any  other  consideration.  Before  the 
statute  of  QuiaEmj)tores,  it  is  generally  thought  that  the  proprietor 
of  lands  was  enabled  to  alienate  no  more  than  a  moiety  of  them; 
the  statute,  therefore,  of  Westm.  II.  permits  only  so  much  of  them. 
to  be  affected  by  the  process  of  law,  as  a  man  was  capable  of  alien- 
ating by  his  own  deed.  But  by  the  statute  De  Mercatorihus 
(passed  in  same  year)  the  whole  of  a  man's  lands  was  liable  to  be 
]»Iodgcd  in  a  statute  merchant,  for  a  debt  contracted  in  trade; 
though  only  half  of  them  was  liable  to  be  taken  in  execution  for 
any  other  debt  of  the  owner. 

I  shall  conclude  what  I  had  to  remark  of  these  estates,  by  statute 
merchant,  statute  staple  and  elegit,  with  the  observation  of  Sir 
Edward  Coke.  "  These  tenants  have  uncertain  interests  in  lands 
and  tenements,  and  yet  they  have  but  chattels  and  no  freeholds" 
(which  make  them  an  exception  to  the  general  rule),  "because, 
though  they  may  hold  an  estate  of  inheritance,  or  for  life,  ut 
lihcrum  iencmenium,  until  their  debt  be  paid;  yet  it  shall  go  to 
their  executors;  for  ut  is  similitudinary ;  and  though  to  recover 
thtiir  estates,  they  shall  have  the  same  remedy  (by  assize)  as  a 
tenant  of  the  freehold  shall  have,  yet  it  is  but  the  similitude  of  a 
frccliold,  and  niiUuin  simile  est  idem."  This,  indeed,  only  proves 
Ihcm  to  be  chattel  interests,  because  they  go  to  the  executors,  which 
is  inconsistent  with  the  nature  of  a  freehold;  but  it  does  not  assign 
the  reason  why  these  estates,  in  contradistinction  to  other  uncer- 
tain interests,  shall  vest  in  the  executors  of  the  tenant  and  not  the 
heir,  wliich  is  probably  owing  to  this:  That,  being  a  security  and 


IKMIK   I.]  Tin:     COMMON     LAW     MORTOAOE.  9 

remedy  provided  for  j)er.sonal  debts  due  to  tlic  deceased,  to  which 
debts  the  exeeiitor  is  entitled,  the  \a\v  lias,  therefore,  thus  directed 
their  succession;  as  judging  it  reasonable  from  a  principle  of  nat- 
ural equity,  that  the  security  and  remedy  should  be  vested  in  those 
to  whom  the  debts,  if  recovered,  would  belong.  For.  upon  the 
same  j)rineijile,  if  lands  be  devised  to  a  man's  executor,  until  out 
of  the  profits  the  debts  due  from  the  testator  be  discharged,  this 
interest  in  the  lands  shall  be  a  chattel  interest,  and  on  the  death 
of  such  executor  shall  go  to  his  executors,  because  they  being  liable 
to  pay  the  original  testator's  debts,  so  far  as  his  assets  will  extend, 
are  in  reason  (Mititled  to  possess  that  fund  out  of  which  he  has 
<lirectcd  them  to  be  paid. 


{(■)    Tlir  Cummou  Law  ^lorfgagc. 

Lit.  §  332.  Of  Estalcs'  upon  Condition.  Item,  if  a  feoffment 
be  made  upon  such  condition,  that  if  the  feoffor  pay  to  the  feoffee 
at  a  certain  day,  \-i-..  10  pounds  of  money,  that  tlien  the  feoffor 
may  re-enter.  &c. ;  in  this  case  the  feoffee  is  called  tenant  in  mor- 
gage,  which  is  as  much  to  say  in  French  as  niort  gage,  and  in  Latin 
mortuum  vadium.  And  it  seemeth  that  the  cause  why  it  is  called 
.morgage  is,  for  that  it  is  doulitful  whether  the  feoffor  will  pay  at 
the  day  limited  such  sum  or  not :  and  if  he  doth  not  pay,  then  the 
land  which  is  put  in  pledge  upon  condition  for  the  payment  of  the 
money,  is  taken  from  him  forever,  and  so  dead  to  him  upon  con- 
dition, &c.  And  if  he  doth  pay  the  money,  then  the  pledge  is  dead 
as  to  the  tenant,  «S:c. 

§  333.  Also,  as  a  man  may  make  a  feoifment  in  fee  in  morgage, 
so  a  man  may  make  a  gift  in  tayle  in  morgage,  and  a  lease  for  term 
of  life,  or  for  term  of  years  in  morgage.  And  all  such  tenants  are 
(•ailed  tenants  in  morgage,  according  to  the  estates  whieh  thev 
have  in  the  land,  &c. 

§  331.  Also,  if  a  feolVment  be  made  in  morgage  upon  condition 
that  the  feoffor  shall  j>ay  >ueli  a  sum  at  such  a  day,  &c.,  as  is  be- 
tween them  by  their  di'ed  indented  agreed  and  limited,  although 
ihe  feoffor  dietli  before  the  day  of  payment.  &e.,  yet  if  the  heir  of 
the  feoffor  pay  the  same  sum  of  money  at  the  same  day  to  the 
feolfee,  or  tender  to  him  the  money,  and  the  feoffee  refuse  to  re- 
ceive it,  then  may  th<'  heir  enter  into  the  land,  and  yet  the  condition 
is,  that  if  the  f<'offor  shall  pay  such  a  sum  at  such  a  day,  &e..  not 
making  mention  in  the  condition  of  any  payment  to  be  made  by 
his  heir,  l)ut  for  that  tlu'  lieir  hath  interest  of  right  in  the  condition. 
Scr..  and  the  intent  wa<  but  that  the  money  should  be  paid  at  the 
day  a-^sessod.  See.  and   the  feoffee  hath  no  more  loss,  if  it  be  paid 


IQ  ntOPKlITY     SKcrUlTY     FOR     DEBT.  [nooK   I. 

bv  the  heir,  llian  if  it  wore  paid  by  the  father,  &c. ;  therefore,  if 
the  heir  pay  the  money,  or  tender  the  money  at  the  day  limited,  &c., 
and  the  other  refuse  it,  he  may  enter,  &e.  But  if  a  stranger  of  lii.-; 
own  liead,  who  hath  not  any  interest,  &c.,  will  tender  the  aforesaid 
money  to  the  feoffee  at  the  day  appointed,  the  feoffee  is  not  bound 
to  receive  it. 

§  335.  And  be  it  remembered  that  in  such  case,  where  such 
tender  of  the  money  is  made.  &c.,  and  the  feoffee  refuse  to  receive 
it,  by  which  the  feoffor  or  his  heirs  enter,  &c.,  then  the  feoffee  hath 
no  remedy  by  the  common  law  to  have  this  money,  because  it  shall 
l)e  accounted  his  own  folly  that  he  refused  the  money,  when  a  law- 
ful tender  of  it  was  made  unto  him. 

§  337.  Also,  if  a  feoffment  be  made  upon  condition,  that  if  the 
feoffor  pay  a  certain  sum  of  money  to  the  feoffee,  then  it  shall  bo 
lawful  to  the  feoffor  and  his  heirs  to  enter:  in  this  case  if  the 
feoffor  die  before  the  payment  made,  and  the  heir  will  tender  to 
the  feoffee  the  money,  such  tender  is  veid,  because  the  time  within 
which  this  ought  to  be  done  is  passed.  For  when  the  condition  is, 
that  if  the  feoffor  pay  the  money  to  the  feoffee,  &c.,  this  is  as  much 
to  say,  as  if  the  feoffor  during  his  life  pay  the  money  to  the  feoffee. 
&c.,  and  when  the  feoffor  dieth,  then  the  time  of  the  tender  is 
passed.  But  otherwise  it  is  where  a  day  of  payment  is  limited, 
and  the  feoffor  die  before  the  day,  then  may  the  heir  tender  the 
money  as  is  aforesaid,  for  that  the  time  of  the  tender  was  not  passed 
l)y  the  death  of  the  feoffor.  Also,  it  scemeth,  that  in  such  case 
where  the  feoffor  dieth  before  the  day  of  payment,  if  the  executors 
of  the  feoffor  tender  the  money  to  the  feoffee  at  the  day  of  payment, 
this  tender  is  good  enough;  and  if  the  feoffee  refuse  it,  the  heirs 
of  the  feoffor  may  enter,  &c.  And  the  reason  is,  for  that  the  execu- 
tors represent  the  person  of  their  testator,  &c. 

§  338.  And  note,  that  in  all  cases  of  condition  for  payment  of 
a  certain  sum  in  gross  touching  lands  or  tenements,  if  lawful  ten- 
der bo  once  refused,  he  which  ought  to  tender  the  money  is  of  this 
quit,  mill  fully  discharged  forever  afterwards. 

Co.  Lit.  209,  a,  b.  This  is  to  be  understood,  that  he  that  ought 
to  tender  the  money  is  of  this  discharged  forever  to  make  any  other 
tender;  but  if  it  were  a  duty  before,  though  the  feoffor  enter  by 
force  of  the  condition,  yet  the  debt  of  duty  remaineth.  As  if  A. 
borrowcth  a  hundred  pounds  of  B.,  and  after  morgageth  land  to 
B.  upon  condition  for  payment  thereof.  If  A.  tender  the  money 
to  B.  and  he  refuseth  it,  A.  may  enter  into  the  land,  and  the  land 
is  freed  forever  of  the  condition,  but  yet  the  debt  remaineth,  and 
may  be  recovered  by  action  of  debt.  But  if  A.  without  any  loan, 
debt  or  duty  preceding  infeoff  B.  of  land  upon  condition  for  the 


intoK  1. 1  'I'lii;    COMMON-    i.wv    Moun;  v(;i:.  11 

piiN  iiifiit  (>r  a  liuiidird  |iuuii<l>  til  I).  Ill  iKitiirr  of  a  ;,M'aluity  or  ;,Mft. 
In  (hat  i-asc  il'  he  tciulcr  the  liimdrcd  |ioiiiid>  lo  liiiii  acfordiii;.'  to 
the  condilioii,  and  he  ri'fiiscth  il,  li.  hath  no  remedy  ihercfor,  and 
so  is  our  autlioi'  in  ihis  and  liis  other  eases  of  like  nature  to  he 
understood. 

Lit.  i;  3.)!).  Also,  if  the  feollVe  in  nior;,M;j:e  before  the  day  of  |»ay- 
nient  whieh  shoidd  he  made  to  iiini.  makes  liis  exeeutor.s  and  <lie, 
and  liis  heir  entereth  into  tlie  land  as  he  oii:,dit,  tie.,  it  scenieth  in 
this  case  that  the  feoffor  ou<,dil  to  i)ay  the  money  at  the  day  ap- 
pointed to  th(^  executors,  and  not  to  the  heir  of  the  feoffee,  hecaus(? 
the  money  at  tlie  hejxinnin;,'  trenched  to  the  feofTee  in  manner  as 
a  duty,  and  shall  l)e  intended  that  the  estate  was  nuule  hy  reason 
of  the  lending  of  the  money  hy  the  feofTee,  or  for  some  other  duty; 
and,  therefore,  the  j)ayment  shall  not  he  made  to  the  heir,  as  it 
scemeth,  but  the  words  of  the  condition  may  he  such,  as  the  pay- 
ment shall  be  made  to  the  heir.  As  if  the  condition  were,  that  if 
the  fcollor  pay  to  the  feoffee  or  to  liis  heirs  such  a  sum  at  such  a 
day,  &c.,  there  after  the  death  of  the  feoffee,  if  he  dieth  before  the 
day  limited,  the  payment  ought  to  be  made  to  the  heir  at  day 
appointed,  &c. 

'i  Bl.vck.stune,  Com.  loT.  There  are  .some  estates  defeasible 
upon  condition  subsequent,  that  require  a  more  peculiar  notice. 
Sui'li  are: — 

Estates  held  in  raJio,  in  (/nge,  or  pledge,  whiih  are  of  two  kinds, 
riiuin  vadiuDi.  or  living  pledge,  and  inorttiuni  nnliiiiit.  dead  pledge, 
or  mortgage. 

Vivuin  vatliuiit.  or  living  pledge,  is  when  a  man  borrows  a  ^um 
(suppose  i'v'OO)  of  another,  and  grants  him  an  estate,  as  of  i-JO 
per  annum,  to  hold  till  the  rents  aiul  jirofits  shall  repay  the  sum 
so  borrowed.  This  is  an  estate  conditioned  to  be  void,  as  soon  as 
such  sum  is  raised.  And  in  this  case  the  land  or  j)ledge  is  said  to 
he  living:  it  subsists,  and  survives  the  debt;  and  immediately  on 
the  di.'scharge  of  that,  results  back  to  the  borrower.  But  niorluuni 
radium,  a  dead  pledge  or  mortgage  (whieh  is  much  more  common 
than  the  other),  is  where  a  man  borrows  of  another  a  .-pecific  sum 
{e.  g.  £200)  and  grants  him  an  estate  in  fee,  on  condition  (hat  if 
he.  the  mortgagor,  shall  repay  the  mortgagee  the  said  sum  of  £'30o 
on  a  certain  day  mentioned  in  the  deed,  that  then  the  mortgagor 
may  re-enter  on  the  estate  so  granted  in  jdedge;  or.  as  is  now  the 
more  usual  way.  that  then  the  mortgagee  shall  reconvey  the  estale 
to  the  mortgagor.  In  this  case,  the  land,  which  is  so  put  in  pledge, 
i>  by  law,  in  case  of  non-payment  a(  the  time  limited,  forever  dead 
and  ijnne  from  the  mortgagor;  and  the  mortgagee's  estate  in  the 


■JO  PROPERTY     SECURITY     FOR     DEBT.  [BOOK  I. 

lands  is  then  no  longer  conditional,  but  absolute.  But,  so  long  as 
it  continues  conditional,  that  is,  between  the  time  of  lending  the 
money  and  time  allotted  for  payment,  the  mortgagee  is  called 
tenant  in  mortgage.  But  as  it  was  formerly  a  doubt,  whether,  by 
taking  such  estate  in  fee,  it  did  not  become  liable  to  the  wife's 
dower  and  other  incumbrances  of  the  mortgagee  (though  that 
doubt  has  been  long  ago  overruled  by  our  courts  of  equity),  it, 
therefore,  became  usual  to  grant  only  a  long  term  of  years  by  way 
of  mortgage,  with  condition  to  be  void  on  repayment  of  the  mort- 
gage monev,  wliich  course  has  been  since  pretty  generally  continued 
prfncipaliv  because  on  the  death  of  the  mortgagee  such  term  be- 
comes vested  in  his  personal  representatives,  who  alone  are  entitled 
in  equity  to  receive  the  money  lent,  whatever  nature  the  mortgage 
mav  happen  to  be. 

As  soon  as  the  estate  is  created,  the  mortgagee  may  immediately 
enter  upon  the  lands ;  but  is  liable  to  be  dispossessed,  upon  per- 
formance of  the  condition  by  payment  of  the  mortgage  money  at 
the  dav  limited.  And,  therefore,  the  usual  way  is  to  agree  that  the 
mortgagor  shall  hold  the  land  till  the  day  assigned  for  payment; 
when,  in  case  of  failure,  whereby  the  estate  becomes  absolute,  the 
mortgagee  may  enter  upon  it  and  take  possession,  without  any 
possibility  at  Jaw  of  being  afterward  evicted  by  the  mortgagor,  to 
whom  the  land  is  now  forever  dead.  But  here  again  the  courts  of 
equity  interpose,  and  though  a  mortgage  be  thus  forfeited,  and  the 
estate  absolutely  vested  in  the  mortgagee  at  the  common  law,  yet 
they  will  consider  the  real  value  of  the  tenements  compared  with 
the' sum  borrowed.  And,  if  the  estate  be  of  greater  value  than  the 
sum  lent  thereon,  they  will  allow  the  mortgagor  at  any  reasonable 
time  to  recall  or  redeem  his  estate;  paying  to  the  mortgagee  his 
j)rincipal,  interest  and  expenses;  for  otherwise,  in  strictness  of 
law,  an  estate  worth  £1000  might  be  forfeited  for  non-payment  of 
£100,  or  a  less  sum.  This  reasonable  advantage,  allowed  to  mort- 
gagors, is  called  the  equitij  of  redemption ;  and  this  enables  a  mort- 
gagor to  call  on  the  mortgagee  who  has  possession  of  his  estate,  to 
deliver  it  back  and  account  for  the  rents  and  profits  received,  on 
payiiicnl  f)!"  liis  wliole  debt  and  interest;  thereby  turning  the  mor- 
inum  into  a  kind  of  vivum  vadium.  But  on  the  other  hand,  the 
mortgagee  may  either  compel  the  sale  of  the  estate  in  order  to  get 
the  whole  of  Ids  money  immediately,  or  else  call  upon  the  mort- 
gagor to  redeem  his  estate  presently,  or  in  default  thereof,  to  bo 
forever  forerlosed  from  redeeming  the  same;  that  is,  to  lose  his 
equity  of  redemption  without  possibility  of  recall.  And  also,  in 
Romo  eases  of  fraudulent  mortgages,  the  fraudulent  mortgagor  for- 
feits all  equity  of  redemption  whatsoever.  It  is  not,  however,  usual 
for  mortgagees  to  take  possession  of  the  mortgaged  estate  unless 


HOOK    I.)  TIIK     COMMON     LAW      M<  iltTC  A(!F:.  13 

v.Irtc  llii-  sfcnritv  i^  |)r('(iiri(Uis.  or  small :  or  ulicrc  tin-  iiiort^M;,'or 
i!(';,Mf(ts  even  liu'  i)iiyiiiciit  of  inU'n-sl  ;  wlicn  llic  mo rt ;,';!;,'»•(•  is  fro- 
(pR'ntly  obli^'ed  to  liriii;:  an  ('jfctiiu'iil.  ami  take  Uk-  lam!  into  his 
own  hands  in  the  nature  of  a  pledge.  (»r  llie  pii/nits  of  the  Roman 
law;  whereas,  while  it  remains  in  the  hands  of  tho  mort«,'agor,  it 
more  rosenihles  their  InipolJicin,  which  was.  where  the  possession 
of  the  thinj:  i)led<,'ed  remained  with  the  dehtor.  But  hy  statute  7 
(leo.  II.,  e.  "v'U,  after  j)ayment  or  tender  hy  the  mort<j;agor  of  prin- 
eii)al,  interest  and  costs,  the  mort<,'a<j:ee  ean  maintain  no  ejectment, 
Init  may  be  compelled  to  re-assign  his  security.  In  (Hanvil's  time, 
when  the  universal  method  of  conveyance  was  hy  livery  of  seisin  or 
eorporal  tradition  of  the  lands,  no  gage  or  pledge  of  lands  was 
good  unless  possession  was  also  delivered  U)  the  creditor:  '' >'/  non 
scquaturipsius  rndii  tradilio,  curia  domini  regis  hujusmodi  privnfna 
•  ■iinrnilinnrs  tnrri  noti  sulci:"  for  which  the  reason  given  i-.  to 
prevent  snhsecjnent  and  fraudulent  |)ledges  of  the  same  land.  '"  Cnni 
in  tali  casu  possil  cadmi  res  phiribw^  aJiis  rrcdiloribiis  htm  prius 
turn  posterius  invadiari."  And  the  frauds  which  have  arisen,  since 
the  exchange  of  these  public  and  notorious  conveyances  for  more 
private  and  secret  bargains,  have  well  evinced  the  wisdom  of  our 
ancient  law. 

CooTE  ox  Mortgage.  5,  0.  The  morluum  vadium,  or  niorigage, 
is  mentioned  by  Littleton,  Coke,  and  others,  as  so  called  because  on 
breach  of  condition  the  estate  was  rendered  indefeasible  in  the  mort- 
gagee,and  absolutely  lost  to  the  mortgagor.  In  this  light  it  is  placed 
by  Lord  Coke,  in  contradistinction  to  the  vivntn  vadium,  and  such 
!-eems  to  be  the  opinion  generally  adoptt'd.  But  (Jlanville,  as  has 
l)een  observed,  gives  a  diiferent  meaning  to  the  origin  of  the  term. 
■He  says,  "  Morluum  vadium  dicilur  illud  cujus  fvuctus  iv/  rt'ddifus 
interim  pcrccpli  in  nuUo  sc  acquictant  :"^  and  ajjjdies  it  to  the  be- 
ft»re  mentioned  species  of  usury  at  common  law,  viz.,  a  feoffment  to 
ili(!  creditor  and  his  heirs,  to  1k'  held  by  him  until  his  debtor  j>aid 
him  a  given  sum,  and  until  which  he  received  the  n-nts  without  ac- 
count, so  that  the  estate  was  unprofitable  or  dead  to  the  mortgagor 
in  the  mean  time;  and  the  exj)osition  given  liy  Cilanville  .seems  the 
more  souiul,  as  it  was  rendered  at  a  very  early  period  of  our  history, 
and  while  yet  the  fetters  on  alienation  were  unreinoved.  We  may 
therefore  consider  the  vivum  vadium  to  have  implied  a  security,  by 
which  the  rents  of  land  were  from  tinu'  (o  time  applied  in  reduction 
of  the  princijial  of  the  del)t  ;  and  the  mortuum  vadium  to  iiave  orig- 
inally implied  a  si'curity,  by  which,  until  payment  of  a  given  sum. 
the  rents  of  land  were  ud  interim  lost  to  the  owner,  and  reecMved  by 
the  creditor  and  \inaccounted  for,  so  that  the  debt  remained  vin- 
'  Lili.  10.  lap.  r> ;  page  1,  supra. 


11 


rr.OPI-lITV     SECURITY     FOR     DEBT.  [book   I. 


.liuiinislied,  which  was  at  common  kw,  as  before  remarked,  in  the 
event  of  the  creditor  dying  possessed  of  the  pledge,  punishable  as 
u^iirv  •  and  it  must  be  observod,  there  was  the  like  advantage,  m  one 
respect,  to  the  debtor  in  this  form  of  mortgage,  as  in  the  vivum 
radiuvi  viz.,  that  the  estate  was  never  lost.    .    .    . 

It  is  somewhat  singular  that  Littleton  should  not  refer  to  the  ex- 
planation of  the  term  as  rendered  l>y  Glanville;  and  we  may  con- 
clude that  the  original  murttiiim  radium  had  by  this  time  totally 
fallen  into  disuse,^  and  become  obsolete.  The  mortgage  described 
bv  Littleton  was  strictly  an  estate  upon  condition,  that  is,  a  feoff- 
nient  of  the  land  was  niado  to  the  creditor,  with  a  condition  in  the 
deed  of  feolTment  or  in  a  deed  of  defeazance  executed  at  the  same 
time  (for  the  common  law  does  not  allow  a  feoffment  to  be  defeaz- 
anced  l)y  matter  subsequent),  l)y  which  it  was  provided,  that  on  pay- 
uient  by  the  mortgagor  or  feoffor  of  a  given  sum  at  a  time  and  place 
certain",  it  should  be  lawful  for  him  to  re-enter.  Lnmediately  on 
tlie  livery  made,  the  mortgagee  or  feoffee  became  the  legal  owner  of 
the  \i\m\,  and  in  him  the  legal  estate  instantly  vested,  subject  to  the 
condition.  If  the  condition  was  performed,  the  feoffor  re-entered 
and  was  in  of  his  old  estate,  paramount  all  the  charges  and  incum- 
l)rances  of  the  feoffee,  whether  in  the  Per  or  in  the  Post,  or  in  other 
words,  above  all  persons,  whether  claiming  through  the  feoffee,  as 
heir,  Avidow,  or  purchaser,  or  paramount,  or  collaterally  to  the 
feoffee,  as  the  lord  by  escheat  and  the  husband  by  curtesy.  If  the 
condition  was  broken,  the  feoffee's  estate  was  absolute  and  his  estate 
was  indefeasible,  and  all  the  legal  consequences  followed  as  though 
he  liad  been  absolute  owner  from  the  time  of  the  feoffment.  But 
until  breach  of  condition,  possession  was  not  in  general  given,  which 
was  a  further  distinction  between  this  mode  of  mortgage  and  the 
riniin  vadium  and  did  morluum  vadium.  And  in  order  to  protect* 
the  mortgagor  from  the  eviction  of  the  mortgagee,  to  which  he  was 
become  lia])le,  a  proviso  was  inserted,  declaring  that  until  breach  of 
condition  the  mortgagor  might  hold  the  estate;  and,  on  the  other 
Iiand,  the  mortgagor  engaged  that,  in  such  event,  he  would  do  all 
lawful  acts  for  further  assurance. 

.\lt hough  the  common  law  did  not  favor  conditions,  but  required 
strict  performance  of  them,  yet  it  was  in  certain  cases  satisfied  witli 
the  performance  of  the  intent  of  the  condition,  though  not  per- 
formed in  words;  and  although  a  difference  was  taken  between 
conditions  to  preserve  and  conditions  to  destroy  an  estate,  the  former 
being  allowed  to  be  performed  as  near  the  condition  as  could  bo,  and 
the  hitter  being  strirtissimi  juris,  yet  conditions  in  mortgages,  the 
performance  of  M-hich,  in  fact,  destroyed  the  estate  of  the  mortgagee. 
were  favoured  in  the  eye  of  the  law. and  rather  considered  as  belong- 
ing to  the  class  of  conditions  for  preserving  estates.   .   .   . 


i;,„,K    I   ]  Tin:     COMMnN      I.WV      MOK  TO ACIK.  15 

'riius  mortgages  stood  at  roiiniioii  law,  inciiuilx'rt'd  with  the  sys- 
i.iii  from  wlucli  lliry  orijrinalcd,  and  altciidi'd  with  ruinous  consc- 
.liiriiccs  lo  the  unrnrhmalc  (l('lil(»r;  and  it  is  ditlifull  to  conceive, 
liad  tlif  ('i)ur(s  of  law  hccn  h)  inc-lint-d  (which  it  docs^not  seem  they 
were),  on  what  |)rin<i|»lc  they  could  have  proceeded  in  giving  the 
debtor  relief.  Tlu'  furfeiiun'  was  comi)lete;  the  mortgagee,  by  the 
default  of  tlu-  morlgagor,  had  become  the  absolute  owner  of  the 
<'statc;  it  could  not  be  divested  from  him  without  a  reconveyance, 
and  there  remained  no  remedy  short  of  an  actual  legislative  enact- 
lueiit,  without  disturbing  the  settled  land-marks  of  property.^ 

Ilap])ilv.  a  jurisdiction  was  arising,  under  which  the  harshness 
of  the  common  law  might  be  softened  without  an  actual  interfer- 
ence with  its  principles,  and  a  system  established  at  once  consistent 
with  the  security  of  the  creditor,  and  a  due  n^gard  for  the  interests 
o(  the  debtor.    .    .    . 

/./.  10.  It  has  iK'cn  already  said,  that  by  the  civil  law  tiie  debtor 
might  redi'em  the  estate  on  jiayment  of  his  debt  at  any  time  before 
>entence  pas.^ed.  It  has  been  seen  how  decidedly  opposed  to  this  is  the 
doctrine  of  forfeiture  at  common  law.  The  ab.solutc  forfeiture  of  the 
estate,  whatever  might  be  its  value,  on  breach  of  the  condition,  was, 
in  the  eye  of  e(piity,  a  tlagrant  injustice  and  hard.^hip,  although  per- 
fectly accordant  with  the  system  on  which  the  mortgage  itself  wa^5 
grounded.  Xo  wonder  then  that  our  Courts  of  equity,  founded  on 
the  principles  of  the  civil  law,  should,  as  they  increased  in  power, 
attempt,  by  an  introduction  of  those  principles,  to  moderate  the 
,-everity  with  which  the  common  law  followed  the  breach  of  the  con- 
dition. They  did  not  indeed  make  the  attempt  of  altering  the  legal 
elTc*  t  of  the  forfeiture  at  connnon  law  ;  they  could  not,  as  they  might 
have  wished,  in  ccmfonnity  to  the  principles  of  the  civil  law,  declare 
that  the  conveyance  shoidd,  notwithstanding  forfeiture  committed, 
cease  at  any  time  befcu-e  sentence  of  foreclosure',  on  payment  of  the 
mortgage-money ;  but  leaving  the  forfeiture  to  its  legal  conse- 
quences.theyoperated  on  the  conscience  of  the  mortgagee,and  acting 
ill  pn'snnnni  and  not  //(  rnn,  they  declared  it  unreasonable  that  he 

'Ndlwilli-taiiiliii;:  tlic  rii:<'iir  willi  uliiili  tlic  idiunKHi  law  puni^^lifd  tlu- 
tin'ucli  t»f  tho  cniiilitinii.  yd  it  i-  cliMr  from  tlio  ooiicurrciil  tpstiinony  of 
all  our  old  diaiiial ic  writiis.  (lu-  .liroiiicIiTs  of  llii'ir  tiinos.  that  the  law- 
was  opi)oscd  to  the  l.cUtT  fcidinj:-^  of  tin-  pcopli'.  ami  that  a  (■oiisidpral)lt' 
df<,'rf«-  of  oliloipiy  attfiiili'd  tlio-i-  wli..  to.ik  ad\  aiitatrt-  of  it.  Tim-,  in 
I'.raimionl   and  riotclicr: 

Mnllii.-    Tin. II   lia-t    iiniloMo  a  failliful  pontloiiiaii. 

r.\    takiiij:  forfrit   of  his  land. 
Ahrr\i'i-.  —  \    do  confi'N-.      I    will   honrcfoith   pra<-tiso  ropontanoe. 

I  will  rc-ton>  nil  innrtpaum,  forswoar  «t)oininable  usury. 
Tlu-   Mfilit   iValko;  or  Little  Thief.— Coote. 


16 


PROrERTY     SECURITY     FOR     DEBT.  [BOOK  I. 


should  retain  for  his  own  benefit  what  was  intended  as  a  mere- 
pledge;  and  thev  adjudged  that  the  breach  of  the  condition  was  in 
the  nature  of  a  penalty,  which  ought  to  be  relieved  against,  and  that 
the  mortgagor  had  an  equity  to  redeem  on  payment  of  principal, 
interest,  and  costs,  notwithstanding  the  forfeiture  at  law. 

Against  the  introduction  of  this  novelty,  the  Judges  of  common 
law  'strenuously  opposed  themselves ;  and  though  ultimately  de- 
feated by  the  increasing  power  of  equity,  they  nevertheless  in  their 
own  Courts  still  adhered  to  the  rigid  doctrine  of  forfeiture,  and  in 
the  result,  the  law  of  mortgage  fell  almost  entirely  within  the  juris- 
diction of  equity.  There  is  no  record  of  the  time  when  this  equity 
was  first  granted.  In  the  before-mentioned  cases  of  Wade^  and 
Goodall/  which  were  decided  towards  the  end  of  the  reign  of  Queen 
Elizabeth,  the  parties  do  not  seem  to  have  entertained  the  idea  of 
any  remedy  existing  for  the  mortgagor's  relief,  if  the  forfeiture  was 
established  at  law,  although  Tothill  mentions  a  case  in  the  3Tth 
year  of  Elizabeth's  reign,^  in  which  the  equity  was  decreed ;  and  it 
must  soon  after  this  time  have  been  generally  in  practice,  for  there 
is  a  case  decided  in  the  first  year  of  Charles  the  First,*  in  which  the 
doctrine  seems  fully  admitted.  It  was  a  question  as  to  a  mortgage 
term  which  had  been  forfeited  by  non-payment  according  to  the  con- 
dition; and  the  Court  held,  that  although  the  money  was  not  paid  at 
the  day,  but  afterwards,  yet  the  term  ought  to  be  void  in  equity,  as 
.well  as  on  a  legal  payment  it  would  have  been  void  at  law.  In  the- 
intermediate  reign  of  King  James  the  First,  the  Courts  of  equity 
became  established  in  power,  and  the  same  period  may  be  reasonably 
assigned  as  that  in  which  the  doctrine  of  equity  of  redemption  was^ 
fully  recognised.   .   .   . 

Spence,  Equit.  Juris.,  601.  The  doctrine  that  a  pledge  should 
l)c  forfeited  on  non-payment  at  the  day,  which  seems  to  have  pre- 
vailed throughout  Europe,  was  considered  by  the  clergy  so  inequit- 
able, that  at  the  Council  of  Lateran,  a.d.  1178,  temp.  Hen.  II.,  at 
whicli  l)isliops  from  all  parts  of  Christendom  attended,  it  was  de- 
(larcd  (no  doubt  with  reference  to  the  doctrines  which  Constantine 
had  promulgated)  that  where  a  creditor  had  been  paid  his  debt  and 
•■•xpenses  out  of  t1io  profits,  he  should  restore  the  pledge  to  the 
creditor.-'' 

The  king's  court,  as  we  learn  from  Glanville,  took  no  cognizance- 
of  agreements  to  ])ledge,  which  were  not  perfected  by  delivery ;  these 
were  left  to  tlie  Court  Christian,  as  cases  of  fidei  Jcesio,  of  which  that 

'  .'i    Co.    11."). — Cootr.  'Jhid.    Wt.—Coote. 

*  Lanyford  v.   liurnard,  Tothill,    l;}4. — Cootc. 

*  i'mamul  Collrrir  v.  Erans,  1  Rep.  in  Chancery,  10. — Coote. 
•-MiiU.    I'aii^.    114-.-).— ,S'/>r>if<; 


HOOK    I.]  Tin;     COMMON'      LAW      MORTGAGE.  17 

(oim  then  had  (•o<,riiizaiuf ;'  tlif  king's  court,  tlierefori',  took  n<» 
iioticr  of  (iiu'stions  as  to  the  prioritit-s  of  creditors,  l)y  way  of  murt- 
gagc  or  plcdirc  where  the  h-gal  interest  did  not  jjuss.^ 

Mortgages  of  hinds  appear  to  have  het'n  i-oinnion  in  the  time  of 
lien.  VI.  an<1  Kdw.  IV.  Sonietinies  they  were  in  the  form  that 
the  feofTee  sliould  take  tlie  prolits  till  the  mortgagor  paid  him  the 
del)t.  Where  ]tro])erty  was  delivered  or  conveyi-d  as  a  security,  an<l 
the  debt  was  duly  paid,  the  Court  of  Chancery  compi'lled  a  reddiv.  ry 
or  reconveyance  of  the  mortgaged  property  \inder  it.s  general  erpiit- 
ahle  jurisdiction,  and  the  ancient  common  law  jurisdicticm  ajJfMar- 
to  have  been  superseded.  Where  the  condition  in  a  mortgage  d«'ed 
was  not  performed  so  that  the  ])roperty  waf  forfeited,  the  Covirt-  of 
I^aw  continued  to  adhere  to  the  ancient  doctrine,  and  would  not 
allow  the  smallest  liberality  in  the  construction  of  such  conditions. 
If  the  defauU  hap])ened  from  accident,  or  any  other  cause  that 
alforded  grounds  for  relief  under  the  general  jurisdiction  to  relieve 
against  penalties  and  forfeitures,  the  Court  of  Chancery  intcrfen>d: 
or,  if  there  were  any  other  acknowledged  equitable  ground,  as  a  col- 
lateral agreement  that,  notwithstanding  the  forfeiture,  the  mort- 
gagor should  have  a  right  to  redeem.  But  it  was  a  long  time  before 
the  Court  of  ("hancery  could  obtain  jurisdiction  to  relieve  where  the 
jiledge  was  actually  forfeited,  and  there  were  no  special  circum- 
stances. 

It  is  stated  by  Sir  Matthew  Hale,  that  the  rarliament  in  the  1  Ith 
Rich.  II.  would  not  admit  of  redemption  after  forfeiture;^  but  it 
a))pears,  on  reference  to  the  Parliament  Kolls,  that  the  case  referred 
to  was  a  petition  addressed  to  Parliament  by  a  person  who  alleged, 
that  the  mortgage  money  had  been  paid  before  the  tinte:  all  parties 
were  ordered  to  atti-nd.  and  on  debate  it  ajipeared,  "as  Seignors  du 
Parliament,"  that  the  matter  was  cognizable  at  law  ;  so  the  petitioner 
took  nothing  by  his  suit.* 

The  general  jurisdiction  to  relieve  against  a  forfeiture  actually  in- 
curred aj)pears  to  have  been  introduced  in  this  way.  Creat  favour 
was  always  shown  to  sureties,  even  at  law.  By  Magna  Charta,  c.  S. 
the  pledge  was  not  to  be  distrained  if  the  ])rincipal  debtor  were 
suflieient  to  jiay  ;  but  this  growing  troublesome  to  the  creditor,  it  Til 
into  use  that  the  pledge  should  be  bound  as  the  principal.  However, 
it  seems  to  have  been  <'onsidered   in  the  Court   of  Cham-ery,  that 

'So   lute   as    H    Ktlw.    I\'.    (\.    15.    fo.    4l    lli-«|iop    Stilliii^'tun.   Cliaiufllor. 
held  tliat   for  lnoacli  of  faitli    i  pro  lasinni-  fidri)    a  nmn  was  at    lil)or1y  <>» 
.sue  oitlipr  ii>  tlio  spiritual  court    {('(tnuniru  InjiiriA),  or  oIt  in  llu>  ('!i;ui 
fory.  for  tlic  daiua^c  (i<  <-a.sioiif(l  by  tho  i>ri>a('li. — >S'/*riir«'. 
MU'auics    ItJlaiivillc],  p.  '2."»7,  lii».  x.  c.    12. — Spcncc. 
'  liosrnnick   v.  Bartuii,  1   f'li.  Ci\.  210. — .S'/»«»i(r. 
*Rot.  Pari.  vol.  iii.  No.   10,  p.  2.')8.  {).—Spcncc. 
2 


IS  PROPERTY  SECURITY  FOR  DEBT.  [BOOK  X. 

wIkto  a  person  gave  a  mortgage  as  surety  only,  if  he  paid  the  debt 
due  from  the  principal  debtor  with  interest  even  after  the  day,  he 
did  all  that  he  really  contracted  to  do,  for  it  was  only  on  non-pay- 
ment that  he  was  to  be  called  upon;  and  out  of  favour  to  him  the 
rigid  doctrine  of  the  law  as  to  the  time  of  payment  was  relaxed. 
Thus  an  advantage  was  given  to  the  surety  that  the  principal  debtor 
liad  not,  for  he  could  only  obtain  relief  on  grounds  that  were  ap- 
l)licablc  to  forfeitures  generally. 

From  this  time  down  to  the  reign  of  James  I.,  Ave  find  the  notion 
of  the  existence  of  a  general  equity  in  the  mortgagor  himself  to  re- 
deem after  forfeiture,  gradually  gaining  ground. 

At  length,  in  the  reign  of  Charles  I.  it  was  established,  that  in  all 
cases  of  mortgage,  where  the  money  was  actually  paid  or  tendered, 
though  after  the  day,  the  mortgage  should  be  considered  as  redeemed 
in  equitv,  as  it  woukl  have  been  at  law  on  payment  before  the  day; 
and  from  that  time  bills  began  to  be  filed  by  mortgagees  for  the  ex- 
tinction or  foreclosure  of  this  equity,  imless  payment  Avere  made  by  a 
sliort  day  to  be  named.^    .    .    . 

The  jurisdiction  Avhich  the  Court  of  Chancery  exercises  in  regard 
to  the  equity  of  redemption  of  mortgaged  premises,  so  far  as  regards 
the  co-existent  legal  rights,  is,  in  some  respects,  analogous  to  that 
wliich  it  exercises  as  regards  trust  estates,  where  the  mortgage  is 
created  Ijy  a  deed  which  conveys  the  legal  estate.  The  Court,  to  a 
certain  extent,,  controls  the  exercise  of  the  le^al  incidents  of  the  es- 
tate or  interest  Avhich  is  acquired,  making  it  subservient  to  the  pur- 
poses for  which  it  is  assumed  that  it  was  created,  namely,  security 
only ;  but  there  is  this  material  difference,  that  the  holder  of  the 
legal  estate  is  not,  as  in  the  case  of  a  trustee,  completely  at  the  com- 
mand of  tlie  court,  for  the  mortgagee  does  not  acquire  it  in  the  char- 
acter of  trustee,  or  for  the  purposes  of  the  mortgagor  or  that  it  may 
continue  to  be  subservient  to  the  equitable  interest.  So  long,  how- 
ever, as  tlie  mortgagee  suffers  the  equitable  interest  to  exist,  Avhich, 
unlike  a  trustee,  he  may  at  his  pleasure  put  an  end  to  by  filing  a  bill 
for  foreclosure,  the  Court  of  Chancery  moulds  and  directs  the  enjoy- 
men't  and  transmission  of  that  equitable  interest  according  to  rules 
and  doctrines  of  its  OAvn,  though  hero  also  taking  the  common  law 
rules  as  to  property  as  its  guide,  just  as  in  the  instance  of  a  trust 
estate,  of  wiiich  we  have  lately  treated.  The  estate  in  the  hands  of 
the  mortgagee  and  his  representatives,  is  considered,  for  almost  all 
purpo.ses,  as  personal  estate;  the  equity  of  redemption  is  treated  as 
an  cslafe  in  the  land,  and  as  having  all  the  qualities  and  incidents 
of  real  eslale;  when  the  mortgage  money  is  paid  off  the  mortgagee 
heeoines  in  the  nature  oi'  a  trustee  for  +lie  mortgagor:  but  the  full 
efjnsideralion  of  these  subjects  cannot  be  entered  upon  at  present. 

'  Kinnnucl  College  v.  Evans,  1  Ch.  Rep.  11,  1  Cha.  I. — Spence, 


UutJK   1.]  Tin:     CO.M.M»»N      LAW      MoliTd.VCi:.  19 

I  Ki;nt,  Tom.,  1  in.  Tlic  law  ul"  i)k'd;^^'s  .>.|io\\>  an  accurale  ami 
rrliiU'd  si'iisi"  uf  justice;  aiul  tlu-  wisdom  of  tlic  i»rovi>i()ns  hy  wliicli 
tho  inti'ivsts  of  tlu'  debtor  and  creditor  are  etiually  guarded,  is  to  he 
I  raced  to  tile  IJomaii  law,  and  shines  with  almost  eipial  advanla<,'e, 
and  with  the  most  attractive  .simi)licity,  in  the  i)afj:es  of  (lianviilc. 

it  forms  a  strikin;^'  contrast  to  the  common-law  morlj,M;,'o  of  the 
rreehold,  which  was  a  feofTment  ujton  condition,  or  the  creation  of 
a  base  or  determinable  fee,  with  a  right  of  reverter  attached  to  it. 
The  legal  estate  vested  immediately  in  the  feoffee,  and  a  mere  right 
of  re-entry,  upon  performance  of  the  condition,  by  payment  of  the 
debt  strii'tly  at  the  day,  remained  with  the  mortgagor  and  his  heirs, 
and  which  right  of  entry  was  neither  alienable  nor  devisable.  If 
the  mortgagor  was  in  default,  the  condition  was  forfeited,  and  the 
estate  became  absolute  in  the  mortgagee,  without  tlie  right  or  tin- 
ho]ie  of  redemi»tion.  So  rigorous  a  doctrine,  aiul  ])n)ductive  of  such 
forbidding,  an<l,  as  it  eventually  proved,  of  such  intolerable  injus- 
tice, naturally  led  to  e.xact  and  scrupulous  regulations  concerning 
the  time,  mode,  and  manner  of  performing  the  condition,  and  they 
liecame  all-important  to  the  mortgagor.  The  tender  of  the  debt 
was  required  to  he  at  tlu'  time  and  ])lace  j)rescribed  ;  and  if  there  was 
no  i)lace  mentioned  in  the  contract,  the  mortgagor  was  bound  lo  seek 
the  mortgagee,  and  a  tender  uj)on  the  land  was  not  sufficient.  If 
there  was  no  time  of  payment  mentioned,  tho  mortgagor  had  his 
whole  lifetime  to  pay,  unk'ss  he  was  (piickened  by  a  demand;  hut  if 
he  died  before  the  payment,  the  heir  could  not  tender  and  save  the 
forfeiture,  because  the  time  was  passed.  I  f,  however,  the  money  was 
declared  to  be  payable  by  the  mortgagor,  or  his  heirs,  then  the  tender 
might  be  made  by  them  at  any  time  indelinitely  after  tho  mort- 
gagor's death,  unless  the  performance  was  hastened  by  recjuest ;  and 
if  a  time  for  ])ayment  was  fi.xed,  and  the  mortgagor  dii'd  in  the 
mean  time,  his  heir  might  redeem,  though  he  was  not  mentiom-d, 
for  he  had  an  interest  in  the  condition.  1  f  tlu'  representatives  of  th.; 
mortgagee  were  mentioned  in  the  feoffment,  whether  they  were  lieirs, 
executors,  or  assignees,  the  payment  could  right f\dly  \\o  made  to 
either  of  them.' 

/(/.,  loS.  In  a.scending  to  the  view  of  a  mortgage  in  the  contem- 
plation of  a  court  of  equity,  we  leave  all  tlu'S(>  tei-hnical  scruples  and 
difficulties  behind  us.      Xot  only  the  original  severity  of  the  common 

'  Gooduir.s  case,  fi  Co.  O.'i ;  Co.  Lilt.  210.  This  case  of  Cloodall,  ami 
Wade's  case,  5  Co.  114,  aro  samples  of  the  discussions  on  what  was,  in  the 
time  of  Lord  Coke,  a  very  momentous  question,  whether  tlie  absolute 
forfeiture  of  the  estate  hatl  or  had  not  !)een  incurred  l>y  reason  of  non- 
liayment  at  the  day.  Such  a  question,  wliidi  would  now  be  only  material 
as  to  the  costs,  was  in  one  of  those  cases  decided,  on  error  from  the  K.  H  . 
after  argument  and  dcliatc.  i)y  all  the  judges  of  England. — Krnl. 


20  PROPERTY     SECURITY     FOR    DEBT.  [BOOK  I, 

law,  treating  the  mortgagor's  interest  as  resting  upon  the  exact  per- 
formanfc  of  a  condition,  and  holding  the  forfeiture  or  the  breach  of  a 
condition  to  be  absolute,  by  non-payment  or  tender  at  the  day,  is  en- 
tirely relaxed;  but  the  narrow  and  precarious  character  of  the  mort- 
gagor at  law  is  changed,  under  the  more  enlarged  and  liberal  juris- 
diction of  the  courts  of  equity.  Their  influence  has  reached  tlu^ 
courts  of  law,  and  the  case  of  mortgages  is  one  of  the  most  splendid 
instances  in  the  history  of  our  jurisprudence,  of  the  triumph  of 
(•quitablc  principles  over  technical  rules,  and  of  the  homage  which 
those  principles  have  received  by  their  adoption  in  the  courts  of  law. 
Without  any  prophetic  anticipation,  we  may  well  say,  that  "  return- 
ing justice  "lifts  aloft  her  scale."  The  doctrine,  now  regarded  as  a 
settled  principle,  was  laid  down  in  the  reign  of  Charles  I.,  ver}^ 
cautiously,  and  with  a  scrupulousness  of  opinion.  "  The  Court  con- 
ceived, as  it  was  observed  in  chancery,  that  the  said  lease  being  but 
a  security,  and  the  money  paid,  though  not  at  the  day,  the  lease 
ought  to  be  void  in  equity."  ^  The  equity  of  redemption  grew  in 
time  to  be  such  a  favorite  with  the  courts  of  equity,  and  was  so 
liighly  cherished  and  protected,  that  it  became  a  maxim,  that  "  once 
a  mortgage,  always  a  mortgage."  The  object  of  the  rule  is  to  pre- 
vent oppression;  and  contracts  made  with  the  mortgagor,  to  lessen, 
embarrass,  or  restrain  the  right  of  redemption,  are  regarded  with 
jealousy,  and  generally  set  aside  as  dangerous  agreements,  founded 
in  unconscientious  advantages  assumed  over  the  necessities  of  the 
mortgagor.    .    .    . 

The  equity  doctrine  is,  that  the  mortgage  is  a  mere  security  for 
the  debt,  and  only  a  chattel  interest,  and  that  until  a  decree  of  fore- 
closure, the  mortgagor  continues  the  real  owner  of  the  fee.  The 
equity  of  redemption  is  considered  to  be  the  real  and  beneficial  estate, 
tantamount  to  the  fee  at  law ;  and  it  is  accordingly  held  to  be  de- 
scendible by  inheritance,  devisable  by  will,  and  alienable  by  deed. 
])recisely  as  if  it  were  an  absolute  estate  of  inheritance  at  law.-  The 
courts  of  law  have,  also,  by  a  gradual  and  almost  insensible  prog- 
ress,   adopted    these   equitable    views    of   the    subject,    which    are 

'  Kiuanuel  College  v.  Evans,  1  Rep.  in  Cli.  10.  In  the  case  of  Roscarrick 
V.  Burton,  1  Cases  in  Ch.  217,  Sir  Matthew  Hale,  when  chief-justieo. 
showed  tlial  he  had  not  risen  above  the  mists  and  prejudices  of  his  ape 
on  tliis  subject,  for  he  complained  very  severely  of  the  growth  of  equitie-i 
of  redemption,  as  having  ))een  too  much  favored,  and  been  carried  too  far. 
In  14  P.icli.  11.,  tlie  Parliament,  he  said,  would  not  admit  of  this  equity  of 
redemption.  P.y  the  growth  of  equity,  the  heart  of  the  common  law  was 
eaten  out.  He  eomjilained  that  an  equity  of  redemption  was  transferable 
from  one  to  another,  though  at  common  law  a  feoffment  or  fine  would 
have  extinguished  it:  and  he  declared  he  would  not  favor  the  equity  of 
redcniptir)n    beyond   existing   precedents. — Kent. 

'■  1  Vern.  7,  232,  and  2  Vent.  ZM.—Kcnt. 


B..,.K    1  TIIK     COMMON      LAW     .\[OHTOA(ii:.  21 

fuuiKk'd  in  jii.4ii.v,  and  iuiord  with  the  triif  intent  and  inherent 
natuiv  of  every  sueli  transaction.  Kxccpt  as  a;i;ainst  tlie  mortgagee, 
the  mortgagor,  while  in  possession,  and  l)efore  f<)rc<  losure,  is  re- 
garded as  the  real  owner,  and  a  freeholder,  with  the  civil  an<l 
l-olitieal  rights  belonging  to  that  character;  whereas  the  mortgagee, 
notwithstanding  the  form  of  the  conveyance,  has  only  a  chattel  in- 
terest, and  his  mortgage  is  a  mere  security  for  a  debt.  This  is  th<' 
conclusion  to  be  drawn  from  a  view  of  the  English  and  American 
authorities.* 

Thowbkiixm:,  Kkadinc}  ox  MoitTGAc;i:s,  8  Mass.  Rep.,  551. 
Among  conditional  estates  are  mortgages  of  land  and  tenement-. 
These  are  sometimes  of  the  freehold  and  inheritance,  and  some- 
times for  a  term  of  years  only. 

1.  Of  the  freehold  and  inheritance:  Where  a  feoffment  is  made 
upon  condition,  that  if  the  feotTor  i»ay  the  feoffee  £!•>  at  a  certain 
day,  then  he  shall  re-enter,  &c.  Here  the  land  and  all  the  feoffor'.^ 
(  tate  in  it  ])ass  presently  to  the  feoffee  by  common  law;  and  the 
feoflTor  has  only  the  condition  left,  and  no  estate  in  the  land  that  h  • 
.m  assign  over  (Co.  Lit.  205  a.  210  a).  So  if  one  here,  by  dee  1 
luly  acknowledged  and  registered,  conveys  his  land  to  another  and 
his  heirs  upon  the  like  condition,  the  land  and  all  the  mortgagor's 
estate  in  it  pass  presently  to  the  mortgagee  by  force  of  the  provincial 
act  of  9  Will.  3,  c.  7(11*.  Will.  T4).  .  .  . 

It  is  objected  to  this  doctrine,  that  Lord  Mansfield,  in  consider- 
ing what  species  of  ])roperty  a  mortgagee  has  in  the  estate  morl- 
gaged,  lately  said  (2  Burr.  978,  979),  that  "  a  mortgage  is  a  charge 
upon  the  land,  and  whatever  would  give  the  money,  will  carry  th  > 
•  -tate  in  the  land  along  with  it,  to  every  purpose.  The  estate  in 
the  land  is  the  same  thing  as  the  money  due  upon  it.  It  will  bj 
liable  to  debts;    it  will  go  to  executors;    it  will  pass  by  a  will  not 

'  77(c  King  v.  .S7.  Michruls,  Douj;.  (530;  The  King  v.  Edington,  1  Eu>t, 
JS8;  Jackson  V.  Willnnl,  4  .Johns.  41;  Ritniitin  v.  Mnscrcau,  11  ibid,  ii^i: 
lluntiiigh.n  v.  Smith,  4  Conn.  'i.3."> ;  Milliiigtoii  v.  dnlr.  7  Mass.  LIS;  M'CoU 
V.  Lciiuor,  0  Sor.,'.  &  Rnwlo.  3!»-2 :  F<rd  v.  I'hilpiit.  '.  llnir.  &  .Johns.  31-2: 
]\'ilsiin  V.  TrnuiK  2  rowui.  l!>r>;  lUilmt  v.  U7(i7i»i</,  3  IMek.  4S4 ;  lUnnrg 
V.  livarcc,  2  (Jroi'iil.  132.  The  •rrowth  and  consoj illation  of  tlu»  .\nicriran 
'hxtrino,  that  until  foicdo-uio  tie  nioit'j;aj;or  remains  sei-eil  of  the  free- 
hold, and  tliat  the  niortjiajiee  has.  in  effej-t,  hut  a  ihattel  iiitpro>;t,  and  that 
it  poes  to  the  oveeutor,  as  personal  assets,  and  thonjjh.  tof-hnicaily  speaking, 
the  f<'P  descends  to  the  heir,  yet  ho  is  Init  a  trustee  for  the  personal  re|)re- 
-entative-.  and  need  not  he  a  party  to  a  hill  hy  the  exe<'Utor  for  a  fore«Io-.ure, 
Ails  fnlly  shown  and  ahly  illustrated  hy  the  Chief-. lustier  of  Conne«tieut, 
ill  flail,  v.  liravh,  (5  Conn.  142,  and  hy  tin-  Chit-f-.Iu-tiee  of  Maine,  in 
U'i7/.i»i.s  V.  Frvnrh,  20  Maine.  Ill  ;  and  hy  the  Chainidlor  of  New  .Jersey,  in 
Kitinn  v.  Sniilh.  2  (Jreen.  14;  and  tlie-e  pi'iieral  principles  were  not  quo?- 
tiiuied  hv  the  courts. —  Kvtil. 


22  rROPKRTY     SECURITY     FOR     DEBT.  [BOOK  I. 

made  and  executed  with  the  solemnities  required  by  the  statute  of 
frauds.  The  assignment  of  the  debt,  or  forgiving  it,  will  draw  the 
land  after  it,  as  a  consequence,  nay,  it  would  do  it  though  the  debt 
were  forgiven  only  by  parole;  for  the  right  to  the  land  would 
follow,  notwithstanding  the  statute  of  frauds"  (3  Cha.  Kep.  3). 

Upon  this  authority  it  is  said  that  the  mortgagee  has  no  legal 
estate  in  the  land;  that  all  mortgages  are  personal  estate;  and  if 
the  land  is  not  redeemed  nor  redeemable,  the  judge  of  probate  has 
a  right  to  assign  to  the  widow,  where  there  are  children,  a  third, 
and  where  there  are  none,  half  the  land,  to  hold,  not  during  life, 
but  forever,  in  fee.    ... 

In  order  the  better  to  settle  the  authority  of  these  propositions, 
said  to  have  fallen  from  Lord  Mansfield,  it  may  not  be  amiss,  first 
to  consider  the  third  proposition,  viz. :  "  that  the  estate  in  the  land 
is  the  same  thing  as  the  money  due  upon  it;"  as  it  may  serve 
to  illustrate  the  rest,  and  show  what  is  intended  to  be  implied  in 
some  or  all  of  them. 

If  the  mortgagee's  estate  in  the  land  is  the  same  thing  as  the 
money  due  upon  it,  then  the  money  due  upon  the  land  is  the  mort- 
gagee's estate  in  it ;  and  consequently  there  is  no  difference  between 
the  mortgage  of  land  for  a  term  only,  and  a  mortgage  of  it  in  fee, 
if  it  be  for  the  same  sum;  the  money,  which  is  the  estate  in  the 
land,  being  exactly  the  same  in  both  cases;  and  the  mortgagee  in 
fee  has  no  other  nor  greater  estate  in  the  land  than  the  mortgagee 
of  a  term  only  hath.  This  proposition,  if  true,  when  taken  accord- 
ing to  the  words  of  it,  Avithout  restriction  or  limitation,  at  once 
destroys  the  distinction  between  the  vadium  vivum  and  the  vadium 
mortuum.  It  renders  idle  the  invention  and  substitution  of  mort- 
gages for  a  term  instead  of  mortgages  in  fee,  and  tends  to  prove 
that  tlie  mortgagee  has  no  estate,  according  to  the  legal  sense  of 
words,  in  tlie  land.  But  surely  Lord  Mansfield  did  not  so  under- 
stand tlie  proposition ;  for  in  that  which  immediately  precedes  it, 
he  plainly  distinguishes  between  the  money  and  the  estate  in  the 
land,  and  so  he  doth  in  those  which  follow.  In  the  same  case  he 
just  Ijeforc  says,  that  if  it  appeared  that  the  testator  really  meant 
and  intended  to  devise  the  close  as  land,  it  would  be  a  devise  of  the 
land,  the  mortgage  being  forfeited  by  law,  and  the  estate  in  the 
laud  having  become  absolute.  What,  was  the  money  become  abso- 
hitc?  Xo,  surely.  His  lordshi])  meant,  that  the  conditional  fee 
simple  which  the  mortgagee  had  in  the  close  by  the  non-payment 
of  the  money  by  the  day,  had  become  an  absolute  fee  simple  in  law; 
so  that  he  might  devise  the  land  to  his  son  and  daughter  in  fee  tail ; 
and  if  that  was  his  intent  in  the  will,  the  close  would  pass  accord- 
ingly, iv<  an  estate  of  inheritance  in  fee  tail  so  long  as  it  continued, 
which  would  be  until  it  was  redeemed,  or  the  estate  tail  was  spent. 


„()(iK    l]  Till-:     fOM.MoN      LAW      M<  tl£l(iAGE,  23 

iij,'ret'ubly  to  what  Lord  Kci|Mr  \Vii;,dit  .-iiid  in  dill).  K<|.  Ca.  •^.  in 
the  t-asu  of  a  mort^'agt'  in  U.v. 

The  inoiicy  due  on  the  mortgage  couiil  not,  hy  Lord  Miinsfield, 
1)(>  consiih'red  as  the  estate  in  the  hind,  ho  as  to  make  the  money 
real  estate,  nor  the  estate  in  the  lanil  money,  so  as  to  make  an 
estate  in  fee  in  hind  or  the  hind  itself  personal  estate.  Ilis  lordshij) 
douI)tless  well  knew  there  was  a  dilTercncc  between  a  mortgage  of 
land  for  a  term  only  and  a  mortgage  in  fee:  That  the  former  was 
hut  a  chattel  and  the  latter  an  estate  of  inheritance;  that  the  for- 
mer, uidess  dependent  upon  the  inheritance,  was  legal  assets,  and 
the  latter  (•(jititable  assets  only;  that  the  former  went  directly  t() 
the  executor,  &e.,  but  the  latter  descended  to  the  heir,  and  the 
executor  could  n(»t  have  the  land  without  the  aid  of  the  Court  of 
Chani-ery.  And  yet  the  several  projHisitions,  as  tlu-y  stand,  con- 
found mortgages  for  a  term  and  mortgages  in  fee  together;  as 
ihougli  there  was  no  difference  between  them,  which  is  not  rea- 
sonable to  supjiose  Lord  Mansfield  ever  did  ;  and,  therefore,  it  must 
he  su])i)osed  the  reporter  did  not  take  down  the  restrictions,  with 
which  his  lordship  (pialified  his  propositions,  and  left  them  to  he 
implied  hy  the  reader.    .    .    . 

For  if  the  mortgagor  in  fee  shall,  after  the  day  of  payment  is 
elapsed,  pay  the  mortgage  money  to  the  mortgagee,  it  doth  not 
revest  the  fee  in  him  in  law,  nor  even  in  equity;  because  the  mort- 
gagee is  deemed  in  such  a  case  by  the  Court  of  Chancery  a  trus- 
tee of  the  mortgagor,  &c.,  until  the  estate  is  reconveyed;  and  so  is 
a  vendor  after  jt  contract  to  convey,  and  the  land,  though  not  con- 
veyed, will  in  cfpiity  pass  by  the  will  of  the  vendee  as  his  land  ('-^ 
Chan.  IJep.  3).  And  surely,  forgiving  the  di'bt  will  not  vest  the 
estate  in  tiic  mortgagor,  nuire  than  payment  of  the  mortgage  money. 
Xay,  where  mortgages  are  devised  to  executors,  upon  payment  of 
the  money  to  them,  the  heir  is  decreed  to  join  in  the  reconvey- 
ance.   .    .    . 

I'pou  the  whole  the  futility  of  the  allegations,  "  that  mortgagt  s 
are  personal  estate,  that  a  mortgagee  has  no  estate  in  the  land, 
and  that  the  land  mortgaged,  even  after  it  has  become  irredeem- 
able, may  be  distributed  by  the  judge  of  ])robate  as  personal  (Es- 
tate." is  evident.     .     .    . 

.\ufhorilies  showing  the  estati-,  both  legal  aiul  e(piitable.  tu  be 
in  the  mortgagee:  ".'  .\tk.  :]yi-\;  2  Cha.  Ca.  !>r  :  1  Cha.  Ca.  '.'S.').' 

'"  If  tlic  r-itale  on  wliiih  a  paiijior  residc.H  is  sulistant  ially  his  pio|)i'i  t  \ . 
tlial  is  sullicicnt  wliatcviT  fmins  of  coiivfyaiifo  tliorc  may  l>i' ;  aiul  ttnitf(in' 
ji  iiit)rt<,'a;,'<>r  in  possrssion  j»aiiis  a  soltlpinont,  hccnusp  the  inort^apro. 
iiol\vilh^la?iiliiiir  1h<'  form,  has  hiif  n  rhallol,  and  (ho  mort<ja^:<'  i-  only 
a  8o<'urily.  It  i^  an  affront  to  ('omnion->.rn^i>  to  say  \ho  niortpajjor  is  not 
th*-  roal  owner."  .  .  .  — I'rr  Lord  MaM>tii-!d.  in  Tin  Kim/  v.  SI.  .l/i'7i,i.7s, 
Douf,'.  (;32    (1781). 


24  PROFERTY    SECUIUTY    POR    DEJiT.  [::ooK  I. 


(d)   The  E'juKahle  Mortgage. 

BURGH  V.  FRAl^CIS. 

Court  of  Chancery,  1673. 

(Rep.  temp.  Finch,  28.) 

Thi^:  bill  was  brought  by  the  executors  of  the  mortgagee  against 
the  lieir  of  the  mortgagor,  to  perfect  a  defective  deed  of  mortgage 
bv  feotl'nient,  without  livery  and  seisin,  and  to  be  relieved  against 
certain  Judgments  confessed  by  the  defendant  Henry  Francis,  and 
bv  Sherrcr  and  his  wife,  by  collusion  to  defeat  the  plaintiffs. 

The  defendants  acknowledge  by  their  answers,  that  they  had  con- 
fessed several  judgments  all  in  one  term,  and  most  of  them  at  the 
same  time,  and  to  several  persons  for  considerable  sums  of  money, 
which  they  set  forth,  but  deny  they  were  since  the  bill  exhibited, 
tho'  they  cannot  tell  when  the  warrants  of  attorney  were  sealed. 

This  cause  being  lieard  by  the  Lord  Keeper  Bridgman,  he  di- 
rected the  matter  to  be  examined  before  a  master,  and  more  par- 
ticularly whether  the  bill  was  a  new  or  an  amended  bill,  and  when 
the  judgments  were  ol^tained,  and  when  the  warrants  of  attorney 
were  dated  and  sealed,  and  whether  the  judgments  were  confessed 
after  tlie  bill,  and  after  notice  of  the  mortgage;  and  after  the  mas- 
ter had  made  his  report,  he  would  give  his  opinion,  &;c.  the  cause 
was  reheard  by  the  Lord  Siiaftsbury',  and  an  accommodation  pro- 
])osed,  which  took  no  effect,  and  being  now  reheard  by  the  Lord 
Kkki'ER  Finch, he  decreed  that  the  plaintiffs  should  be  relieved,  and 
tliat  the  several  judgments  ought  not  to  incumber  the  mortgaged 
premisses,  until  the  mortgage  money  was  all  paid. 

This  decree  was  not  founded  on  the  manner  of  obtaining  these 
judgments,  nor  on  the  special  way  by  which  they  were  endeavored 
to  charge  the  lands,  viz.,  by  pleading  that  the  heir  had  nothing  by 
descent  besides  the  lands  in  mortgage,  nor  upon  the  priority  of  the 
icste  of  the  subpoena,  which  was  before  the  teste  of  the  originals 
ujton  which  the  judgments  were  had,  but  it  was  founded  on  the 
nature  f>f  the  case. 

Fcr  the  del)t  due  upon  this  mortgage  did  originally  charge  the 
land  which  the  debts  by  bond  did  not,  till  they  were  reduced  into 
judgments;  and  altho'  the  mortgage  was  defective  in  point  of 
law  for  want  of  livery,  yet  equity,  which  supplies  that  defect,  did 
ptill  charge  the  land,  and  it  ought  not  to,  be  in  the  power  of  the  heir 


uooK  I.]  8IU  SIM  RON   stkwaict's  t  a.-^i;.  25 

at  law  to  charfjc  it,  hv  aiknowk-d/^Mii^'  jiul^'ments  in  prfjudico  to 
sucli  equity;  the  rather,  beeause  in  this  cause  it  appeared,  that  the 
mortgagor  had  covenanted  for  him  and  his  heirs,  to  make  any  far- 
ther assurance;  so  that  when  the  hind  descends  upon  the  heir 
charged  with  this  mortgage,  he  is  in  nature  of  a  trustee  for  tlie 
mortgagee  till  the  money  is  paid,  und  cannot  incumber  it;  and 
tho'  the  creditors  had  not  any  notice  of  this  mortgage,  yet  they 
shall  be  bound  in  this  case,  because  they  are  not  put  in  a  worse 
condition  than  they  ought  to  be,  viz.,  to  be  postponed  to  the  mort- 
gage; and  it  appeared  in  proof,  that  the  heir  once  offered  to  pay  the 
)uortgage  money,  but  u])on  sight  of  the  defect  of  the  deed  he  rc- 
fuscd>  and  presently  acknowledged  all  those  judgments  on  bonds, 
on  purpose  to  load  the  land  with  incumbrances,  and  in  effect  to  pay 
his  father's  debts  with  the  money  due  on  the  mortgage. 

Wherefore  the  decree  was,  that  the  defi'udant  Henry  Francis, 
who  was  to  be  heir  at  law,  shall  convey  to  the  plaintilTs,  or  to  such 
whom  he  shall  apjioint,  a  sullicient  and  perfect  estate  of  inheritance 
in  the  premisses,  in  such  manner  as  the  master  shall  direct,  subject 
to  bo  redeemed  ujion  the  payjnent  of  the  principal  and  interest  due 
on  the  former  defective  deed,  and  the  said  lands  shall  be  held  as 
mortgaged,  and  be  quietly  enjoyed  against  the  defendants,  and  all 
claiming  under  them  since  the  date  of  the  former  mortgage;  and 
thai  he,  to  whom  the  redeinjition  doth  belong,  may  exhibit  his  Ijill 
in  convenient  time,  or  in  default  thereof  the  plaintilT  may  exhibit 
'i^  bill  to  foreclose. 

-Vnd  a  perpetual  injunction  was  awarded  to  quiet  the  plaintiff's 
possession  against  all  the  said  defendants,  and  to  stay  all  proceed- 
ings at  hiw,  but  no  costs  until  redemption,  or  the  jdaintilT  enforced 
to  exhibit  his  bill  to  foreclose,  and  then  costs  to  be  allo.vcd  a.  in 
such  cases. 


SIi;  SIM  1:0 X  STKWAKT'S  CASE. 

CofKT    or    ('itAXCKKV. 

(2  Sch.  a-  L<f.  nsi.) 

The  late  Sir  Simeon  Stewart  being  embarrassed  in  his  alTairs, 
made  a  conveyance  to  the  late  Lord  Delaware,  Sir  If.  Tiehborne, 
and  others,  in  trust,  for  the  ))ayment  of  his  debts.  Trevious  to 
<xeeuting  that  conveyance,  a  genileman  of  the  name  of  Willis  had 
hc.-n  prevailed  on  by  Sir  Simeon  Stewart  to  lend  him  a  large  sum 
of  money;  and  Sir  Simeon  wrote  him  a  lett(>r.  in  which  he  slated 
that  he  would  make  a  mortgage  lo  him  on  some  part  of  his  ITamp- 
fihirc  estate;    and  the  question  was  whether  that   was  a  contract 


26  l>ROrEl{TY     SECURITY     FOR     DEBT.  [BOOK  I. 

^vllic•h  bound  the  trustees,,  who  were  trustees  for  general  creditors. 
The  creditors  insisted  they  were  purchasers  for  valuable  considera- 
tion, without  notice  of  this  contract.  The  fact  of  notice  could  not 
be  brought  home  to  the  creditors ;  but  it  was  sufficiently  established 
that  the  persons  who  prepared  the  trust  deeds,  and  were  therefore 
the  agents  of  the  creditors  and  the  trustees  in  that  transaction,  had 
full  notice :  and  therefore  the  only  question  was,  whether  this  bound 
the  estate  in  the  hands  of  the  trustees,  as  being  an  equity  affecting 
Sir  Simeon  Stewart,  prior  to  his  conveyance;  for  if  it  bound  him, 
the  consequence  would  be  that  it  bound  his  trustees,  under  the  cir- 
cumstances of  that  deed.  The  Court  did  determine  that  the  letter 
was  sufficient  to  bind  him. — Per  Eedesdale,  L.  Ch.,  in  Card  v.  Jaf- 
fray,  2  Sch.  &  Lef.  374  (1805). 


PoMEROY,  Equity  Jurisp.,  §  368.  The  full  significance  of  the 
principle  that  equity  regards  and  treats  as  done  what  ought  to  be 
done  throughout  the  whole  scope  of  its  effects  upon  equity  juris- 
prudence is  disclosed  in  the  clearest  light  by  the  manner  in  which 
equity  deals  with  executory  contracts  for  the  sale  of  land  or  chat- 
tels, which  presents  such  a  striking  and  complete  contrast  with  the 
legal  method  above  described.  While  the  legal  relations  between 
the  two  contracting  parties  are  wholly  personal — things  in  action — 
equity  views  all  these  relations  from  a  very  different  standpoint. 
In  some  respects  and  for  some  purposes,  the  contract  is  executory 
in  equity  as  well  as  at  law ;  but  so  far  as  the  interest  or  estate  in 
the  land  of  the  two  parties  is  concerned,  it  is  regarded  as  executed 
and  as  operating  to  transfer  the  estate  from  the  vendor  and  to  vest 
it  in  the  vendee.  By  the  terms  of  the  contract  the  land  ought  to 
be  conveyed  to  the  vendee,  and  the  purchase  price  ought  to  be  trans- 
ferred to  the  vendor;  equity  therefore  regards  these  as  done:  the 
vendee  as  having  acquired  the  property  in  the  land,  and  the  vendor 
as  having  acquired  the  property  in  the  price.  The  vendee  is  looked 
upon  and  treated  as  the  oivner  of  the  land;  an  equitable  estate  has 
vested  in  him,  commensurate  with  that  provided  for  by  the  con- 
tract, whetlier  in  fee,  for  life  or  for  years;  although  the  vendor 
remains  owner  of  the  legal  estate,  he  holds  it  as  a  trustee  for  the 
vendee,  to  wliom  all  the  beneficial  interest  has  passed,  having  a  lien 
on  the  land,  even  if  in  possession  of  the  vendee,  as  security  for 
any  nnjiaid  portion  of  the  purchase  money.  The  consequences  of 
lliis  doctrine  are  all  followed  out.  As  the  vendee  has  acquired  the 
full  equitable  estate— though  still  wanting  the  confirmation  of  the 
legal  title  for  purposes  of  security  against  third  persons— he  may 


i;o;k  I.]  Tin:    KiillTAHLi:    MORTOAOK.  2 1 

convey  or  (.■luiiinlxT  it;  may  devise  it  by  will;  on  liis  death,  in- 
testate, it  dt'seends  to  his  heirs  and  n<»t.  to  his  administrators;  in 
this  country  iiis  wife  is  entitled  to  (h)\ver  in  it;  a  specific  per- 
formance is,  after  liis  death,  enforced  l)y  liis  lieirs;  in  short,  all  tin; 
incidents  of  a  real  ownership  belong  tf)  it.    .    .    . 

Id.  8  1335.  The  doctrine  may  be  stated  in  its  most  general 
form,  that  every  express  executory  agreement  in  writing,  whereby 
the  contracting  jiarly  sulliciently  indicates  an  intention  to  makt; 
Bome  particular  property,  real  or  personal,  or  fund  therein  de- 
scribed or  identified,  a  security  for  a  debt  or  other  obligation,  or 
whereby  the  party  promises  to  convey  or  assign  or  transfer  the 
property  as  security,  creates  an  equitable  lien  upon  the  proj)erly  >o 
indicated,  which  is  enforceable  against  the  property  in  the  hands 
not  only  of  the  original  contractor,  but  of  his  heirs,  administrators, 
executor?,  voluntary  assignees,  and  purchasers  or  encumbrancers 
with  notice.  Under  like  circumstances,  a  merely  verbal  agreement 
may  create  a  similar  lien  upon  personal  property.  The  ultimate 
grounds  and  motives  of  this  doctrine  are  exj)lained  in  the  preceding 
section;  but  the  doctrine  it.self  is  clearly  an  application  of  tht; 
maxim,  equity  regards  as  done  that  which  ought  to  be  done.'     .    .    . 

'  "  The  doctrine  secni.s  to  be  well  established  that  an  aj^reenu-nt  in  writing' 
to  give  a  mortfrage,  or  a  mortgage  defectively  executed,  or  an  imperfect, 
attempt  to  create  a  mortgage,  or  to  appropriate  specific  property  to  the 
discharge  of  a  particular  debt,  will  create  a  mortgage  in  equity,  or  a 
specific  lien  on  the  property  so  intended  to  be  mortgaged  (1  Am.  Lead. 
Cas.  in  Kq.  510:  Howe's  Case,  1  Paige.  125).  The  maxim  of  equity  xipnn 
which  this  doctrine  rests  is,  that  equity  looks  upon  things  agreed  to  be  done 
as  actually  i>erformed  :  the  true  meaning  of  which  is  that  equity  will  treat 
the  subject-matter  as  to  collateral  consequences  and  incidents  in  the  same 
manner  as  if  the  final  acts  contemplated  by  the  parties  had  been  executed 
exactly  as  they  ought  to  have  been  (Story.  K<\.  .lur..  sees.  (14  and  7!>0:  Will. 
Kq.  Jur.  289,  299)."— /Vr  Curry,  Ch.  J.,  in  Daggett  v.  liaiikin,  31  Cal.  321 
(1866). 


BOOK  II; 

ESSENTIAL  ELEMENTS  OF  MORTGAGE. 


CHAPTER    I. 

CONVEYANCE. 

Sectiox  I. — Mortgage,  Pledge  axd  Lien. 

RATCLIFF  V.  DAYIES. 
King's  Bench,  1010.    • 
{Cro.  Jac.  214.) 

Action  of  Trover  and  Conversion  of  an  hatband  set  xi'ltli  pearls 
and  diamonds;  upon  not  guilty  pleaded,  a  special  verdict  was 
found,  that  the  plaintiff  was  possessed  thereof,  and  pawned  it  to 
John  Whitlock  for  £25,  but  no  certain  time  appointed  for  the  re- 
demption thereof;  that  Whitlock  being  sick,  his  wife  in  presence, 
and  with  his  assent,  delivered  it  to  the  defendant,  and  afterward 
lie  made  his  said  wife  his  executrix,  and  died,  who  proved  the  will; 
that  the  plaintiff  tendered  to  the  said  executrix  the  said  £25,  who 
refused,  and  afterward  demanded  the  hatband  of  the  defendant, 
who  refused  to  deliver  it;  but  converted  it  to  his  own  use:  where- 
upon, (S:c.     And  in  this  case  three  points  were  moved : 

First,  there  being  no  time  appointed  for  the  redemption,  whether 
it  may  be  made  after  the  death  of  him  to  whom  it  was  pawned,  or 
ought  to  be  in  the  lives  of  both  the  parties,  and  all  the  justices  re- 
solved, it  may  be  well  made  after  the  death  of  him  to  whom  it  was 
plodged,  but  not  after  the  death  of  him  who  pledged  it.  Yelverton 
iiud  T'roke  doul)ted,  and  held, .that  it  could  not;  for  he  at  his  peril 
ought  to  redeem  it  in  his  time,  as  it  is  upon  a  mortgage;    but 


SKC.   I.] 


I  KAN  KLIN     r.    NKATK.  29 


I'LKMiMi  iiiul  llu!  others  a^Min.-l  it  :  for  i>lcil;,'in.Lr  «lotli  not  iiiak"-  an 
al^;olutL'  i)roiH'rty,  but  it  is  a  ddiviTv  only  until  lie  pays,  &(;.,  so  it  is 
a  debt  unto  the  one,  and  a  n-taincr  of  the  thing  unto  the  other:  fop 
which  there  may  be  a  rc-dcniaiid  at  any  tinio  upon  the  payment  <tf 
the  money.  For  the  pled;;e  delivered  is  but  a  security  for  liis 
money  lent,  so  as  he  who  borrows  the  money  Is  to  have  a;;ain  his 
pledge  when  he  repays  it,  and  his  tender  gives  him  interest  therein; 
and  there  is  dilVerenee  between  mortgage  of  land  and  pledging  of 
goods;  for  the  mortgagee  hath  an  absolute  interest  in  the  land,  but 
the  other  hath  but  a  speeial  ])n)perly  in  the  goods,  to  detain  them 
for  his  eeeurity  (o  If  en.  VII.,  l;'o  Ed.  IV.,  25;  'M\  Ed.  III. 
Bar.,  188). 

Secondly,  it  was  resolved,  that  by  this  delivery  of  the  .-aid  goods 
by  the  feme,  with  the  assent  of  her  baron,  to  the  defendant,  there 
]tassed  no  interest  of  them  to  the  defendant,  but  (as  it  were)  a 
custody  only:  and  therefore  the  tender  of  the  redeniption  ought  to 
be  made  to  the  cxecutri.x,  and  not  to  the  defendant. 

Thirdly,  that  when  he  tendered  the  money  to  the  e.vecutrix,  and 
she  refused,  it  was  as  good  as  payment ;  and  tiie  especial  projierty 
of  the  goods  is  revested  in  the  plaintiff:  then,  when  he  demanded 
tiiem  of  the  defendant  and  he  refused  to  deliver  them,  but  con- 
verted them  to  liis  own  use,  a  trover  and  conversion  well  lies,  al- 
though he  came  unto  them  by  a  lawful  delivery,  and  not  by  trover. 
Wherefore  it  was  adjudged  for  the  ])laintiir. 


FijANKMN'  V.  .\i:A'ri:. 

COLKT  OF   lOxc I IKcilKlJ.   1811. 

(i;?  M.  a-  ir.  im.) 

This  was  an  action  of  trover  for  a  ehronomeier ;  to  whiih  the  de- 
fendant pleaded,  first,  not  guilty;  secondly,  that  the  plaintiff  was 
not  possessed  of  the  chattel. 

At  the  trial,  before  Parke,  B.,  at  the  Middlesex  sittings  in  la-t 
Trinity  Term,  it  a|)peared  that  the  chronometer  for  which  the  ac- 
tion was  brought  had  Iteeii  i)ledged,  by  a  person  named  (Jilbi-rt.  to 
the  defi'udant,  a  pawid»roker,  under  a  written  agreement  that  it  was 
deposited  as  a  collateral  security  for  the  sum  of  £15,  and  interest  ; 
and  that,  in  ease  Ciilbert  should  not  redeem  it  before  twelve  month-:, 
the  defendant  should  be  authorized  to  sell  it,  and  repay  himself 
))rineipal  and  interest.  The  ]ilaintifT  afterward  bought  the  chro- 
nometer from  (Gilbert,  whilst  it  was  in  the  defen<lanr«-  hands,  after 
the  expiration  of  the  year:    h'*  then  tenderecl  to  thi*  d<>fendant  the 


r 


30  CONVEYANCE.  [CHAP.  I, 

amount  due,  and  demanded  possession  of  it,  and  on  the  defendant's 
refusing  to  deliver  it.  brought  the  present  action.  It  was  contended 
for  the  defendant,  that  no  property  passed  to  the  plaintiff  by  the 
sale ;  that  it  was  merely  an  assignment  of  a  right  of  action,  with  an 
equity  of  redemption  ;  and  the  learned  Judge,  being  of  that  opinion, 
directed  the  jury  to  find  their  verdict  in  favor  of  the  defendant; 
giving  leave  to  the  plaintiff  to  move  to  enter  a  verdict  for  him  for 
the  sum  of  £19  10s.  Humfrey  having,  in  the  early  part  of  this 
term,  obtained  a  rule  accordingly, 

Petersdorff  showed  cause  (ISTov.  14). — The  question  here  is, 
whether  the  assignee  of  the  right  of  a  pawnor  to  redeem  an  article 
pledged  can  maintain  an  action  of  trover  against  the  party  with 
whom  it  is  pledged,  he  having  refused  to  deliver  it  up.  Now,  that 
depends  upon  the  contract  made  between  the  parties.  The  pawnee 
agrees  to  deliver  the  article  to  the  party  pledging  it,  but  he  does  not 
undertake  to  deliver  it  to  his  assignee.  The  only  right  that  the 
pawnor  could  give  to  the  buyer  was  a  right  to  claim  restitution  of 
tlie  article  jjledgcd.  The  pawnor  retained  nothing  more  than  a 
mere  right  of  action.  Suppose  an  injury  had  happened  to  the 
chronometer,  could  the  assignee  have  sued  the  defendant  ?  Or  sup- 
pose the  property  pawned  consisted  of  twenty  different  articles, 
could  the  pawnor,  by  selling  them  separately  to  twenty  different  per- 
sons, give  each  of  them  a  right  of  action  against  the  defendant? 
It  is  submitted  he  clearly  could  not.  In  Story  on  Bailments,  p. 
377,  pi.  350,  it  is  said,  "  Subject  to  the  rights  of  the  pledgee,  the 
owner  has  a  right  to  sell  or  assign  his  property  in  the  pawn ;  and  in 
such  a  case  the  vendee  will  be  substituted  for  the  pledger,  and  the 
pledgee  will  be  bound  to  redeem,  and  to  account  to  him  for  the 
pledge  and  its  proceeds.  If  he  refuses,  an  action  at  law  will  lie  for 
damages,  as  well  as  a  bill  in  equity  to  compel  a  redemption  and  ac- 
count." But  it  is  not  there  said  that  an  action  of  trover  will  lie. 
In  nich  V.  Aldred,  G  Mod.  21G,  which  was  an  action  of  detinue  for 
Oliver  Cromwell's  picture,  it  was  ruled  by  Lord  Holt,  C.  J.,  at  Nisi 
Priui3,  that  "  if  A.  bail  goods  to  C.  and  after  give  his  whole  right  in 
them  to  B.,  B.  cannot  maintain  detinue  for  them  against  C,  because 
the  .special  property  that  C.  acquires  by  the  bailments  is  not  thereby 
transferred  to  B."— He  also  referred  to  Eyall  v.  BoUe,  1  Atk.  167; 
Kemp  V.  We^tlrrool',  1  Yes.  sen.  278;  Beeves  v.  Capper.  5  Bing. 
N.  V.  1 :5n ;  0  Scott,  877 ;  Legy  v.  Evans,  6  M.  &  W.  3G ;  Clarle  v. 
Gilhert,  2  Bing.  N.  0.  313;  2  Scott,  520,  and  Com.  Dig.  tit. 
"  ^rortgage,"  B. 

Ilumfrey  (Crouch  with  him)  in  support  of  the  rule.  The 
pawnor  retained  a  special  projjcrty  in  the  thing  pawned,  which  he 
was  fapablc  of  transferring  to  the  plaintiff.  The  law  as  to  pawns 
is  derived  from  tlu"  civil  law;  and  in  Story  on  Bailments,  pi.  307,  it 


HEC.  1.] 


FRANKLIN'     V.     NEATE.  31 


is  said,  "  In  tho  Roman  law  it  shoul.l  sicni  tliat  the  pledgee  lias  n..t 
liroiKTty  in  the  thin^',  but  lu'  luis  a  mere  right  of  detention  or  re- 
tainer. ri(jnus,  manrnte  proprietate  dehiloris,  solum  possrssionem 
Iransfcrl  ad  creditorcm  :  or,  as  we  shouhl  say,  the  pawnee  has  a  mere 
lien,  and  no  property."  In  Ri/nll  v.  liolle,  Burnet,  J.,  says,  "  The 
ilistinetion  between  mortgages  and  pawns  is  laid  down  in  Noy,  137, 
and  in  Cro.  Jae.  245.  There  is  a  dilTcTenee  between  mortgaging  of 
lands  and  pledging  of  goods;  for  the  mortgagee  has  an  absolute  in- 
terest in  the  land,  whereas  the  other  has  but  a  special  property  in 
the  goods,  to  retain  them  for  his  security."  The  passage  cited  on  the 
other  side  from  Story  on  Bailments,  pi.  350,  that  "subject  to  the 
rights  of  the  pledgee,  the  owner  has  a  right  to  sell  or  assign  his  prop- 
erty in  the  pawn,"  is  clearly  in  the  plaintiff's  favor;  for,  if  the 
pawnor  may  sell  the  property  pawned,  all  the  consequences  of  the 
.-ale  attach  to  the  purchaser,  and  he  may  ])ring  trover  for  a  conver- 
sion of  the  chattel ;  for,  by  the  sale  of  a  chattel,  the  interest  in  it  is 
transferred  without  delivery.  It  is  a  perfect  fallacy  to  say  that  this 
was  a  mere  assignment  of  a  chose  in  action. 

Cur.  adv.  viilt. 

The  judgment  of  the  Court  was  delivered  on  the  10th  of  De- 
cember by 

RoLFE,  B.  This  was  an  action  of  trover  for  a  chronometer.  It 
appeared  on  the  trial  that  the  chronometer  in  question  had  been 
pawned  by  the  owner  witli  the  defendant,  and  at  the  time  of  the 
jiawn,  the  owner  delivered  to  the  defendant  a  written  paper,  au- 
thorizing him  to  sell  if  the  chronometer  was  not  redeemed  within 
a  year.  The  owner  afterward  sold  it  to  the  jilaintilT,  su1)ject  to 
the  defendant's  right  as  pawnee.  The  plaintilT,  then,  after  the 
vear  had  expired,  tendered  to  the  defendant  the  amount  due  on  the 
pawn,  but  the  defendant  denied  the  plaintiff's  right  to  redeem,  and 
refused  to  deliver  up  the  chronometer,  and,  therefore,  the  plain- 
lilT  brought  this  action.  On  this  state  of  facts,  the  verdict  on  the 
issue  on  the  plea  denying  the  plaintiff's  pos.se.ssion,  was  by  the 
direction  of  my  brother  Parke,  who  tried  the  cause,  taken  for  the 
defendant,  with  liberty,  nevertheless,  for  the  plaintiff  to  move  t<> 
enter  a  verdict  for  him,  with  CI!)  10s.  damages,  in  case  the  Court 
should  be  of  opinion  that  he  had  |)roved  the  issue.  The  learned 
Judge  was  inclini'd  to  think  that  this  was  not  the  case  of  a  simjil'' 
])awn,  but  that  the  terms  on  which  the  chronometer  was  picdgrd 
were  such  as  to  give  the  defendant  something  more  than  the  right 
<if  a  pawnee,  and  operated  as  a  mortgage.  If  he  was  a  mortgagee. 
an«l  the  nb.<olut(^  property  was  transferred  to  him,  (^'feasible  upon 
repavmont  of  the  money  advanced,  tiie  a.ssignee  of  the  right  of  re- 
d»>mption,  which  only  renuiined  in  the  original  owner,  eouhl  have 


33  COXYEYAXCE.  [CHAP.  I, 

maintained  no  action  of  trover  after  tendering  the  money:  but, 
considering  the  terms  of  the  instrument  which  accompanied  the 
deposit,  we  all  agree  in  thinking,  that,  though  they  gave  more  than 
the  ordinary  right  of  a  pawnee,  viz.,  the  right  to  sell,  which,  being 
part  of  the  security  for  the  advance,  was  irrevocable  by  the  pledgor 
or  liis  assignee,  they  did  not  constitute  a  mortgage  or  transfer  of 
the  entire  legal  property  in  the  chattel  itself.  The  case,  therefore, 
stands  on  the  same  footing,  as  far  as  relates  to  the  right  of  the 
pawnor,  with  an  ordinary  pledge. 

A  rule  nisi  having  been  granted,  pursuant  to  the  leave  reserved. 
Mr.  Petersdorlf,  for  the  defendant,  showed  cause,  and  contended 
that  the  verdict  w^as  right,  on  the  ground  that  a  pawnor  cannot 
transfer  to  another  such  a  right  of  possession  as  enables  him  to 
bring  an  action  of  trover.  There  is  very  little  to  be  found  in  the 
books  on  the  subject  of  the  right  of  a  pawnor  over  the  chattel 
pawned;  but  this  is  very  clear,  that,  notwithstanding  the  pawn, 
the  pawnor  still  retains  a  qualified  property;  and,  in  the  absence  of 
direct  authority  on  the  point,  this  seems  to  us  decisive  in  favor  of 
his  right  to  sell,  and  by  the  sale  to  transfer  to  the  purchaser  liis 
qualified  property  in  the  goods  pawned,  together  with  all  the  riglits 
incident  thereto.  The  case  was  argued  for  the  defendant,  as  if 
wluit  this  pawnor  transferred,  or  sought  to  transfer,  Avas  a  mere 
riglit  of  action.  But  this  is  not  so;  he  transfers  the  property  in 
tlie  chattel,  qualified,  indeed,  by  the  right  existing  in  the  pawnee, 
but  still  a  right  of  property,  and  the  right  of  action  afterward* 
exists  in  the  purchaser,  not  in  consequence  of  its  having  been  trans- 
ferred to  liim  by  the  original  paA\Tior,  but  by  reason  of  the  pawnee 
having  wrongfully  converted  to  his  own  use  that  which  by  the  sale 
became  the  property  of  the  purchaser. 

We  do  not  feel  at  all  pressed  by  the  argument  ah  iiiconvcnioiti. 
urged  by  Mr.  Petersdorff.  "  If  several  chattels,"  he  asked,  "  should 
be  pawned  for  one  sum,  could  separate  sales  be  made  of  each  to 
different  purchasers?"  "We  answer,  undoubtedly  they  may;  the 
])awnce  will,  of  course,  not  be  bound  to  part  with  any  of  the  chat- 
tels until  his  whole  debt  is  paid;  but,  subject  to  the  claim  of  the 
pawnee,  the  pawnor  has  the  same  right  over  each  chattel  r.epa- 
rafcly  which  lie  had  before  the  pawn  was  made.  Again,  it  is  said, 
t^uppose  the  chattel  is  injured  by  default  of  the  pawnee,  while  in 
his  custody,  who  was  to  sue  the  pawnee,  the  original  pawnor  or  the 
purchaser?  The  answer  is  obvious.  The  person  with  whom  iho 
contract  is  made,  that  is,  the  original  depositor,  is  the  proper  plain- 
lifF,  if  the  action  be  for  a  breach  of  contract  express  or  implied,  un- 
less a  new  one  be  made  with  the  purchaser;  the  owner  for  the  time 
being  is  the  proper  plaintiff,  if  the  injury  be  by  the  destruction 
or  conversion  of  the  chattel;  just  as,  in  the  case  of  a  carrier,  the 


SKC.  1.]  I-ltANKI.IN'     r.     NKATi:.  33 

original  eiuplovcr  is  the  jmi-sou  to  sue  for  llif  loss  for  iK-gligont 
carriage,  or  other  breaeli  of  contraet — tlie  otlur  -ulisiMjiicnt  pur- 
cliaser  for  the  conversion  after  the  purchase. 

That  in  ordinary  cases  of  bailment,  not  by  way  of  i)a\vn.  th"' 
bailor  niav  sell,  is  a  proposition  ailrnitting  of  no  di^ibt  ;  iiulced,  it 
is  assumed  to  be  hiw  by  Lord  Holt,  in  one  of  the  cases  relied  on 
by  Mr.  PetersdoriT  {liick  v.  Aldrcil,  G  Mod.  'l\^\),  where  he  says: 
"If  A.  bails  goods  to  C,  and  after  gives  his  whole  right  in  them  to 
1?.,  B.  cannot  maintain  detinue  for  them  against  C.  because  the 
special  propt-rty  that  C.  ac<iuires  by  the  bailment  was  not  thereby 
transferred  to  Ji. ;"'  and  there  does  not  seem  to  be  any  solid  ground 
of  distinction,  in  this  respect,  between  a  bailment  by  way  of  ])awn 
and  any  other  bailment. 

With  so  little  then  of  direct  authority,  we  must  act  on  the  gen- 
eral princii)le,  that  a  jtawnor,  like  every  other  bailor,  retains  his 
ju-operty  in  the  goods  pawned,  subject  only  to  the  rpialified  prop- 
erty transferred  to  the  pawnee ;  that  as  an  incident  to  such  prop- 
erty, he  has  the  right  of  sale,  and  that  after  the  sale  the  purchaser 
has  the  same  interest  in  the  chattel  which  the  pawnor  had.  The 
rule  must,  therefore,  be  ma<le  absolute.* 

'  "  It  appears  to  mo  tliat  con-idoraldo  <oiifu>ion  has  been  introduoeil 
into  this  subject  l)y  tlie  sonu-wliat  indiscriiniiiate  use  of  the  words  '  special 
property.'  as  alike  aiipliial)h'  to  the  ri;;ht  of  personal  retention  in  ease  of 
a  lien  and  tlic  actual  interest  in  the  goods  crerted  by  contract  of  pledge 
to  secure  the  payment  of  money.  In  Lt^oP  ^'^  ^> '""■'».  C  M.  &  W.  42,  the 
nature  of  a  lien  is  defined  to  be  a  '  personal  right  whidi  cannot  be  parted 
with:  '  iiut  '  the  contract  of  |>lcdge  carries  an  implication  that  the  security 
'-hail  be  made  elTectual  to  dischaige  the  obligation.'  Story  on  Bailments, 
§  311.  In  each  ca-^e  the  {icmrtil  pKjpnIii  nnniiiis  in  the  pninior:  but  tlie 
question  is  as  to  the  nature  and  extent  of  the  interest,  or  special  property, 
passing  to  the  bailee,  in  the  two  cases.  Mr.  .Justice  Story,  in  his  treatise 
on  Hailments,  §  ,324,  thus  describes  the  riglit  and  interest  of  the  pawnee: 
'  He  may  by  the  common  law  deliver  over  the  pawn  into  the  hands  of 
a  stranger  for  safe  custody,  without  consideration,  or  he  may  sell  or 
assign  all  his  interest  in  the  pawn,  or  he  may  convey  the  same  interest, 
conditionally,  by  way  of  ])a\vn  to  another  jjcrson,  witlwnit  in  either  ca>i» 
destroying  or  invalidating  his  security;  biit  if  the  pawnee  should  under- 
take to  j)ledge  the  prrtpcrty  (not  being  negotiable  securities)  for  a  debt 
beyond  his  own,  or  to  make  a  transfer  thereof  to  liis  own  creditor  as  if  he 
were  the  abscdute  owner,  it  is  clear  that  in  such  a  case  he  would  be  gtiilty 
of  a  breach  of  trust,  and  his  cretlitor  would  actpiire  no  title  beyon<l  that 
held  by  the  pawnee.  The  only  (pu>st  ion  i-*.  whether  the  creditor  should 
be  entitled  to  retain  the  pledge  until  the  original  debt  was  diM-hargcd.  or 
whether  the  owner  might  recover  the  plcilge  ijt  the  same  nninner  as  in  the 
rase  of  a  naked  tort,  without  any  (jualilicd  right  in  the  lirst  pawnee."    .    .    . 

"  There  would  therefore  appear  to  be  s(mie  real  dilTerence  in  the  incidents 

between  a   simple  lien,  like  tliat    in   l.ri/fi  v.  Hrnns,  (I  M.  &  W.  ,3(5,  and  tho 

lien  of  a  broker  or  factor  l)efore  the  Factor's  Act,  and  the  case  of  n  deposit 

by  way  of  pledge  to  secure  the  repayment   of  money,   which   latter  more 

3 


5^4  CONVEYANCE.  [chap.  I. 


BROWN  V.  BEMENT. 

Supreme  Court  of  New  York,  1811. 
(8  Johns.  75.) 

This  was  an  action  of  trover,  for  three  horses  and  a  chair.  The 
<ause  was  tried  at  the  Cohimbia  Circuit,  in  September,  1810,  be- 
fore Mr.  Justice  Thompson. 

Tlie  phiintiff  proved  that  he  was  possessed  of  the  horses  and 
ihair,  and  that,  afterward,  on  the  26th  of  April,  1810,  he  tendered 
the  sum  of  283  dollars  and  5  cents  to  Bement,  one  of  the  defend- 
jints,  and  demanded  the  horses  and  chair,  who  refused  to  deliver 
ilicm,  and  referred  the  plaintiff  to  Strong,  the  other  defendant. 
The  plaintiff  on  the  next  day,  made  a  tender  of  the  same  sum  to 
Strong,  and  demanded  the  property,  but  Strong  refused,  saying 
tlie  horses  and  chair  were  in  possession  of  Bement.  The  defend- 
ants then  produced  in  evidence  an  absolute  bill  of  sale  of  the  horses 
and  chair  to  the  defendants,  under  the  hand  and  seal  of  the  plain- 
tiff, dated  27th  October,  1809,  for  the  consideration  of  210  dollars 

iieiuly  resembles  an  ordinary  mortgage,  except  that  the  pawnor  retains 
tlie  general  property  in  the  goods  pledged  which  the  mortgagor  does  not 
ill  the  ease  of  an  ordinary  mortgage.  Notes  to  Coggs  v.  Bernard,  1  Smith's 
L.  C.  194  (5th  ed.).  A  lien,  as  we  have  seen,  gives  only  a  personal 
right  to  retain  possession.  A  factor's  or  broker's  lien  was  apparently 
nt tended  with  the  additional  incident  that  to  the  extent  of  his  lien  he 
might  transfer  even  the  possession  of  the  subject-matter  of  the  lien  to 
a  tliird  person,  'appointing  him  as  his  servant  to  keep  possession  for 
liim.'  In  a  contract  of  pledge  for  securing  the  payment  of  money,  we 
have  seen  that  the  pawnee  may  sell  and  transfer  the  thing  pledged  on 
"ondition  broken;  but  what  implied  condition  is  there  that  the  pledgee 
>hall  not  in  the  meantime  part  with  the  possession  thereof  to  the  extent 
of  his  interest?  It  may  be  that  upon  a  deposit  by  way  of  pledge  the 
••xpress  contract  between  the  parties  may  operate  so  as  to  make  a  parting 
with  the  possession,  even  to  the  extent  of  his  interest,  before  condition 
broken,  so  essential  a  violation  of  it  as  to  revest  the  right  of  possession 
in  the  pawnor;  but  in  the  absence  of  such  terms,  why  are  they  to  be 
implied?  There  may  possibly  be  cases  in  which  the  very  nature  of  the 
tiling  deposited  might  induce  a  jury  to  believe  and  find  that  it  was  depos- 
ited on  the  understanding  that  the  possession  should  not  be  parted  with; 
but  in  the  cai^e  before  us  we  have  only  to  deal  with  the  agreement  which 
i-<  stated  in  the  plea.  The  object  of  the  deposit  is  to  secure  the  repayment 
of  a  loan,  and  the  efTect  is  to  create  an  interest  and  a  right  of  property  in 
llip  pawnee,  to  the  extent  of  the  loan,  in  the  goods  deposited;  but  what 
i-<  the  authority  for  saying  that  until  condition  broken  the  pawnee  has 
only  a  personal  right  to  retain  the  goods  in  his  own  possession?  " — Per 
■\fellor,  J.,  in  Donald  v.  Suckling,  1  Q.  B.  .^85    (1866). 


t,K<:.  1.]  llliOUN      c.      HKMKVT.  35 

iunl  ;)5  cents.  Aiul  [\w  plnintilT  ^mvo  in  i-vidonev  a  wrilin/?  bearing 
the  same  date,  executed  by  tlie  defendants,  by  which  they  stipuhitcd, 
on  tlie  payment  of  210  dolhirs  and  ']'>  cents  to  them,  by  the  plain- 
tiff, in  14  days  from  the  date,  to  deliver  to  the  plaintifT  the  horses 
and  the  chair;  but  if  the  property  was  lost  in  llie  meantime,  they 
were  not  to  be  responsible;  nor  for  any  expenses  attending  the 
property  during  the  time. 

It  was  proved,  that  before  the  commencement  of  the  suit,  IJement 
bad  told  the  i)laintilT  he  was  willing  to  return  the  projjcrty  which 
rcmaini'd,  l)ut  that  one  of  the  horses  had  \)oon  sold.  The  plaintifT 
answered,  that  if  they  could  agree  as  to  tjie  price  of  the  horse  sold, 
that  would  create  no  dilficulty.  A  verdict  was  found  for  the  plain- 
tiff, by  consent,  sul)je(t  to  the  opinion  of  the  Court;  and  it  was 
agreed  that  if  tlie  ])laintifT  was  entitled  to  recover  the  whole?  prop- 
erty, the  verdict  should  be  entered  for  438  dollars;  but  if  for  the 
one  horse  only  which  had  been  sold,  then  the  verdict  was  to  be  for 
85  dollars;  and  if  the  Court  should  be  of  opinion  that  the  plaintifT 
was  not  entitled  to  recover  at  all,  then  a  judgment  of  non-suit  was 
to  be  entered. 

Three  points  were  raised  for  the  consideration  of  the  Court: 

1.  That  the  writing  given  by  the  defendants  to  the  plaintifT 
made  the  property  a  pledge,  redeemable  at  any  time. 

'?.  That  on  tender  of  the  money,  the  plaintiff's  right  of  action 
was  eomplete. 

'^.  That  the  ])laimitT  was  entitled,  at  least,  to  recover  the  value 
of  the  horse  sold. 

Pir  Curiam.  The  plaintilV  has  not  shown  a  right  of  action. 
Here  was  a  complete  transfer  of  the  title  to  the  goods  in  question, 
with  a  condition  of  defeasance,  on  the  payment  of  210  dollars  and 
.15  cents,  in  1  I  day-.  This  was  a  mortgage,  not  a  technical  pledge; 
and  all  that  was  said  in  the  case  of  Cortchjou  v.  Lansiiuj  (2  Caines's 
Cases  in  Error,  200)  resjiecting  the  nature  and  redeemableness  of 
pledges,  has  no  ajiplication  to  the  case.  The  distinction  between  a 
pledge  and  a  mortgage  of  goods  was  recognized  by  this  court  in 
Barrow  v.  Pa.rfon  (5  Johns.  Rep.  258).  A  mortgage  of  goods  is  a 
pledge  and  more:  for  it  is  an  absolute  jdedge  to  beeomi^  an  absolute 
interest,  if  not  redeemed  at  th<>  sjx'cifii'd  time.  AftiT  the  cimdition 
forfeited,  the  mortgagee  has  an  absolute  interest  in  the  thing  mort- 
gaged ;  whereas  the  pawnee  has  but  a  special  property  in  the  goods 
to  detain  them  for  his  security  (2  Ves.  Jun.  378;  1  Powell  on 
^fort.  3).  The  title  of  the  defendants  here  became  absolute  aftiT 
the  14  days;  and  though  it  does  not  apj)ear  whether  one  of  the 
horses  was  sold  after  or  before  the  expiration  of  the  time  to  redeem, 
that  omission  is  not  luaterial.  as  no  attempt  was  luade,  in  season, 
to  redeem. 


36  COXVEYAXCE.  [CIIAP.  I. 

Judgment  of  nonsuit  must,  therefore,  be  entered  according  to 
the  stipulation  in  the  case. 


BEACE  V.  MARLBOEOUGH; 

Court  of  Chaxcery,  1728, 
(3  Peerc  Wms.  -191.) 

After  a  decree  which  referred  it  to  a  master  to  state  the  several 
incumbrances  and  their  priority,  affecting  the  estate  of  Sir  Wil- 
liam Gostwick,  this  case  arose :  A  puisne  judgment  creditor  bought 
in  the  first  mortgage  without  notice  of  the  second  mortgage  when 
he  lent  his  money  on  the  judgment,  and  the  question  was,  whether 
this  puisne  judgment  creditor  should  tack  and  unite  his  judgment 
to  the  first  mortgage,  so  as  to  gain  a  preference  on  his  judgment 
before  the  mesne  mortgage?  And  the  Master  of  the  Eolls  [Sir 
Joseph  Jcl-yll]  on  considering  the  cases  and  precedents,  held,i 

First.  That  if  a  third  mortgagee  buys  in  the  first  mortgage, 
though  it  be  pendente  lite,  pending  a  bill  brought  by  the  second 
mortgagee  to  redeem  the  first,  yet  the  third  mortgagee  having  ob- 
tained the  first  mortgage  and  got  the  law  on  his  side,  and  equal 
equity,  ho  shall  thercl)y  squeeze  out  the  second  mortgage ;  and  this 
the  Lord  Chief  Justice  Hale  called  a  planh  gained  by  the  third 
mortgagee,  or  tabula  in  naufragio,  which  construction  is  in  favor 
of  a  purchaser,  every  mortgagee  being  such  pro  tanto. 

Secondly.  If  a  judgment  creditor,  or  creditor  by  statute  or  re- 
cognizance buys  in  the  first  mortgage,  he  shall  not  tack  or  unite  this 
to  his  judgment,  (Src,  and  thereby  gain  a  preference :  for  one  can- 
not call  a  judgment.  &c.,  creditor,  a  purchaser,  nor  has  such  cred- 
itor any  right  to  the  land;  he  has  neither  jus  in  re,  nor  ad  rem, 
and,  therefore,  tho'  he  releases  all  his  right  to  the  land  he  may 
extend  it  afterward.  All  that  he  has  by  the  judgment  is  a  lien 
upon  the  land,  but  non  constat  whether  he  ever  will  make  use 
thereof;  for  he  may  recover  the  debt  out  of  the  goods  of  the  cog- 
nizor  l)y  fieri  facias,  or  may  take  the  body,  and  then  during  the 
defendant's  life  he  can  have  no  other  execution;  besides,  the  judg- 
ment creditor  does  not  lend  his  money  upon  the  immediate  view  or 
contemplation  of  the  cognizor's  real  estate,  for  the  land  afterward 
purchased  may  be  extended  on  the  judgment,  nor  is  he  deceive! 
or  defrauded,  tbo'  the  cognizor  of  the  judgment  had  before  made" 
twenty  mortgages  of  all  his  real  estate,  whereas  a  mortgagee  i^ 

'  Only  fio  much  of  tlie  njiinion  is  given  as  deals  with  the  question  under 
consideration. 


SEP.  i.l  COXARD    C.    ATI.AVTir    IXSfRAVrK    CO.  37 

(lil'iautlfd  or  ckrcived  if  Uk'  ni(»rlga;,'()r  iK-lun'  that  tim<>  mort^'ago 
his  land  to  another;  and  'lis  such  u  fraud  as  the  Parliament  takes 
notice  of  and  punishes  by  foreclosing  such  mortgagor  wlio  mort- 
gages his  hmd  a  second  time,  without  giving  notice  of  tlie  first 
mortgage,  and  in  that  respect  this  case  differs  from  a  puisne  mort- 
gagee's buying  in  the  first  mortgage. 

Fourlhli/.  If  a  first  mortgagee  lends  a  further  sum  to  the 
mortgagor  upon  a  statute  or  judgment,  he  shall  retain  against  a 
mesne  mortgagee,  till  both  the  mortgage  and  statute  or  judgment 
be  paid;  because  it  is  to  be  presume<l  that  he  lent  his  money  upon 
the  statute  or  judgment,  as  knowing  he  had  hold  of  the  hind  by  the 
mortgage,  and  in  confidence  ventured  a  farther  sum  on  a  security, 
which,  tho'  it  i)assed  no  present  interest  in  the  land,  yet  must  be 
admitted  to  be  a  lien  thereon. 


CoN'ARD  V.  Atlantic  Insuranch  Co.,  1  Peters,  38G  (1828). 
Action  of  trespass  dc  bonis  asiiorlatis  brought  in  the  Circuit  Court 
of  the  United  States  for  the  District  of  Pennsylvania,  by  the 
Atlantic  Insurance  Company  to  recover  against  the  defendant, 
John  Conard,  the  Marshal  of  that  district,  the  value  of  certain  teas 
shipjied  on  board  the  ships  Addison  and  Superior,  and  levied  upon 
by  him,  upon  an  execution  in  favor  of  the  United  States  against 
one  Edward  Thompson,  as  the  property  of  the  latter.  .  .  .  The 
cargoes  had  previously  been  transferred  by  Thompson  to  the  Insur- 
ance Co.  by  assignment  of  the  bills  of  lading  to  secure  the  payment 
of  a  respondentia  bond.  It  was  held  that  this  constituted  a  mort- 
gage. The  defendant  contended  that  the  statutory  priority  of  the 
T'nited  States  (Stat.  1700,  c.  128,  §  05)  cxtend.-d  to  thi-  cas^e.  Tho 

ipreme  Court  overniled  the  claim  in  an  ojnnion  by  Mr.  Justice 
-  ory,  from  which  the  following  is  taken  (  ll<»)  : 

''Then,  again,  it  is  contended  on  behalf  of  the  United  States, 
that  the  priority  thus  created  by  law,  if  it  be  not  of  itself  a  lien,  is 
yet  superior  to  any  lien,  and  even  to  an  aotnnl  ninrtirncrc,  on  the 
personal  property  of  the  debtor." 

It  is  admitted  that  whcn>  any  absolute  <Min,  x.iin.-  i--  iit,..!- .  the 
property  passes  so  a-  to  defeat  the  jiriority  ;  but  it  is  said  that  a 
lien  has  been  decided  to  have  no  such  edect,  and  that  in  the  eye  of 
!  Court  of  Kcpiity  a  mortgage  is  but  a  lien  for  a  debt.  Tlielhison 
Smith,  'i  Wheat.  :?0G,  has  been  mainly  relied  on  in  support 
of  this  doctrine.  That  case  has  been  greatly  misunderstood  at  tho 
bar.  and  will  require  a  particular  explanation.  Rut  the  language 
of  the  learned  Jnilge  who  delivered  the  opinion  of  the  Court  in  that 


38  CONVEYANCE.  [CHAP.  I, 

case  is  conclusive  on  the  point  of  a  mortgage.  "The  United 
States,"  said  he,  "  are  to  be  first  satisfied ;  but  then  it  must  be  out 
of  the'debtor's  estate.  If,  therefore,  before  the  right  of  preference 
has  accrued  to  the  United  States,  the  debtor  has  made  a  bona  fide 
conveyance  of  his  estate  to  a  third  person,  or  has  mortgaged  the 
same  to  secure  a  debt ;  or  if  his  property  has  been  seized  under  a 
fieri  facias,  the  property  is  divested  out  of  the  debtor  and  cannot 
be  made  liable  to  the  United  States."  The  same  doctrine  may  be 
deduced  from  the  case  of  the  United  States  v.  Fisher,  2  Cranch. 
358,  where  the  Court  declared  that  "no  bona  fide  transfer  of 
property  in  the  ordinary  course  of  business  is  overreached  by  the 
statutes,"  and  "that  a  mortgage  is  a  conveyance  of  property,  and 
passes  it  conditionally  to  the  mortgagee."  If  so  plain  a  propo- 
sition required  any  authority  to  support  it,  it  is  clearly  maintained 
in  United  States  v.  Hooe,  3  Cranch,  73. 

It  is  true,  that  in  discussions  in  Courts  of  Equity,  a  mortgage  is 
sometimes  called  a  lien  for  debt.  And  so  it  certainly  is,  and  some- 
thing more;  it  is  a  transfer  of  the  property  itself,  as  security  for 
the  debt.  This  must  be  admitted  to  be  true  at  law,  and  it  is 
equally  true  in  equity,  for  in  this  respect  equity  follows  the  law. 
It  does  not  consider  the  estate  of  the  mortgagee  as  defeated  and 
reduced  to  a  mere  lien,  but  it  treats  it  as  a  trust  estate,  and  accord- 
ing to  the  intention  of  the  parties,  as  a  qualified  estate  and  security. 
When  the  debt  is  discharged,  there  is  a  resulting  trust  for  the  mort- 
gagor. It  is,  therefore,  only  in  a  loose  and  general  sense  that  it  is 
sometimes  called  a  lien,  and  then  only  by  way  of  contrast  to  an 
estate  absolute  and  indefeasible. 


Ex  parte  Foster,  2  Story,  131,  142  (1842).  "But  it  is  said 
that  an  attachment  under  our  law  constitutes  a  lien  upon  the  prop- 
erty attached ;  that  it  is  a  perfect,  fixed  and  vested  lien,  as  much  so 
as  a  lien  by  a  mortgage  upon  personal  estate;  that  it  gives  a  vested 
interest  in  the  real  estate  attached,  so  that  the  creditor  may  dispute 
the  validity  of  a  will  thereof,  and  that  it  is  deemed  equivalent  to  a 
title  by  purchase  for  a  valuable  consideration.  And  certain  author- 
ities are  relied  on  to  establish  and  confirm  these  positions.  .  .  . 

"  It  is  true,  as  asserted  at  tlie  bar,  that  an  attaclimcnt  upon  mesne 
process  is  constantly  spoken  of  in  our  Reports  as  a  lien,  and  doubt- 
less it  is  so  in  a  very  general  sense  of  the  term,  adopted  by  way 
of  analogy  and  illustration,  rather  than  from  a  very  exact  resem- 
1)lance  wliich  it  bears  to  lien?,  generally  recognized  as  such  at  the 
common  law,  or  in  equity,  or  in  maritime  jurisprudence.     But,  as 


stc.  I.]  />•'■  p'lrtc  Foster.  39 

lias  boon  truly  said  Ijy  Lord  Cuko.  no  simile  holds'  in  evcryilnn^'. 
Xiilluin  {■liinilr  iiimdnir  pcdihus  citrrit.  Lord  Tt-ntcrdcn  has  said 
that  the  word  lien,  in  its  j)roj)er  sense,  in  the  law  of  l-]n^dand,  im- 
ports that  the  party  is  in  possession  of  the  thin^  that  he  elaims  to 
detain,  and  that  where  there  is  no  possession,  actual  or  constructive, 
there  can  be  no  lien.  And  this  is  generally  true,  perhaps  univer- 
sally true  at  the  oonnnon  law.  indei)endently  of  statutory  provisir)ns. 
or  of  special  contract.  The  doctrine  was  explicitly  as.serted  by  Mr. 
Justice  Buller  in  delivering  his  opinion  in  the  great  case  of  Licl- 
harrow  v.  Mason,  before  the  House  of  Lords  (G  East.,  R.  21,  note; 
id.  25),  where  he  says:  '  Liens  e.\ist  at  law  only  in  ca.scs  where  the 
])arty  entitled  to  them  has  the  possession  of  the  good.<,  and  if 
he  once  part  with  the  possession  after  the  lien  attaches,  the  lien  is 
gone.'   .   .   . 

"  In  cquitv,  also,  liens  exist  independent  of  possession,  either 
actual  or  constructive ;  as,  for  example,  the  lien  of  a  vendor  on  the 
land  for  the  unpaid  purchase  money.  But  it  has  been  the  long  es- 
tablished doctrine,  in  equity,  that  a  lien  is  not,  in  strictness,  either 
a  jus  in  re,  or  a  jus  ad  rem;  that  is,  it  is  not  a  property  in  the  thing 
itself,  nor  does  it  constitute  a  right  of  action  for  the  thing.  It  more 
properly  constitutes  a  charge  upon  the  thing.  It  is,  therefore,  at 
most,  a  simple  right  to  possess  and  retain  property  until  some  charge 
attaching  to  it  is  paid  or  discharged ;  or  a  mere  right  to  maintain  a 
suit  in  rem  to  enforce  payment  of  the  charge.  Mr.  Justice  Buller. 
speaking  of  liens  at  tlie  common  law,  is  equally  expressive.  Tit- 
says:  'Liens  are  not  founded  on  property,  but  they  necessarily 
suppose  the  property  to  be  in  some  other  person,  and  not  in  him 
who  sets  up  the  right.    They  are  qualified  rights.' 

"Now,  an  attachment  does  not  come  up  to  the  exact  definition 
or  meaning  of  a  lien,  either  in  the  general  sense  of  the  common 
law,  or  in  that  of  the  maritime  law,  or  in  that  of  equity  jurispru- 
dence. Xot  in  that  of  the  common  law,  because  the  creditor  is  not 
in  possession  of  the  j)roperty ;  but  it  is  in  custodia  legis,  if  personal 
property;  if  real  ])roj)(Tly.  it  is  not  a  fixed  and  vested  charge,  but 
it  is  a  contingent,  conditional  charge,  until  the  judgment  and  levy. 
Not  in  the  sense  of  the  maritime  law,  which  does  not  recognizi>  or 
enforce  any  claim  as  a  lien,  until  it  has  become  absolute,  fixed  and 
vested.  Not  in  that  of  e(|uity  jurisj)rudence,  for  there  a  lien  is  n<»t 
a  jus  in  re  or  a  jus  nd  rem.  It  is  but  a  charge  upon  the  thing,  anil 
then  only  win  ii  it  has,  in  like  manner,  become  absolute,  fixed  and 
vested."     .     .     . — Per  Storv,  J. 


40  CONVEYANCE,  [CHAP.  I. 

CHAPTER    I.     (Continued.) 
Section  II.    xVfter-acquired  Property. 


Perkins,  Laws  of  England  (about  1550).  Grants.  §  G5.  Now 
i?  to  shew  of  things  to  be  granted  or  charged :  And  as  to  that  Tcnow, 
that  it  is  a  common  learning  in  the  law,  that  a  man  cannot  grant  or 
charge  that  which  he  hath  not:  And  therefore,  if  a  man  grant  a 
rent  charge  out  of  the  Manoiir  of  Dale,  and  in  truth  he  hath  net 
anything  in  the  Manour  of  Dale,  and  after  he  purchase  the  Manour 
of  Dale,  j^et  he  shall  hold  it  discharged.     .     .     . 

§  86.  And,  therefore,  if  the  Disseisee  of  one  acre  of  land  grant 
his  right  vmto  a  stranger,  it  is  nothing  worth;  but  if  he  release 
all  his  right  unto  thiS  Disseisor,  it  is  good,  if  it  be  b}-  deed.  And  if 
he  confirm  the  estate  of  the  Disseisor,  the  confirmation  is 
good.     .     .     . 

§  90.  A  Parson  of  a  Church  may  grant  his  tythes  for  yeares, 
and  yet  they  are  not  in  him  at  the  time.  But  if  Lord  and  Tenant 
be,  the  Lord  cannot  grant  the  wardship  of  the  heir  of  the  Tenant, 
living  the  Tenant.  But  if  a  man  grants  unto  mee  all  the  wooll  of 
his  sheep  for  seven  yeares,  the  grant  is  good,  &c. 


GRAXTIIAM  V.  IIAWLEY. 

Court  of  Common  Pleas,  1615. 

{Ilohart,  132.) 

"Robert  Grantham  brought  an  action  of  debt  upon  an  obligation 
of  £40  against  Edward  nawle}^  the  condition  whereof  was,  that  if 
a  certain  crop  of  corn  growing  upon  a  certain  piece  of  ground,  late 
in  (ho  oceiipalion  of  Richard  Sankcc,  did  of  riglit  belong  to  the 
])laintifr,  tlien  the  defendant  should  pay  him  for  it  £30.  Now 
the  case  upon  the  pleading  and  demurrer  fell  out  thus:  That  one 
Sutton  was  seised  of  the  land,  and  30  Eliz.,  in  April  made  a  lease 
of  it  to  Riciiard  Sankeo  for  21  years  by  indenture,  and  did  thereby 
covenant,  grant  to  and  with  Sankee,  his  executors  and  assigns, 
that  it  shall  be  \\\\\U\\  for  him  to  take  and  carry  away  to  his  own 


SEC.   11. 


GItANTII.VM      V.      II.VWI.KY.  '11 


use  such  corn  as  should  hv  ^nowinfj  upon  the  ground  at  the  cn«l  of 
the  Icnn.  Then  Sullon  conveyed  the  reversion  to  tiie  phiintifT,  an<l 
John  Sankee.  exeeutor  lo  Hichard.  havin;;  sowed  the  eorn,  and  that 
hein^;  ^'r()\vin<;  u])on  the  ^'round  at  the  end  of  the  term,  sold  it  to 
the  del'endant.  And  it  was  argued  l)y  Ilultun  for  the  plainlifF, 
that  it  was  merely  eontinpfent  whether  there  should  he  corn  grow- 
ing upon  the  ground  at  the  end  of  the  term  or  not.  Also,  the 
lessor  never  had  projierty  in  tlie  eorn:  and,  therefore,  could  not 
give  nor  grant  it,  hut  it  sounded  properly  in  covenant;  for  the 
right  of  the  corn  standing  in  the  end  of  the  term  heing  certain,  ac- 
orues  with  the  land  to  the  lessor,  and  it  was  said  to  he  adjudged. 
And  it  was  agreed  hy  the  Court  that  if  A.  sei.sed  of  lan<l  sow  it  with 
corn,  and  then  convey  it  away  to  B.  for  life,  reniain<ler  to  ('.  for 
life,  and  then  B.  die  hefore  the  corn  reapt ;  now  C.  shall  have  it  and 
not  the  executors  o\'  B.,  tliough  his  estate  was  uncertain.  Xolc,  the 
reason  of  industry  and  cliarge  in  B.  fails,  yet  judgment  in  this 
case  was  given  against  the  plaintifT,  that  is,  that  the  property  and 
very  right  of  the  corn,  when  it  hapned.  was  past  away,  for  it  was 
hoth  a  covenant  and  a  grant.  And,  therefore,  if  it  had  heen  of 
natural  fruits,  as  of  grass  or  hay,  which  run  merely  with  the  land, 
the  like  grant  would  havi'  carried  them  in  projierty  after  the  terra. 
Xow,  tliough  corn  hv  fnichis  indii^lrlaUii,  so  that  he  that  sows  it 
may  si-cni  to  have  a  kind  of  j)roperty  ipso  fnclo  in  it  divided  from 
the  land  :  and,  therefore,  the  executor  shall  have  it,  and  not  the 
lieirs;  yet  in  this  case,  all  the  colour,  that  the  plaintifT  hath  to  it, 
is  hy  the  land  which  lie  claims  from  the  lessor  whicji  gave  the  corn. 
And  thougli  the  lessor  had  it  not  actually  in  him,  not  certain,  yet 
hi'  had  it  jiotentially:  for  the  land  is  the  mother  and  root  of  all 
fruits.  Therefore,  lie  that  hath  it  may  grant  all  fruits  that  may 
ari.>-i'  ujion  it  after,  and  the  jirojierty  shall  pass  as  soon  as  the  fruits 
are  extant,  as  21  II.  (!.  A  parson  may  grant  all  the  tithewool  that 
lie  shall  have  in  such  a  year;  yet,  perhaps,  he  shall  have  none;  hut 
a  man  cannot  grant  all  the  wool  that  shall  grow  upon  his  sheep 
that  he  shall  hiiy  hereafter:  for  there  he  hatli  it  neither  actually 
nor  potentially.  And  though  the  words  ;ire  here  not  hy  words  of 
gift  of  tli(>  corn,  hut  that  it  shall  he  lawful  for  him  to  take  it  to  his 
own  use,  it  is  as  good  |o  irini-rer  the  jiroperty,  for  tlu>  intent  and 
common  us(>  of  such  words,  as  a  leasi*  without  im|M'achment  of 
waste,  for  the  like  reason,  and  not  c.r  vi  termini,  gives  the  trees. 


43  CONVEYANCE.  [CHAP.  I. 


HOLKOYD  V.  MARSHALL. 

The  House  of  Lords,  1861. 

(10/7.  L.  C.  191.) 

James  Taylor  carried  on  the  bvisiness  of  a  damask  manufac- 
turer at  Hayes  Mill,  Ovenden,  near  Halifax,  in  the  county  of  York. 
In  1858  he  became  embarrassed,  a  sale  of  his  effects  by  auction 
took  place,  and  the  Holroyds,  who  had  previously  employed  him  in 
the  way  of  his  business,  purchased  all  the  machinery  at  the  mill. 
The  machinery  was  not  removed,  and  it  was  agreed  that  Taylor 
should  buy  it  back  for  5000Z.  An  indenture,  dated  the  20th  Sep- 
tember, 1858,  was  executed,  to  which  A.  P.  and  W.  Holroyd  wore 
parties  of  the  first  part,  James  Taylor  of  the  second  part,  and  Isaac 
Brunt  of  the  third  part.  This  indenture  declared  the  "  macliinery, 
implements,  and  things  specified  in  the  schedule  hereunder  writ- 
ten and  fixed  in  the  said  mill,"  to  belong  to  the  Holroyds;  that 
Taylor  had  agreed  to  purchase  the  same  for  5000/.,  but  could  not 
then  pay  the  purchase  money,  wherefore  it  was  agreed,  &c.  that 
"  all  the  machinery,  implements,  and  things  specified  in  the  sched- 
ule (hereinafter  designated  '  the  said  premises ')  "  were  assigncil 
to  Brunt,  in  trust  for  Taylor,  until  a  certain  demand  for  payment 
should  be  made  upon  him,  and  then,  in  case  he  should  pay  to  the 
Holroyds  a  sum  of  5000?.,  with  interest,  for  him  absolutely.  If 
default  in  payment  was  made.  Brunt  was  to  have  power  to  sell,  and 
hold  the  moneys,  in  pursuance  of  the  trust  for  sale,  upon  trust, 
to  pay  off  the  Holroyds,  and  to  pay  the  surplus,  if  any,  to  Taylor. 
The  indenture,  in  addition  to  a  clause  binding  Taylor,  during  the 
continuance  of  the  trust,  to  insure  to  the  extent  of  50007.  contained 
the  following  covenant :  "  That  all  machinery,  implements,  and 
things  which,  during  the  continuance  of  this  security,  shall  be 
fixed  or  placed  in  or  about  the  said  mill,  buildings,  and  appur- 
tenances, in  addition  to  or  substitution  for  the  said  premises,  or 
any  part  thereof,  shall,  during  such  continuance  as  aforesaid,  be 
subject  to  the  trusts,  powers,  provisoes,  and  declarations  hereinbe- 
fore declared  and  expressed  concerning  the  said  premises;  and  that 
the  said  James  Taylor,  his  executors.  &c.  will  at  all  times,  durinir 
such  continuance  as  aforesaid,  at  the  request,  &c.  of  the  said  Hol- 
royds, their  executors,  &c.  do  all  necessary  acts  for  assuring  such 
added  or  substituted  machinery,  implements,  and  things,  so  that 
the  same  may  become  vested  accordingly."  The  deed  was,  four 
days  afterwards,  duly  registered,  as  a  bill  of  sale,  under  the  17  & 
18  Vict.  c.  36.    Taylor,  who  remained  in  possession,  sold  and  ex- 


m.C.  II. J  HOI.nOYI)     C.     MAKSItAI.I..  K' 

changed  some  of  the  ohl  iiiiichiiicry,  and  introdiiocd  some  new 
machinery,  of  wliich  lie  rcnikTi-d  an  account  to  the  Ilolroyds  before 
April,  18(10;  hut  no  eonveyanci;  was  made  of  this  nrw  machinery 
to  them,  nor  was  any  act  done  hy  them,  or  on  their  hchalf,  to  con- 
stitute a  formal  taking  of  ])ossession  of  the  added  machinery.  On 
the  2d  April,  18G0,  the  Holroyds  served  Taylor  wiih  a  demand  for 
payment  of  the  r)(K)(i/.  and  interest,  and  no  payment  heing  nia<le. 
they,  on  the  30tli  April,  took  pos.session  of  the  luachinery.  and 
advertised  it  for  sale  by  auction  on  the  21st  May  following. 

On  the  I'Mh  April,  18(!0,  Emil  Treller  sued  out  a  writ  of  urirf 
facias  against  Taylor  for  the  sum  of  155/.  18*-.  Ad.,  damages  an<l 
costs,  which  was  executed  on  the  following  day  hy  James  Davis, 
an  ollicer  of  Mr.  Garth  Marshall,  tlun  high  sheriff  of  York.  On 
the  10th  May,  18G0,  a  similar  writ,  for  138/.  3.s.  3(/.,  was  e.\ecute«l 
by  Davis,  and  on  the  2oth  May,  ]8()0,  the  property  was  sold  by  the 
sheriiT.  Xotice  was  given  to  the  sheriiT  of  the  bill  of  sale  executed 
in  favour  of  the  Ilolroyds.  The  only  ])art  of  the  machinery  claimed 
by  the  execution  creditors  consisted  of  those  things  which  had  been 
purchased  by  Taylor  since  the  date  of  the  bill  of  sale.  The  shcrilT 
insisted  on  taking  under  the  writs  these  ailded  articles,  and  the 
Holroyds,  on  the  3(illi  ^lay,  18(50,  filed  their  bill  against  the 
eheriff,  and  the  other  necessary  parties,  praying  for  an  assessment  of 
damages  and  general  relief.  The  cause  was  heard  before  "\'ice-Chan- 
cellor  Stuart,  who,  on  27 th  July,  18(j0,  made  an  order,  declaring 
that  the  whole  machinery  in  the  mill,  including  the  added  and  sui)- 
stituted  articles,  at  the  time  of  the  execution,  ve?ted  in  the  i)lain- 
tiflfs  by  virtue  of  the  bill  of  sale.  On  appeal,  before  Lord  Chan- 
cellor Campbell,  on  the  22d  IVcember,  18(50,  the  Vice-Chancellor's 
order  was  reversed.    This  ])resent  appeal  was  then  brought. 

Mr.  Malins  and  Mr.  (!.  V.  Yool  for  the  appellants. 

Mr.  Awphlcit  and  Mr.  Jlubliunse  for  the  respondents. 

The  Lord  Cii.vxci:i.lou  (Loud  Westbuuy),  after  stating  the 
facts  of  the  case,  said  :  ^ly  Lords,  the  (pieslion  is,  whether  as  to  the 
machinery  added  and  sulistituted  since  the  date  of  the  mortgagi* 
the  title  of  the  mortgagees,  or  that  of  the  judgment  creditor,  ought 
to  prevail.  It  is  admitted  that  the  judgment  creditor  has  no  till" 
as  to  the  machinery  originally  comprised  in  the  bill  of  sale;  but  it  is 
contended  that  the  mortgagees  had  no  specific  estate  or  interest  in 
the  future  machinery.  It  is  also  admitted  that  if  the  mortgagees 
had  an  equitable  estate  in  the  aildcil  machinery,  the  <ame  c<Md<l 
not  be  taken  in  execution  by  the  judgment  cretlitor. 

The  qtiestion  nuiy  be  easily  decided  by  the  application  of  a  few 
elementary  principles  long  settled  in  Courts  of  equity.  In  o»|uity 
it  is  not  necessary  for  the  alienation  of  jiroperty  that  then*  should 
be  a  f(^rm;il  dee<1  of  cenvevfince.     .\  contract  for  valual)le  consid- 


44  CONVEYANCE,  [CHAP,  I. 

eration,  by  which  it  is  agreed  to  make  a  present  transfer  of  prop- 
erty, passes  at  once  the  beneficial  interest,  provided  the  contract  is 
one 'of  which  a  Court  of  equity  will  decree  specific  performance. 
In  the  language  of  Lord  Hardwicke,  the  vendor  becomes  a  trustee 
for  the  vendee ;  subject,  of  course,  to  the  contract  being  one  to  be 
specifically  performed.  And  this  is  true,  not  only  of  contracts  re- 
lating to  real  estate,  but  also  of  contracts  relating  to  personal  prop- 
erty, provided  that  the  latter  are  such  as  a  Court  of  equity  would 
direct  to  be  specifically  performed. 

A  contract  for  the  sale  of  goods,  as,  for  example,  of  five  hundred 
chests  of  tea,  is  not  a  contract  which  would  be  specifically  per- 
formed, because  it  does  not  relate  to  any  chests  of  tea  in  particu- 
lar; but  a  contract  to  sell  five  hundred  chests  of  the  particular 
kind  of  tea  which  is  now  in  my  warehouse  in  Gloucester,  is  a  con- 
tract relating  to  specific  property,  and  which  would  be  specifically 
performed.  The  buyer  may  maintain  a  suit  in  equity  for  the 
delivery  of  a.  specific  chattel  when  it  is  the  subject  of  a  contract, 
and  for  an  injunction  (if  necessary)  to  restrain  the  seller  from 
delivering  it  to  any  other  person. 

The  effect  in  equity  of  a  mere  contract  as  amounting  to  an  aliena- 
tion, may  be  illustrated  by  the  law  relating  to  the  revocation  of 
wills.  If  tlie  owner  of  an  estate  devises  it  by  will,  and  afterwards 
contracts  to  sell  it  to  a  purchaser,  but  dies  before  the  contract  is 
performed,  the  will  is  revoked  as  to  the  beneficial  or  equitable  in- 
terest in  the  estate,  for  the  contract  converted  the  testator  into  a 
trustee  for  the  purchaser;  and,  in  like  manner,  if  the  purchaser 
dies  intestate  befors  performance  of  the  contract,  the  equitable  es- 
tate descends  to  his  heir  at  law,  who  may  require  the  personal  rep- 
resentative to  pay  the  ])iircliase  money.  But  all  this  depends  on 
the  contract  being  such  as  a  Court  of  equity  would  decree  to  be 
specifically  performed. 

There  can  be  no  doubt,  therefore,  that  if  the  mortgage  deed  in 
the  i)resent  case  had  contained  nothing  but  the  contract  which  is 
involved  in  the  aforesaid  covenant  of  Taylor,  the  mortgagor,  such 
contract  would  have  amounted  to  a  valid  assignment  in  equity  of 
till'  whole  of  the  machinery  and  chattels  in  question,  supposing 
such  machinery  and  efi'ects  to  have  been  in  existence  and  upon  the 
mill  at  the  time  of  llio  execution  of  the  deed. 

But  it  is  alleged  tjiat  this  is  not  the  effect  of  the  contract,  because 
it  ri'lates  to  niachineiT  not  existing  at  the  time,  but  to  be  acquired 
and  fixed  and  })hiced  in  the  mill  at  a  future  time.  It  is  quite  true 
that  a  deed  whicli  professes  to  convey  property  which  is  not  in  ex- 
istence at  the  time  is  as  a  conveyance  void  at  law,  simplv  because 
there  is  nothing  to  convey.  So  in  e([iiity  a  contract  which  engages  to 
transfe.-  property,  whieh  is  not   in  existence,  cannot  operate  as  an 


SKC.  11.]  IIOLUOVI)    r.    MAICSUAI-L.  45 

iinmc'diate   uliciuitinn    incrclv    iirciiiiM'    tlifrc   is    iintliiiiLT   to   traii-- 

f.T. 

But  if  a  veinlor  i>r  iiiorlgagttr  a^^iccs;  lu  m-U  ur  ninit^'a^c  prop- 
erty, real  or  pL-rsoiial,  of  wliich  ho  is  not  ])ossi'ss(.'<l  at  tlie  titne, 
and  he  roccivcs  the  consideration  for  the  contract,  and  afterwards 
becomes  j)ossessed  of  proj)erty  answering  the  descri])tion  in  the 
contract,  there  is  no  doubt  that  a  Court  of  ecpiity  would  compel 
him  to  })erfonn  the  contract,  and  that  tlie  contract  would,  in  equity, 
transfer  the  benelicial  interest  to  the  niortga<;ee  or  ])urchaser  im- 
mediately on  the  ])roi)erty  being  acijuircd.  This,  of  course,  as- 
sumes that  the  supposed  contract  is  one  of  that  class  of  which  a 
Court  of  equity  would  decree  the  specific  performance.  If  it  be 
so,  then  immediati'ly  on  the  accpiisition  of  the  property  described 
the  vendor  or  mortgagor  would  hold  it  in  trust  for  the  j)urchaser 
or  mortgagee,  according  to  the  terms  of  the  contract.  For  if  a 
contract  be  in  other  respects  good  and  fit  to  be  performed,  and  the 
consideration  has  been  received,  incapacity  to  perform  it  at  the 
time  of  its  execution  will  be  no  answer  when  the  means  of  doing 
so  are  afterwards  obtained. 

Apply  these  familiar  principles  to  the  present  case;  it  follows 
that  immediately  on  the  new  nuichinery  and  effects  being  fixed  or 
})laced  in  the  mill,  they  became  subject  to  the  operation  of  the 
contract,  and  passed  in  equity  to  the  mortgagees,  to  whom  Taybtr 
was  bound  to  make  a  legal  conveyance,  and  for  whom  In-,  in  th<' 
mean  time,  was  a  trustee  of  the  property  in  question. 

There  is  another  criterion  to  prove  that  the  mortgagee  acipured 
an  estate  or  interest  in  the  added  machinery  as  soon  as  it  was 
brought  into  the  mill.  If  afterwards  the  mortgagor  had  attempted 
to  remove  any  part  of  such  machinery,  except  for  the  j)urpose  of 
substitution,  the  mortgagee  would  have  been  entitled  to  an  injunc- 
tion to  restrain  such  removal,  and  that  because  of  his  estate  in  the 
specific  property.  The  result  is,  that  the  title  of  the  appellants  is 
to  be  preferred  to  that  of  the  judgment  creditor. 

Some  use  was  made  at  the  bar  and  in  the  Court  below  of  tin; 
language  attriliuted  to  Mr.  Baron  Parke  in  the  case  of  Mofjrj  v. 
linker,  3  yi.  &  W.  IHS.  That  learned  Judge  ap]»ears  to  have  given, 
not  his  own  opinion,  but  what  he  understoo<l  would  have  been  the 
decision  of  a  Court  of  cfpiity  upon  the  case.  ]Ie  is  represented  a< 
speaking  npon  the  authority  of  one  of  the  Judges  of  the  Court  of 
Chancery.  Any  communication  so  made  was  of  course  extra-judicial, 
and  tliere  is  much  danger  in  making  eomnnmications  of  such  a  na- 
ture the  ground  of  judicial  decision;  but  1  entirely  concur  in  what 
appears  to  have  been  the  principle  intended  to  be  stated;  for  Mr. 
Baron  Parke,  speaking  of  the  agreement  in  the  case.  says.  *'  It 
would  cover  no  specific  furniture,  and  would  confer  no  right   in 


46  COXVEYAN-CE.  [CHAP.  I. 

equity."  I  have  already  explained,  that  a  contract  relating  to 
goods,  but  not  to  any  specific  goods,  would  not  be  the  subject  of  a 
decree  for  specific  performance,  and  that  a  contract  that  could  not 
be  specifically  performed  would  not  avail  to  transfer  any  estate  or 
interest. 

If,  therefore,  the  contract  in  Mogg  v.  Balver  related  to  no  specific 
furniture,  it  is  true  that  it  would  not,  at  the  time  of  its  execution, 
lonfer  any  right  in  equity;  but  it  is  equally  true  that  it  would  at- 
tach on  furniture  answering  the  contract  when  acquired,  provided 
the  contract  remained  in  force  at  the  time  of  such  acquisition. 

Whether  a  correct  construction  was  put  upon  the  agreement  in 
Mogg  v.  Bal-er  is  a  different  question,  and  which  it  is  needless  to 
consider,  as  I  am  only  desirous  of  showing  that  the  proposition 
stated  by  the  learned  Judge  is  quite  consistent  with  the  principles 
on  which  this  case  ought  to  be  decided. 

I  therefore  advise  your  Lordships  to  reverse  the  order  of  Lord 
Chancellor  Campbell,  and  direct  the  petition  of  rehearing  pre- 
sented to  liim  to  be  dismissed,  with  costs. 

Lord  Chelmsford.  My  Lords,  this  case,  which  has  become  of 
great  importance,  has  been  twice  fully  and  ably  argued,  there  hav- 
ing been  a  difference  of  opinion  amongst  your  Lordships  upon  the 
first  argument,  whicli  made  it  desirable  that  a  second  should  take 
place.  Upon  the  original  argument  I  thought  that  the  decree  of 
my  late  noble  and  learned  friend.  Lord  Campbell,  could  not  be 
maintained;  but  I  came  to  this  conclusion  with  all  the  deference 
due  to  his  great  legal  experience,  and  with  the  more  doubt  as  to 
the  soundness  of  my  views,  upon  finding  not  only  that  he  adhered 
to  liis  opinion  on  hearing  the  question  argued  in  this  House,  but 
that  he  was  supported  in  it  by  my  noble  and  learned  friend  Lord 
Wensleydale,  for  whose  judgment  (it  is  unnecessary  to  say)  I  en- 
tertain the  most  sincere  respect.  Aware  that  I  was  opposed  to 
such  eminent  authorities,  I  listened  to  the  second  argument  with 
llie  most  earnest  and  anxious  attention;  but  nothing  which  I 
heard  in  the  course  of  it  tended  to  shake  the  opinion  which  I  had 
originally  formed.  I  should,  therefore,  have  been  compelled  to 
htate  this  opinion  under  such  discouraging  circumstances,  if  I  had 
not  happily  lieen  fortified  by  the  concurrence  of  the  noble  and 
learned  Lord  upon  the  "Woolsack,  before  whom  the  last  argument 
took  place.  ITis  great  learning  and  long  experience  in  Courts  of 
equity  justify  me  now  in  expressing  myself  with  some  confidence 
in  a  rase  in  wliich  his  views  coincide  with  mine,  and  which  is  to  be 
d'cidcd  upon  equitable  grounds  and  principles. 

In  considering  the  question,  I  propose  to  advert  to  the  various 
points  wliifh  were  touclied  upon  in  the  course  of  botli  the  argu- 
Tiu-nN.  althfiugb  upon  tlic  hnt  oooasion  many  were  omitted  which 


<tX'.    II.  J 


lI(»I.lto^l)     r.      MAItSIIAI.I,.  -l"^ 


w.rt"  rai.^itl  uim.ii  tlif  \\v>L  Tlic  <|iic^linii  iii  llie  ciisl'  is,  whelluT 
Ihr  iipix'llants,  wlio  have  an  ciuilaljlc  lillr  as  in(.r(ga;,'ci-s  of  ccrlaiii 
iiiachinery  ri\<'(l  and  {.lacctl  in  a  mill,  of  wliidi  tlic  mort^jagor, 
James  Taylor,  was  ti'nant,  aiv  tntitlcl  to  (lie  property  which  was 
seized  hy  Ihe  slierilV.  under  two  writs  of  exeention  issued  against 
the  mortgagor,  in  jiriority  to  those  executions,  or  either  of  them? 

The  title  of  the  appellants  tlepends  upon  a  deed  dated  llu-  *i<»th 
Stptemher,  ISoS.  [His  I.ordship  here  stated  the  hill  of  sale  and 
the  other  fact's  of  the  case— see  aiitr.]  The  machinery  sold  hy  the 
sherifT  was  more  than  sufhcient  to  satisfy  the  first  execution,  and 
the  appellants  claiming  a  preference  over  hoth  executions,  contend 
that  the  possession  taken  hy  them  on  the  30th  April  entitled  them, 
at  all  events,  to  priority  over  the  second  execution  of  the  lltli 
May.  The  great  cpiestion,  however,  is,  whether  they  are  entitled 
to  a  preference  over  the  first  execution  hy  the  mere  effect  of  their 
4leed?  or  whether  it  was  necessary  that  some  act  should  have  been 
«lone  after  the  new  machinery  was  fixed  or  placed  in  the  mill,  in 
order  to  complete  the  title  of  the  appellants? 

It  was  admitted  that  the  right  of  the  judgment  creditor,  who 
has  no  specific  lien,  hut  only  a  general  security  over  his  debtor's 
jiropcrty,  must  be  subject  to  all  the  ecpiities  which  attach  upon 
whatever  property  is  taken  under  his  execution.  But  it  was  said 
(and  truly  said)  that  those  equities  must  be  complete,  and  not  in- 
choate or  imperfect,  or,  in  other  words,  that  they  must  be  actual 
« (luitable  estates,  and  not  mere  executory  rights. 

What.  then,  was  the  nature  of  the  title  which  the  mortgagees 
nhtaineil  under  their  mortgage  deed?  If  the  question  had  to  be 
<lecided  at  law,  there  would  be  no  difficulty.  At  law  an  assign- 
ment of  a  thing  which  has  no  existence,  actual  or  potential,  at  the 
time  of  the  execution  of  the  deed,  is  altogether  void  (Robinsun  v. 
Macihiuu'll.  5  Maule  &  S.  228).  But  where  future  property  is 
assigned,  and  after  it  comes  into  existence,  possession  is  either  de- 
livered bv  the  assignor,  or  is  allowed  by  him  to  be  taken  by  the 
assignee,  in  either  case  there  would  be  the  nonift  ncfus  iii(('rvenien<i 
of  the  nuixim  of  T.orcl  Bacon,  upon  which  Lord  Tampbell  n-sted  his 
<recree,'  and  the  ))roi>erty  would  pass. 

It  seemed  to  be  supposed  ui)on  the  first  argument  that  an  assign- 
ment of  this  kind  would  not  be  void  in  law  if  the  deed  containe<l 
a  license  or  jiower  to  seize  the  after-ac(piired  property,  lint  this 
eireumslance  would  make  no  difference  in  the  case.  The  mere  as- 
signment is  itself  a  sulVu-ient  declaratio  prart'ilnis  in  the  words 
■of  the  nuixim;  and  altlumgh  Chief  Justice  Tindal,  in  the  case  of 

'  Ijiitt  disiiusitio  </t  iiitvunsc  futuro  sit  inutilia,  tamvit  fieri  pohsl  •/.  • 
4lnrali(t  i>iaicrdriis  nunr  snrtiatur  rffrrtum,  iiitrrrvniciitc  not'o  actu. 


4S  COXVEYAXCE.  [CIIAP.  I. 

Lunn  V.  Thornton,  said,  "It  is  not  a  question  whether  a  deed 
might  not  have  been  so  framed  as  to  give  the  defendant  a  power  of 
seizing  the  future  personal  goods,"'  he  must  have  meant,  that 
under  such  a  power  the  assignee  might  have  talven  possession,  and 
so  have  done  the  act  which  was  necessary  to  perfect  his  title  at 
law.  This  will  clearly  appear  from  the  case  of  Congnve  v.  Evetts, 
10  Exch.  298,  in  which  there  was  an  assignment  of  growing  crops 
and  effects  as  a  security  for  money  lent,  with  a  ix)wer  for  the 
assignee  to  seize  and  take  possession  of  the  crops  and  effects  bar- 
gained and  sold,  and  of  all  such  crops  and  effects  as  might  be  sub- 
stituted for  them ;  and  Baron  Parke  said,  "  If  the  authority  given 
by  the  debtor  by  the  bill  of  sale  had  not  been  executed,  it  would  have 
been  of  no  avail  against  the  execution.  It  gave  no  legal  title,  nor 
even  equitable  title,  to  any  specific  goods ;  but  when  executed  not 
fully  or  entirely,  but  only  to  the  extent  of  taking  possession  of  the 
growing  crops,  it  is  the  same  in  our  judgment  as  if  the  debtor  him- 
self had  put  the  plaintiff  in  actual  possession  of  those  crops."  x\nd 
in  Hope  v.  HaijUy,  5  Ellis  &  B.  830,  84:5  (a  case  much  relied  upon 
by  the  Vice-Chancellor),  where  there  was  an  agreement  to  transfer 
goods,  to  be  afterwards  acquired  and  substituted,  with  a  power  to 
take  possession  of  all  original  and  substituted  goods,  Lord  Camp- 
bell, Chief  Justice,  said,  "  The  intention  of  the  contracting  parties 
was,  that  the  present  and  future  property  should  pass  by  the  deed. 
That  could  not  be  carried  into  effect  by  a  mere  transfer;  but  the 
deed  contained  a  license  to  the  grantee  to  enter  upon  the  property, 
and  that  license,  when  acted  upon,  took  effect  independently  of  the 
transfer." 

I  have  thought  it  right  to  dwell  a  little  upon  these  cases,  both 
on  account  of  some  expressions  which  were  used  in  argument  re- 
specting them,  and  also  because  in  determining  the  present  ques- 
tion it  is  useful  to  ascertain  the  precise  limits  of  the  doctrine  as  to 
the  assignment  of  future  property  at  law.  The  decree  appealed 
against  proceeds  upon  the  ground,  not  indeed  that  an  assignment 
of  future  property,  without  possession  taken  of  it,  would  be  void  in 
equity  (as  the  cases  to  which  I  have  referred  show  that  it  would  be 
at  law),  but  that  the  equitable  right  is  incomplete  and  imperfect 
imless  there  is  subsequent  possession,  or  some  act  equivalent  to  it  to 
perfect  the  title. 

In  considering  the  case,  it  will  be  unnecessary  to  examine  the 
authorities  cited  in  argument,  to  show  that  if  there  is  an  agree- 
ment to  transfer  or  to  charge  future  acquired  property,  the  prop- 
erty passes,  or  becomes  liable  to  the  charge  in  equity,  where  the 
question  has  arisen  between  the  parties  to  the  agreement  them- 
selves. In  order  to  determine  whether  the  equity  which  is  created 
under  agreements  of  this  kind  is  a  personal  equity  to  be  enforced 


SLC.    11.] 


IIOI.KOVI)     r.     MAIISIIAlJi.  4& 


hy  suit,  or  to  he  made  available  l»y  some  ait  to  he  clone  belueeii 
the  i)arties,  or  is  in  the  nature  <>f  a  trust  attaeliinj?  upon  and 
liindinj,'  the  projjerty  at  the  instant  of  its  eomin",'  into  existence, 
we  must  look  to  cases  where  the  rights  of  the  third  persons  in- 
tervene. 

The  respondents,  in  support  of  the  decree,  relied  strongly  on 
what  was  laid  down  I)V  IJaron  Parke  in  Mo;/;/  v.  linker,  ."5  M.  iS:  W. 
IDo,  VJS,  as  the  rule  in  e(|uity  which  he  staled  he  had  derived  from 
a  very  high  authority,  "  that  if  the  agrei-ment  was  to  mortgage  cer- 
tain specific  furniture,  of  which  the  corpus  was  ascertained,  tiiat 
would  constitute  an  ecpiitable  title  in  the  defendant,  so  as  to  pre- 
vent it  passing  to  the  assignees  of  the  insolvent,  and  then  the  assign-  • 
mcnt  would  make  that  equitable  title  a  legal  one;  but  if  it  was  only 
an  agreement  to  mortgage  furniture  to  be  subsequently  ac(iuircd, 
or  "  (the  word  "  or  "  is  omitted  in  the  report)  "  to  give  a  bill  of  sale 
at  a  future  day  of  the  furniture  and  other  goods  of  the  insolvent, 
then  it  would  cover  no  specific  furniture,  and  would  confer  no  right 
in  equity."  The  meaning  of  these  latter  words  must  be  that  there 
would  be  no  complete  etiuitable  transfer  of  the  property,  because 
there  can  be  no  doubt  tliat  the  agreement  stated  would  create  a 
right  in  equitv  upon  which  the  party  entitled  might  file  a  bill  for 
specific  performance. 

This  point  is  so  clear  that  it  is  almost  unnecessary  to  refer  to 
the  observations  of  Lord  Eldon,  in  the  case  of  the  ship  Warre,  S 
Price,  2G1),  n.,  in  su]>port  of  it.  It  must  also  be  observed,  that  the 
proposition  in  Mo(j<j  v.  Baker  hardly  reaches  the  ])resent  (piestion, 
l)ecause  it  is  not  stated  as  a  case  of  an  actual  transfer  of  futun' 
jiroperty,  but  as  an  agreement  to  mortgage,  or  to  give  a  bill  of  sale 
at  a  future  day.  The  only  equity  whicli  could  belong  to  a  party 
under  such  an  agreement  would  be  to  have  a  mortgage  or  a  bill  of 
sale  of  the  future  property  executed  to  him.  It  does  not  meet  a  case 
like  the  present,  where  it  is  expressly  provided  that  all  additional  or 
substituted  machinery  shall  be  subject  to  the  same  trusts  as  are  de- 
clared of  the  existing  maihinery. 

Under  a  covenant  of  tins  descrii)tion  to  hold  that  that  tru-t 
attaches  upon  the  new  machinery  as  soon  as  it  is  ])laced  in  the 
mill,  is  to  give  an  effect  to  the  deed  in  perfect  conformity  with  the 
intention  of  the  ])arlies,  ami  as,  by  the  terms  of  the  deed,  Taylor 
was  to  remain  in  ]>ossession,  the  act  of  jdacing  the  machinery  in 
the  mill  would  ai)itcar  to  be  an  act  binding  his  conscience  to  the 
agreed  trust  on  behalf  of  the  appellants,  and  nothing  more  woidd 
appear  lo  be  requisite,  uidess  by  the  established  doctrine  of  a  Court 
of  equity  some  further  act  was  indispensable  to  complete  tlieir 
etpiitable  title. 

The  judgment  of  Lord  Campbell    rr^tiuL',  as  he    states,    upon 
4 


50  COXVEYAXCE.  [cilAP.  I. 

Lord  Bacon's  maxim,  determines  that  some  subsequent  act  is  neces- 
sary to  enable  "the  equitable  interest  to  prevail  against  a  legal 
interest  subsequently  bona  fide  acquired."  It  is  agreed  that  this 
maxim  relates  only  to  the  acquisition  of  a  legal  title  to  future  prop- 
erty. It  can  be  extended  to  equitable  rights  and  interests  (if  at 
all)  merely  by  analogy;  but  in  thus  proposing  to  enlarge  the  sphere 
of  the  rule,  it  appears  to  me  that  sufficient  attention  has  not  been 
paid  to  the  different  effect  and  operation  of  agreements  relating  to 
future  property  at  law  and  in  equity.  x\t  law  property,  non-exist- 
ing, but  to  be  acquired  at  a  future  time,  is  not  assignable ;  in  equity 
it  is  so.  At  law  (as  we  have  seen),  although  a  power  is  given  in 
the  deed  of  assignment  to  take  possession  of  after-acquired  prop- 
erty, no  interest  is  transferred,  even  as  between  the  parties  them- 
selves, unless  possession  is  actually  taken;  in  equity  it  is  not 
disputed  that  the  moment  the  property  comes  into  existence  the 
agreement  operates  upon  it. 

No  case  has  been  mentioned  in  which  it  has  been  held  that  upon 
an  agreement  of  this  kind  the  beneficial  interest  does  not  pass  in 
equity  to  a  mortgagee  or  purchaser  immediately  upon  the  acquisi- 
tion of  the  property,  except  that  of  Langton  v.  Horton,  1  Hare,  549, 
which  was  relied  upon  by  the  respondents  as  a  conclusive  authority 
in  their  favor.  I  need  not  say  that  I  examine  every  judgment  of 
that  able  and  careful  Judge,  Vice-Chaneellor  Wigram,  with  the  def- 
erence due  to  such  a  highly  respected  authority.  Langton  v.  Hor- 
ton was  the  case  of  a  ship,  her  tackle  and  appurtenances,  and  all  oil, 
head  matter,  and  other  cargo  which  might  be  caught  and  brought 
home.  The  Vice-Chancellor  decided,  in  the  first  place,  that  as 
against  the  assignor  there  was  a  valid  assignment  in  eqiiity  of  the 
future  cargo.  But  the  question  arising  between  the  mortgagees  and 
a  judgment  creditor,  who  had  afterwards  sued  out  a  writ  of  fi.  fa., 
bis  Honor,  assuming  that  the  equitable  title  which  was  good  against 
the  assignor  would  not,  under  the  circumstances  of  the  case, be  avail- 
able against  the  judgment  creditor,  proceeded  to  consider  whether 
enough  had  been  done  to  perfect  the  title  of  the  mortgagees,  and 
ultimately  decided  in  their  favour  upon  the  acts  done  by  them  to 
obtain  possession  of  the  cargo. 

It  was  said  upon  the  first  argument  of  this  case  by  the  counsel 
for  the  appellants  that  the  judgment  of  the  Vice-Chancellor  was, 
upon  this  occasion,  fettered  by  his  deference  to  the  opinion  appar- 
ently entertained  and  expressed  by  Lord  Cottenham  in  the  case  of 
Whilworth  v.  Gaugain,  1  Phill.  728. 

[The  noble  and  learned  Lord  then  discusses  the  case  of  Whit- 
irorth  v.  Gaugain,  and  concludes  as  follows :] 

Whatever  doubts,  therefore,  may  have  been  formerly  entertained 
upon  the  subject,  the  right  of  priority  of  an  equitable  mortgagee 


SKC.   II.]  IIOLHOVI)    r.    MAHSIIAI.I..  51 

<»V(.'r  a  judirnicm  creilitor,  tliou<rli  without  iidtiic,  may  now  Ik-  con- 
fuU'rocl  to  be*  lirinly  ('stal)lisli('(l ;  and,  aicordiii;:  to  the  opinion  of 
Lord  St.  Leonards,  "any  agreoincnt  binding  jjrojicrty  for  valuable 
consideration"  will  confer  a  similar  right. 

It  does  not  ai){)ear  from  this  review  of  the  case  of  Whit  worth  v. 
(i(Ut(jain.  that  it  could  have  had  any  intluence  over  the  question  in 
LdiKjton  V.  Ifortoii,  as  to  the  imjX'rfection  of  the  mortgagee's  title, 
unless  something  had  been  done  to  perfect  it.  The  point  docs  not 
appear  to  have  been  at  all  noticed  by  T^ord  Cottenham,  liis  observa- 
tions having  been  confined  to  the  competition  between  the  equitable 
title  of  the  mortgagee  and  the  legal  title  of  the  judgment  creditors. 
Laiujton  V.  Ilortun  must  therefore  be  accepted  as  an  authority  that 
there  may  be  cases  in  which  an  equitable  mortgagee's  title  may  Ije 
incomplete  against  a  subsequent  judgment  creditor.  In  that  case 
the  delivery  of  possession  of  tlie  cargo  on  board  the  vessel  wa.s,  as 
the  Vice-Chancellor  said.  ''  impossible,  as  the  vessel  was  at  sea. 
The  parties  could  do  nothing  more  in  tiiis  country  with  reference 
to  it  than  execute  an  instrument  purporting  to  a.ssign  such  interest 
as  Rirnie  (the  mortgagor)  had.  send  a  notice  of  the  assignment 
to  the  master  of  the  ship,  and  await  the  arrival  of  the  ship  and 
largo.  This  was  the  course  taken;  and  on  the  arrival  of  the  ship 
at  the  port  of  T.,ondon,  the  plaintiffs  immediately  demanded  pos- 
session." The  cargo  was,  in  point  of  fact,  in  possession  of  the 
captain,  as  the  agent  for  the  owner,  the  mortgagor.  It  would  have 
been  rather  a  strange  eftect  to  give  to  the  assignment  of  the  future 
cargo,  to  hold  that  when  it  came  into  existence  a  trust  attached 
npon  it  for  the  benefit  of  the  mortgagee,  that  therenpon  the  cap- 
tain became  his  agent,  and  that  the  mortgagee  thereby  acquired 
a  perfect  equitable  right  to  the  j»roperty,  which  was  valid  against 
all  subsequent  legal  claimants.  Lang^on  v.  Ilorton  may  have  been 
rightly  decided  as  to  the  necessity  for  the  completion  of  the  mort- 
gagee's title  under  the  circumstances  which  there  existed,  and  yet  it 
will  be  no  authority  for  saying  that  in  every  case  of  an  equitable 
mortgage  of  future  property  something  beyond  the  execution  of 
the  deed  and  the  coming  into  existence  of  the  property  will  be 
necessary. 

It  certainly  appears  to  be  putting  too  great  a  stress  upon  this 
case,  to  urge  it  as  an  authority  that  an  eipiitable  title  would  have 
l)ecn  defective  if  certain  circumstances  had  not  existed,  when  the 
existence  of  those  circumstances  was  established  in  proof  and  made 
the  ground  of  the  decision. 

But  if  it  should  still  be  thought  that  the  di-ed.  together  with  the 
act  of  bringing  the  machinery  on  the  pnvnises.  were  not  suflieient 
to  complete  the  mortgagee's  title,  it  may  be  asked  what  mon> 
could  have  been   done   for  this  purpose,     '{'he  trustee  could   not 


52  CONVEYANCE.  [CHAP.  1. 

take  possession  of  the  new  machinery,  for  that  would  have  been 
contrary  to  the  provisions  of  the  deed  under  which  Taylor  was  to 
remain  in  possession  until  default  in  payment  of  the  mortgage 
money  after  a  demand  in  writing,  or  until  interest  should  have  be- 
come in  arrear  for  three  months-;  and  in  either  of  these  events  a 
power  of  sale  of  the  machinery  might  be  exercised.  And  if  the 
intervenient  act  to  perfect  the  title  in  trust  be  one  proceeding  from 
the  mortgagor,  what  stronger  one  could  be  done  by  him  than  the 
fixing  and  placing  the  new  machinery  in  the  mill,  by  which  it  be- 
came, to  his  knowledge,  immediately  subject  to  the  operation  of 
the  deed  ? 

I  asked  Mr.  Amphlett,  upon  the  second  argument,  what  novus 
actus  he  contended  to  be  necessary,  and  he  replied  "  a  new  deed."' 
But  this  would  be  inconsistent  with  the  terms  of  the  original  deed, 
which  embraces  the  substituted  machinery,  and  which  certainly 
was  operative  upon  the  future  property  as  between  the  parties  them- 
selves. And  it  seems  to  be  neither  a  convenient  nor  a  reasonable 
view  of  the  rights  acquired  under  the  deed,  to  hold  that  for  any 
separate  article  brought  upon  the  mill  a  new  deed  was  necessary, 
not  to  transfer  it  to  the  mortgagee,  but  to  protect  it  against  the 
legal  claims  of  third  persons. 

But  if  something  was  still  requisite  to  be  done,  and  that  by  the 
mortgagor,  I  cannot  help  thinking  that  the  account  delivered  by 
Taylor  to  the  mortgagees  of  the  old  machinery  sold,  and  of  the  new 
machinery  which  was  added  and  substituted,  was  a  sufficient  novus 
actus  intervcniens,  amounting  to  a  declaration  that  Taylor  held 
the  new  machinery  upon  the  trusts  of  the  deed. 

Lord  Wensleydale.  My  noble  and  learned  friend  will  forgive 
me,  but  that  was  not  mentioned  in  the  l)ill. 

Lord  Chelmsford.  j\Iy  noble  and  learned  friend  is  quite  cor- 
rect in  that ;  it  must  be  taken  that  that  was  not  mentioned  in  the 
bill,  and  that  was  the  answer  given  when  I  urged,  in  the  course  of 
the  argument,  that  that  account  must  be  taken  to  be  a  sufficient 
actus.  But  still  I  am  stating  what  my  views  are  of  the  whole  of  the 
case.  I  tliink  that  the  account  delivered  by  Taylor  to  the  mort- 
gagees of  the  whole  machinery  which  w^as  added  and  substituted, 
was  a  sufficient  novus  actus  interveniens,  amounting  to  a  declaration 
that  Taylor  held  the  new  machinery  upon  the  trusts  of  the  deed, 
the  only  act  which  could  be  done  by  him  in  conformity  with  it; 
and  it  is  difficult  to  understand  for  what  other  reason  such  an  ac- 
count should  have  been  rendered.  As  between  themselves,  it  is  quite 
clear  that  a  new  deed  of  the  added  and  substituted  machinery 
was  unnecessary;  no  possession  could  be  delivered  of  it,  because 
it  woukl  have  been  inconsistent  with  the  agreement  of  the  parties; 
and   anything,   therefore,   beyond   this   recognition  of   the   mort- 


bKi'.  11. J  IIULUOVI)    /•.    MAKSIIALL.  53 

^M^'t'f's  right  appears  to  be  cxchuktl  liy  tin-  natiirf  of  tin*  transac- 
tion. 

I  will  add  a  wvy  lew  words  mi  I  tit;  sul)JL'ct  of  the  notice  of  the 
claim  of  liie  inort^'a^^-es  to  tiic  jud-^Miu-nt  creditor.  I  think  that 
llic  ('(iuitaijle  title  would  prevail  even  if  the  jud^Mni'nt  crctlitor  hail 
no  notice  of  it,  according  to  the  authorities  which  have  been  al- 
ready ohservt'd  upon.  It  is  true  that  liord  C'ottenhani,  in  the  case 
<d'  Mclralf  V.  J'lu.'  Archbishop  of  York,  1  Mylne  &  C.  'j17,  Soo,  said 
that  if  tiie  plaintiff,  in  that  case,  was  entitled  to  the  charge  upon 
the  vicarage  under  the  covenant  and  charge  in  the  deed  of  1811. 
"  then,  as  the  defendants  had  notice  of  that  deed  before  they  ob- 
tained their  judgment,  such  charge  must  be  preferred  to  that  judg- 
ment.'' This  aj)i)ears  to  imj)ly  tiiat  his  oj)inion  was,  that  if  the 
judgment  creditor  had  not  had  notice,  he  would  have  been  entitled 
to  priority.  Much  stress,  however,  ought  not  to  be  laid  upon  an  in- 
cidi'ntal  ol).<ervation  of  this  kind,  where  notice  had  actually  been 
given,  and  where,  therefore,  the  case  was  deprived  of  any  such  argu- 
ment in  favor  of  the  judgment  creditor.  If  Lord  Cottenham  really 
meant  to  say  that  notice  by  the  judgment  creditor  of  the  prior 
('(piitable  title  was  necessary  in  order  to  render  it  available  against 
him,  his  opinion  is  oi)posed  to  the  decisions  which  have  established 
that  a  judgment  cre<litor,  with  or  without  notice,  mu>t  take  the 
property,  subject  to  every  liability  under  which  the  debtor  held  it. 

The  present  case,  however,  meets  any  possible  difliculty  upon 
the  subject  of  notice,  because  it  aj^pears  that  the  deed  was  regis- 
tered as  a  bill  of  sale,  under  the  provisions  of  the  17  &  18  Vict.,  c. 
3(».  It  was  argued  that  this  Act  was  intended  to  apply  to  bills  of 
sale  of  actual  existing  property  only,  and  it  j»robably  may  be  the 
case  that  sales  of  future  pro|)erty  were  not  within  the  contemplation 
"f  the  Legislature;  but  there  is  no  ground  for  excluding  them  from 
the  j)rovisions  of  the  Act ;  and  upon  the  question  of  notice,  the  reg- 
i>ter  would  furnish  the  same  information  of  the  dealing  witli 
future  as  with  existing  properly,  which  is  all  that  is  required  to 
answer  the  objection. 

I  think  that  the  late  Lord  Chancellor  was  right  in  holding  that 
if  actual  possession  of  the  machinery  in  question  before  the  sher- 
itT's  ofTicer  entered  was  necessary,  there  was  no  proof  of  such  pos- 
session having  becm  taken  on  behalf  of  the  mortgagee.  But  \ipon 
a  careful  consideration  of  the  whole  cas»\  I  am  compelled  to  differ 
with  him  upon  the  ground  on  wl\ich  he  ultimately  reversed  Vici»- 
f'hancellor  Stuart's  decree.  I  think,  therefore,  that  his  decnv 
should  be  reversed,  and  that  of  the  Vieo-Chnncellor  affirmed.    .    .    . 

The  following  order  was  afterwards  entered  on  the  Journals: 

"That  the  decree  or  decn>tnl  order  of  the  Court  of  Chancery,  of 
the  "P^d  of  Deopmhor.  ISHO.  lie  reversed:  and  that  the  petition  for 


54  CONVEYANCE.  [CUAP.  I. 

rehearing,  presented  by  the  said  respondent,  Emil  Preller,  to  the 
Lord  High  Chancellor,  be  dismissed,  with  costs ;  and  that  the  cause 
be  remitted  back  to  the  Court  of  Chancery,  to  do  therein  as  shall 
be  just,  and  consistent  with  this  judgment." 


MOODY  V.  WEIGHT. 

Supreme  Judicial  Court  of  Massachusetts,  1847. 

(13  MetcaJf,  17.) 

This  was  a  petition,  under  St.  1838,  c.  163,  §  18,  for  the  inter- 
position of  the  Court,  as  a  court  of  chancery,  in  behalf  of  a  creditor 
of  two  insolvent  partners.  The  petitioner  alleged  that  Horace 
Wright  and  Benjamin  B.  Hoxse,  tanners,  and  partners  in  business,, 
applied  to  the  Judge  of  Probate  for  the  County  of  Hampshire,  in 
December,  1846,  for  the  benefit  of  the  insolvent  laws,  and  that  such 
proceedings  were  had,  upon  their  application,  that  all  their  estate 
was  assigned  to  the  defendant,  as  assignee :  That  the  petitioner,  in 
July,  1839,  sold  and  delivered  to  said  Wright  &  Hoxse,  hides,  skins 
and  hark,  for  the  sum  of  $2371.34,  on  credit,  and  took  their 
promissory  note  therefor,  payable  in  four  months,  with  anmial 
interest,  and  also  took  a  mortgage  of  said  propcrt}^  and  of  other 
property,  which  mortgage  was  duly  recorded,  and  by  which  they 
secured  to  the  plaintiff  whatever  hides,  skins,  bark  or  stock,  which 
might  afterwards  belong  to  them,  wherever  situated,  and  whether 
manufactured  or  not,  and  whether  at  market  or  not,  or  the  proceeds- 
of  the  same,  if  sold,  and  also  all  leather  thereafter  manufactured 
from  the  proceeds  of  the  property  then  on  hand,  and  in  what- 
ever shape  it  might  afterwards  exist,  or  whatever  form  it  might 
assume,  so  that  the  then  present  and  future  earnings  of  the  said 
Wright  &  Hoxse's  tan  works,  both  stock  and  proceeds,  and  whether 
sold  or  unsold,  might  stand  conveyed,  pledged  and  hypothecated 
to  the  petitioner,  for  tlie  payment  of  said  purchase  money  and 
note:  That  said  note  and  mortgage  had  never  been  satisfied,  dis- 
charged or  cancelled,  and  that  their  validity  had  been  repeatedly 
recognized  and  confirmed  by  said  Wright  «&  Hoxse,  by  the  pay- 
ment, and  in(lf)rsemont  on  the  note,  of  the  annual  interest  thereby 
secured:  That  the  petitioner,  at  the  first  meeting  of  the  creditors 
of  said  Wright  &  Hoxse,  presented  a  petition  to  said  judge  of  pro- 
bate, setting  forth  the  facts  above  mentioned,  and  also  stating 
that  the  property  intended  to  be  secured  by  the  mortgage  aforesaid 
had  been  taken  l>y  the  inessenger,  under  the  warrant  issued  accord- 
ing to  the  provisions  of  the  insolvent  laws,  and  praying  that  said 


^Ee.   II.]  MOOPY    r.    WIMOIIT.  55 

property  might  be  sold,  and  the  proceeds  thereof  applied  to  the 
payment  of  said  note,  and  that  lie  might  he  admitted  as  a  creditor 
for  the  residue,  if  any;  referring  to  the  schedides  and  return  of 
the  messenger  for  a  description  of  the  i)roi)erty  to  l>e  sold;  hut 
that  said  judge  of  probate  "  did  order  and  decree  that  tlu;  prayer 
of  said  petition  should  not  be  granted:"  That  a  large  amount  of 
the  j)roperty  intended  to  bo  conveyed  and  hyj)othecated,  as  afore- 
said, was  taken  by  said  messenger,  and  afterwards  by  the  defendant, 
as  assignee,  in  behalf  of  the  general  creditors  of  said  Wright  6c 
Jloxse :  That  although,  in  the  course  of  the  business  of  said  Wriglil 
&  Iloxse,  the  identical  property  which  was  sold  and  delivered  to 
them,  as  aforesaid,  by  the  petitioner,  was  changed  into  other  forms, 
yet  the  ])rocceds  thereof  were  so  used  and  invested  as  to  assume  th<' 
form  of  and  become  the  i)roperty  thus  taken  by  said  messenger  and 
the  defendant;  that  said  property,  thus  taken  and  held  by  force 
of  said  mortgage,  was  a  portion  of  the  property  and  earnings  of 
Wriglit  t.^'  Hoxse's  tan  works,  and  was  described  in  said  mortgage, 
and  therein  pledged  and  hypothecated  to  the  i)etitioner;  and  that 
said  Wright  and  Iloxse  continued  their  business  as  tanners  until 
said  warrant  issued. 

The  petitioner's  prayer  was,  that  the  i)roperty  aforesaid,  taken  by 
the  defendant,  as  assignee,  or  the  proceeds  tiiereof,  might  be  a|iplied 
towards  the  payment  of  said  note,  and  that  he  might  be  admitted 
as  a  creditor,  for  the  residue  thereof,  if  any,  according  to  the  pro- 
visions of  St.  1838,  c.  1G3,  §  3;  and  that  such  other  order  or  decree 
might  be  made  in  the  premises,  as  law  and  justice  might  require. 

The  answer  of  the  resjmndent  averred,  that  all  the  property  be- 
longing to  the  said  Wright  &  Iloxse,  at  the  date  of  said  note  and 
mortgage,  was  afterwards,  from  time  to  time,  dispo.scd  of  by  them, 
at  their  pleasure,  and  that  at  no  time  between  the  date  of  ."^aid  mort- 
gage and  the  taking  of  their  jjroperty  by  the  defendant,  as  a.ssignec. 
did  they  ever  set  apart  to  the  petitioner  any  specific  portion  of  their 
])roperty,  which  might  have  been  purcha.sed,  if  any  was  so  ])ur- 
ehased,  with  the  proceeds  of  the  property  included  in  said  mortgage : 
nor  did  they  ever  account  to  the  petitioner,  specifically,  for  the 
proceeds  of  the  same,  or  any  part  thereof;  nor  did  they,  in  the 
purchase  and  aetpiisition  of  stock,  or  other  property  which  might 
iiave  belonged  or  come  to  them,  after  the  date  of  said  mortgage, 
make  any  distinction  between  such,  if  any.  as  was  purcha.sed  or 
accpiired  with  the  specific  proceeds  of  the  |)roperty  belonging  to 
them  when  said  mortgage  was  executed,  and  that  which  was  the 
l>roper  fruit  of  their  own  personal  labor,  money  and  inecune.  or 
wjiich  accrued  to  them  from  any  other  source  than  the  sale  of  said 
hypothecated  projiertv.  When>fore  the  respondent  prayed  tliat  the 
decree  of  the  Judge  of  I'robate  miglit  be  allirmed. 


56  CONVEYANCE.  [cilAr.  I. 

The  arguments  in  this  case  were  submitted  in  writing. 

Huntington  for  tlie  petitioner. 

Delano  for  the  respondent. 

Dewey,  J.  The  positions  taken  by  the  opposing  counsel  have 
been  fully  and  ably  presented,  in  their  respective  arguments,  but, 
in  the  view  we  have  taken  of  the  case,  it  has  become  unnecessary 
to  express  any  opinion  upon  several  of  the  points  raised.  We  have 
directed  our  attention  more  particularly  to  one,  which  is  a  leading 
iind  material  one,  and  decisive  of  the  case. 

The  instrument  offered  in  evidence  by  the  petitioner,  as  the 
foundation  of  his  claim,  purports  to  convey  to  him  certain  articles 
of  personal  property,  consisting  of  hides,  skins  and  bark,  all  then 
in  existence,  and  in  possession  of  the  grantors,  and  also  whatever 
hides,  skins,  bark  or  stock,  of  whatever  description,  that  may  here- 
after belong  to  the  grantors,  wherever  situated,  and  whether  manu- 
factured or  not,  and  at  market  or  not,  or  the  proceeds  if  sold; 
also,  all  leather  thereafter  manufactured  from  the  proceeds  of  prop- 
erty then  on  hand,  and  in  whatever  shape  the  property  might  there- 
after exist,  or  whatever  form  it  might  assume;  so  that  the  then 
present  and  future  property  and  earnings  of  the  tan  works  might 
stand  conveyed,  pledged  and  hypothecated  to  the  petitioner. 

This  instrument,  so  far  as  it  purports  to  mortgage  the  prop- 
erty of  the  mortgagors  then  in  existence,  and  held  by  them,  was  in 
all  respects  a  valid  instrument;  and  if  any  such  property  now  re- 
mains for  it  to  operate  upon,  it  will  be  effectual  to  pass  the  same  to 
the  petitioner.  We  understand,  however,  that  the  case  shows  no 
such  property  in  llic  hands  of  the  assignee,  and  that  the  specific 
property  conveyed  by  the  petitioner  to  Wright  &  Hoxse,  and  by 
tliem  reconveyed  in  mortgage  to  him,  has  no  longer  any  existence, 
and  that  the  only  ground  of  sustaining  this  petition  is  that  of  a 
lien  upon  subsequently  acquired  property,  -which  had  no  existence 
at  the  time  of  the  execution  of  the  mortgage,  and  which  has  no 
other  connection  with  it,  than  that,  to  some  extent,  it  may  have 
been  ])urchascd  with  funds  which  were  the  proceeds  of  various 
sales  from  the  tannery;  first,  of  the  articles  purchased,  and  their 
proceeds  applied  to  the  purchase  of  new  stock,  which,  when  manu- 
fnr-tured,  was  again  sold,  and  its  proceeds  invested;  and  so  from 
lime  to  time.  This  instrument  is  clearly,  therefore,  an  attempt  to 
mortgage  or  hypothecate  after  acquired  property.  Can  such  secur- 
ity be  made  effoetual  ])y  the  making  and  recording  of  such  instru- 
ment, without  any  further  act  of  the  parties,  with  no  delivery  by 
the  mortgagor,  and  no  act  on  the  part  of  the  mortgagee,  taking 
possession  or  exercising  any  rights  of  property  in  the  newly  ac- 
quired articles,  l)y  virtue  f)f  the  provisions  in  the  mortgage  as  to 
proj)erty  ? 


.SKC.   II.]  M^(»|)^     ;.     WlMtlllT.  57 

This  siibji'ct  ha>  hccn  rrcciilly  Ixfon-  us,  in  the  cmsc  of  Jonrs  v. 
Jiichaiilsun,  10  Mv{.  AS],  iinolvin;;  tlio  (|ucsti()n  as  to  the  validity 
of  such  a  iiiorl<;agc  in  a  cnuii  of  law.  'I'hc  suhjccl  was  very  ina- 
luix'ly  considiTcd,  and  tin-  Coiiit  wm-c  all  cloarly  of  (tpinion  that 
such  ni()rtfia<ri'  did  not  ])ass  after  ac(|uin'd  ])ro]M'rly.  It  was  stated, 
in  that  case,  as  an  cicnK'ntary  princijilc,  thai  "  a  jM-rson  cannot 
^rant  or  mortgage  projicrty  of  which  he  is  not  j)0.ssesscd.  and  to 
which  ho  has  no  title."  All  the  ([ualification  introduced  was,  that 
one  may  grant  j)ersonal  i)roi)erty  of  which  he  is  potentially,  thou;;h 
not  actually,  possessed,  as  in  the  case  of  the  grant  of  all  the  wool 
that  shall  grow  on  the  sheej)  he  owns  at  the  time  of  the  grant,  hut 
ijot  wool  which  shall  grow  on  sliecj)  which  are  not  hi-.  l)Ut  which 
he  may  afterwards  l)uy. 

In  our  ojunion  these  ])rinciplcs  as  to  conveyance  of  pro|)erty  are 
equally  sound  and  equally  to  be  enforced,  whether  the  question  a.s 
to  the  right  of  jjropi-rty  is  raised  in  a  court  of  law  or  of  equity, 
'^riie  parties  appear  before  us,  each  claiming  the  property  by  con- 
veyance; the  petitioner  by  the  instrument  already  recited,  and  the 
<lefen(lant  as  assignee,  holding  by  virtue  of  a  deed  from  a  nuister 
in  chancery,  for  the  benefit  of  all  the  creditors  of  Wright  &  Iloxse. 
Whether  it  would  really  be  more  equitable,  in  a  ca>e  like  the 
jtresent,  that  the  after  acquired  property  should  be  h(tlden  by  the 
one  ])arty  or  the  other;  whether  the  claims  of  the  intlividual  cred- 
itor would,  in  an  equitable  view,  be  more  meritoriou><  than  those  of 
the  entire  body  of  creditors,  seeking  a  distribution  pro  raid,  would 
depend,  not  so  much  on  anything  disclosed  on  the  face  of  the 
mortgage,  as  upon  a  full  knowledge  of  the  entire  course  of  busi- 
ness of  the  mortgagor,  and  the  circumstances  a])pertaining  to  the 
]iroperty  which  is  now  the  subject  of  controver-v.  the  moib'  of  its 
aoqm'sition,  &c. 

Supposing  ourselves  clothed  with  full  e(|uily  powers,  and  treat- 
ing this  case  as  before  us  uiu'mbarrassed  by  any  (piestion  as  to  our 
limited  jurisdiction  in  chaiu-ery,  we  are  not  satisdeil  that  the  j)e- 
titioner  has  shown  any  such  title  to  this  proj)erty  as  would  author- 
ize us  to  hold  it  to  be  subject  to  a  lien  for  the  note  of  Wright  & 
Hoxse  to  the  jietitioner,  as  against  crcilitors  who  have  acfpiired  n 
right  to  it  before  any  act  of  the  petitioner  had  taken  jdace,  reduc- 
ing the  property  to  his  possession,  or  by  asserting  eiTectimlly  any 
right  under  the  prospective  hypothecation,  as  by  making  a  claim 
and  taking  po.s.session  under  it.  while  in  the  possession  of  Wright 
A'  Iloxse.  There  are  doubtless  ei|uitable  liens  which  nuiy  be  en- 
forced in  courts  of  ecpiity.  though  not  available  in  a  court  of  law. 
Many  such  might  be  enumi'rated.  That  which  nearest  approaches 
the  present  case  is  that  of  an  agreenuMit  to  convey  property,  or  do 
some  act,  the  perfornuince  of  which  has  Imhmi  casually  postponed; 


58  CONVEYANCE.  [CHAP.  I. 

and  in  dealing  with  ilie  rights  of  the  parties  in  such  case,  a  court 
of  equity  will  consider  a  thing  done  which  was  agreed  to  be  done. 
That  class  of  cases  does  not  present,  however,  the  difficulties  that 
arise  in  the  present  case  The  property  which  is  the  subject  of 
the  agreement,  in  the  case  supposed,  was  in  existence,  and  the 
power  to  convey  the  same,  or  stipulate  for  a  conveyance,  existed. 
Nor  do  the  cases  of  Davis  v.  Newton,  6  Met.  537,  and  Eastman 
V.  Foster,  8  Met.  19,  at  all  conflict  with  the  view  we  have  taken  of 
the  present  case.  The  property,  in  reference  to  which  those  cases 
presented  questions,  was  in  existence,  was  susceptible  of  being 
conveyed  and  was  the  subject  of  bargain  and  sale.  In  the  case 
JEastman  v.  Foster,  more  particularly  relied  upon,  the  mortgage 
j^^as  a  good  and  valid  mortgage  in  law,  and  of  property  then  in 
existence,  and  the  party  only  went  into  equity  to  enforce  a  claim 
qrising  under  such  valid  mortgage.  The  case  was  one  of  implied 
trust,  of  which  this  Court  has  jurisdiction,  and  which  it  may  well 
enforce. 

The  difficulty  that  presses  in  the  present  case  is  the  want  of 
any  binding  original  contract,  which  per  se  could  have  force  and 
effect  to  change  the  after  acquired  property,  without  some  further 
act  by  the  parties,  after  the  property  should  have  come  into  ex- 
istence. Such  act  we  deem  to  have  been  necessary  to  perfect  the 
title  of  the  petitioner,  whether  his  rights  of  property  in  such  after 
acquired  articles  are  sought  to  be  enforced  in  equity  or  at  law. 
We  are  fully  aware  that  a  different  view  of  this  question  was  taken 
by  Mr.  Justice  Story  in  the  case  of  Mitchell  v.  Winslow,  2  Story, 
E.  630,  and  that  the  result  to  which  he  came  differs  from  ours 
as  to  the  effect  to  be  given  to  such  mortgages  in  a  court  of  equity.^ 
In  relation  to  that  case,  it  is  supposed  by  the  counsel  for  the  pe- 
titioner, that  it  had,  to  some  extent,  the  sanction  of  this  Court, 
in  the  remarks  of  the  judge  who  delivered  the  opinion  in  the  case 
of  Jones  v.  Richardson.  But  we  apprehend  that  no  such  view  was 
intended  to  be  suggested.  The  case  then  before  the  Court  was  an 
action  at  law;  and  the  obvious  and  quite  sufficient  answer  to  the 
case  of  Mitchell  v.  Winslotv  which  was  relied  upon  by  the  then 
plaintiffs,  was  "  that  was  a  case  in  equity,"  without  entering  upon 
the  further  inquiry  wliether  we  shoukl.  as  a  court  of  equity,  in  a 

*  "  It  seems  to  me  a  dear  result  of  all  the  authorities  that  wherever  the 
parties  by  their  contract  intended  to  create  a  positive  lien  or  charge,  either 
upon  real  or  tipon  personal  property,  whether  then  owned  by  the  assignor 
or  contractor  or  not,  or,  if  personal  property,  whether  it  is  then  in  esse 
or  not,  it  attaches  in  equity  as  a  lien  or  charge  upon  the  particular  prop- 
erty as  swrn  as  the  assignor  or  contractor  acquires  a  title  thereto,  against 
the  latter  and  all  persons  asserting  a  claim  thereto  under  him,  either 
voluntarily,  or  with  notice,  or  in  bankruptcy." — Per  Story,  J.,  in  Mitchell 
V.  Wmslow,  2  Story,  G30,  G44  (1843). 


tjKc.  M.]  iioubi    r.   uicKiirr.  59 

ra^o  before  us,  come  to  tlu'  same  ri'sult.  'I'lie  case  <»f  Lniujlon  \. 
llmidii,  1  Hare,  5J!>,  imieh  relied  upon  as  sanetioniii;;  the  doetriiie 
that  fi^iieh  eonveyanee  might  l>e  supjiorted  in  a  court  of  equity, 
isccms  to  us  to  go  no  further  than  this,  viz.,  that  tliere  having  lx»en 
«ueh  a  eontraet  hctween  the  parties  as  wouM  in  et|iiity  have  given 
the  phiintitT  a  titU'  to  the  eargo  when  it  arrived,  and  that  contract 
having  been  j)erfected  In'  possession  hnvfully  taken,  it  being  a  case 
of  property  mortgaged  while  at  sea,  and  it  being  sullicient  to  take 
possession  forthwith  on  its  arrival,  the  jdaintitTs  were  entitled  to 
Iiold  under  this  contract  as  against  a  judgment  creditor.  On  the 
other  hand,  another  adjudication  nuiy  be  rcfi-rred  to  as  strongly 
sustaining  the  view  we  take  of  the  invalidity  of  this  mortgagj'  in 
equity.  I  allude  to  the  case  of  Mofj(j  v.  Baker,  3  M.  &  \V.  195,  in 
the  Court  of  Exchequer.  As  I  understand  that  case,  the  doctrine 
thaf  a  lien  may  bi-  enforted  in  e(piity,  in  a  case  like  the  present, 
is  wholly  repudiated.  The  Court  held  that  an  agreement  to  mort- 
gage certain  specific  furniture  then  in  existence  would  constitute 
an  equitable  title  in  the  party  holding  such  agreement,  and  pre- 
vent its  passing  to  the  assignees  of  the  insolvent ;  but  if  it  was  only 
an  agreement  to  mortgage  the  furniture  to  be  subsequently  ae- 
(juired,  then  it  would  confer  no  right  in  equity.  It  is  true,  as  was 
remarked  by  the  counsel  for  the  petitioner,  that  the  Court  wen* 
dealing  there  with  the  equity  principle  of  construing  that  to  have 
been  done  which  was  agreed  to  be  done;  but  no  question  arose  as 
to  the  correctness  of  that  princijile  of  equity,  and  the  only  point  of 
controversy  was,  whether,  taking  that  to  have  been  done  which 
was  agreed  to  be  done,  it  would  constitute  a  valid,  equitable  lien. 
.\nd  whether  it  would  do  so  or  not,  was  made  to  depend  ui>on  the 
fact  whether  the  propi-rty  was  subseqiu-ntly  acquired;  and,  if  so, 
it  was  held  that  the  agreement  would  confer  no  right  in  equity. 
The  doctrine  of  that  case,  which  seems  fully  to  sanction  the  prin- 
cij)le  we  have  adopted  in  the  present  ease,  was  aHirmed  by  the 
Court  of  Queen's  liench.  in  Gale  v.  Bunirll.  7  A.  &  E.,  X.  R.  8>)0. 

The  residt  to  which  we  have  come,  upon  the  present  petition, 
may  be  stated  in  the  following  propositions:  The  petitioner  can- 
not hold  the  property  in  controversy,  as  mortgaged  property.  l)e- 
causc  it  was  not  in  existence,  and,  therefore,  not  ca|)able  of  l)eiiig 
conveyed  in  mortgage,  at  the  time  when  the  mortgage  was  nuule. 
The  instrunu'ut  could  not  operate  to  pass  the  pnqu'rty  as  a  pledge, 
because  the  custody  of  the  sanu*  was  not  taken  and  retained  by  thi' 
pledgee.  The  jiroperly  cannot  be  held  as  charged  with  a  lien,  be- 
cause a  lien  cannot  be  creatccl  by  an  executory  agreement  without 
b(Mng  accompanied  by  possession  or  delivery  of  the  property.  .V 
stipulation  that  future  acijuired  property  shall  be  holden  as  secur- 
ity for  some  present  engagement,  is  an  executory  agreement,  of 


Co  CONVEY AXCE.  [cilAP.  I. 

such  a  character,  that  the  creditor  with  whom  it  is  made  may, 
under  it,  take  the  property  into  his  possession,  when  it  comes  into 
existence,  and  is  the  subject  of  transfer  by  his  debtor,  and  hold  it 
for  his  security;  and  whenever  he  does  so  take  it  into  his  posses- 
sion, before  any  attachment  has  been  made  of  the  same,  or  any 
alienation  thereof,  such  creditor,  under  his  executory  agreement, 
may  hold  the  same;  but,  until  such  an  act  done  by  him,  he  has  no 
title  to  the  same ;  and  that,  such  act  being  done,  and  the  possession 
thus  acquired,  the  executory  agreement  of  the  debtor  authorizing 
it,  it  will  then  become  holden  by  virtue  of  a  valid  lien  or  pledge. 
The  executory  agreement  of  the  owner,  in  such  a  case,  is  a  con- 
tinuing agreement,  so  that  when  the  creditor  does  take  possession 
under  it,  he  acts  lawfully  under  the  agreement  of  one  then  having 
the  disposing  power,  and  this  makes  the  lien  good.  If,  however, 
before  taking  possession,  or  doing  such  acts  as  are  necessary  to 
give  vitality  to  the  mortgage,  as  to  the  subsequently  acquired  prop- 
erty, an  attachment  or  assignment  for  the  benefit  of  creditors  takes 
place,  the  opportunity  for  completing  the  lien  is  lost,  and  the  mort- 
gage or  pledge  not  being  perfected,  the  property  passes  to  the  as- 
signee, and  must  be  held  i)y  him  for  the  benefit  of  the  creditors 
generally. 

There  was  no  act  done  by  the  petitioner  and  by  "Wright  &  Hoxse 
jointly,  or  by  either  of  the  parties,  which  was  sufficient  to  give 
effect  to  the  original  mortgage,  as  to  the  after  acquired  property. 
The  recording  of  the  mortgage  by  the  petitioner  did  not ;  for  that 
was  before  such  property  was  acquired.  The  annual  payment  of 
interest  by  Wright  &  Hoxse  could  have  no  such  effect.  It  was 
neither  actually  nor  symbolically  accepting  the  transfer  or  x:;onvcy- 
ance  of  the  articles  after  they  were  acquired  by  Wright  &  Hoxse. 

As  to  the  point  suggested,  that  this  agreement  between  these 
parties  might  be  treated  as  a  conditional  sale  by  the  petitioner, 
the  change  of  property  to  take  effect  only  on  payment  of  the  note, 
it  was  competent  for  the  petitioner  to  have  made  such  a  condi- 
tional sale,  and  the  effect  of  such  sale  would  have  been,  that  ho 
would  not  have  been  divested  of  the  property  in  the  articles  thus 
conditionally  sold.  But  no  such  principle  can  avail  the  petitioner 
here,  as  no  articles  remain  in  existence  that  were  his  property  and 
possessed  by  him  at  the  time  of  the  sale.  The  petitioner  seeks  not 
lo  reclaim  such  articles,  but  those  subsequently  acquired  by  his 
debtors.  Nor  is  there  any  ground  for  the  suggestion  that  this  may 
be  treated  as  the  constitution  of  an  agency  on  the  part  of  Wright 
&  Hoxse,  and  that,  as  such  agents,  all  their  acquisitions  would 
omire  to  the  petitioner  as  the  principal  until  the  note  of  Wright  & 
Hoxse  was  fully  paid. 

In  no  way,  that  we  perceive,  can  we  give  effect  to  this  contract, 


SEC.  II. J  SMirilli;>r    c.    l.DMINDS.  61 

so  iis  (()  ^'ivi'  the  lu'iitioiifP  lln'  litn.  u|i»>m  llic  after  ai"(|uirt'(|  prop- 
erty, that  lie  .<c('ks  to  (.'stabli.-li. 


SMrnii  U'ST  V.  i:it.Mi  XDs. 

Cofirr  OK  (iiANi  i:i;v  di-   Nkw  ,1i:i;si:v,  l.sfi'.'. 
(11  .V.  ./.  K'l.   I  OS.) 

This  was  a  motion  to  dissolve  an  injuiu-tion,  nndcr  uircuni-stanct'-; 
which  ari'  fully  staled  in  the  opinion  of  the  Chancellor. 

Tin-:  C"ii.vNii:i,LOU.  The  complainant,  bcin;;  the  owner  of  liif 
Columhia  House  hotel,  at  CajK'  Island,  with  its  appurtenance-,  and 
<if  the  furniture  therein,  and  beinp  in  possession  of  the  premises, 
l»y  an  indenture  bearing  date  on  the  seventh  of  June,  18(10,  leased 
the  real  estate  to  James  II.  Laird,  for  the  term  of  three  years 
from  the  first  of  :May,  ISGO,  at  the  yearly  rental  of  $."^^(K)0.  payable 
in  equal  installments,  on  the  fifteenth  day  of  .fuly  and  thirty-first 
flay  of  August  in  each  year,  and  sold  and  transferred  to  the  les.see, 
the  furniture  and  other  household  articles  for  the  sum  of  $.'),')r):M'?. 
I.aird.  as  the  lessee,  as  a  collateral  security  for  the  punctual  pay- 
ment of  the  rent,  resold  and  retransferred  to  the  lessor  all  of  said 
furniture  and  other  household  articles,  and  also  sold,  assigned  and 
transferred  and  covenanted  and  agreed  to  sell,  assign  and  transfer 
.ill  other  articles  of  furniture  which  the  lessee  should  j)uri'hase  and 
|>Iace,  or  cause  to  be  purchased  and  placed  uj)on  said  demised 
premises  during  the  said  term,  it  being  then  known  to  and  con- 
templated by  said  ])arties  that  it  would  be  necessary  for  the  lessee 
to  purchase  and  place  a  large  amount  of  furniture  on  said  premises, 
in  addition  to  that  which  was  then  there,  and  it  being  the  agre<Mnent 
anil  intention  of  said  parties  that  when  and  so  often  as  any  addi- 
tional furniture  should  be  purchased  and  placed  on  the  premi>e-s 
by  the  lessee,  it  shotdd  be  deemed  and  considered  as  belonging  to 
llu>  complainant  as  collateral  security  for  the  payment  of  said 
rent.  .Vnd  the  lessee,  among  other  things,  covenanted  and  agreed 
with  the  les.-or  that  the  said  furniture  and  other  household  articb'«. 
as  well  as  that  which  then  was  on  said  premises  as  tlint  which 
should  thereafter  be  placed  thereon  by  the  lessee,  shoidd  not  ho 
sold  or  otherwi.<e  disposed  of,  or  removed  from  said  premises  during 

'Followed,   Lute   v.   I'vir,    108   Muss.   347     (IHTI);    Chitnointh    v.    Trnnry, 
10  \Vi^.  Ml   ( ISC.O).     Hut  see  Chaxv  v.  Ihnny,  130  Mani..  TMHi  (  1S81  ). 


(52  CONVEYAyrCE.  [chap.  I. 

the  term,  but  should  remain  thereon,  as  the  property  of  the  com- 
plainant, as  collateral' security  for  the  payment  of  said  rent. 

The  bill  charges  that,  in  pursuance  of  the  lease,  the  lessee  en- 
tered upon  the  possession  and  enjoyment  of  the  premises,  and  that 
large  arrears  of  rent  are  due  to  the  complainant;  that  after  the 
execution  of  the  lease,  the  lessee,  as  had  been  contemplated,  pur- 
chased and  placed  on  the  demised  premises  a  large  amount  of  fur- 
niture, of  the  value  of  about  $5000,  in  addition  to  that  purchased 
of  the  complainant,  which  still  remains  thereon.  The  complainant 
insists  that,  by  virtue  of  his  contract  with  the  lessee,  all  the  said 
furniture  belongs  to  him  as  collateral  security  for  the  payment 
of  rent,  and  that  it  cannot  lawfully  be  sold  or  removed  from  the 
said  premises  by  the  said  lessee,  or  by  virtue  of  any  process  or  pro- 
ceedings against  him. 

The  bill  further  charges,  that  sundry  judgments  at  law  have 
been  recovered  against  the  lessee,  and  that,  by  virtue  of  executions 
issued  thereon,  the  sheriff  of  the  County  of  Cape  May  has  levied 
upon  the  said  furniture  on  the  demised  premises,  and  advertised 
the  same  for  sale.  The  bill  prays  that  an  injunction  may  be  issued 
to  restrain  the  sheriff  from  selling  the  said  furniture,  or  any  part 
thereof,  and  from  removing  the  same  from  the  demised  premises. 
An  injunction  issued  pursuant  to  the  prayer  of  the  bill.  The  de- 
fendant now  moves  to  dissolve  the  injunction  for  want  of  equity 
in  the  bill. 

The  question  at  issue  turns  upon  the  validity  and  effect  of  the 
contract  between  the  complainant  and  Laird  relative  to  the  furni- 
ture and  other  household  articles  specified  in  the  agreement.  As 
to  so  much  of  the  furniture  as  was  sold  by  the  conplainant  to 
T^aird,  and  which  was  upon  the  premises  at  the  date  of  the  lease, 
the  validity  of  the  contract  is  not  called  in  question.  But  in  regard 
to  that  part  of  the  furniture  which  was  not  at  the  time  owned  by 
the  lessee,  but  which  it  was  then  contemplated  should  thereafter 
be  purchased  and  placed  upon  the  premises,  it  is  insisted  that  the 
rontract  is  invalid  and  inoperative  (2  Story's  Eq.  Jur.,  §  875;  1 
Kden  on  Tnj.,  Waterman,  15  p.  note).  .  .  . 

To  authorize  the  interference  of  the  Court,  the  complainant  must 
show  by  his  bill  the  existence  of  a  right,  legal  or  equitable,  and  the 
danger  of  the  deprivation  of  that  right.  No  fraud  is  imputed  to 
the  parties  in  tlie  making  of  the  agreement.  It  must  be  assumed 
that  the  contract  was  made  in  good  faith  and  for  the  purpose  of 
securing  a  bona  fide  debt  thereafter  to  grow  due. 

The  objection  is,  that  a  valid  sale  or  transfer  cannot  be  madc^ 
of  chattels  which  at  the  time  of  the  contract  are  not  owned  by  tlie 
vendor,  and  have  no  actual  or  potential  existence.  It  is  clear  that, 
if  valid  at  all.  the  contract  must  be  valid  as  a  chattel  mortgage. 


.sM>.  11.]  SMITIIUBST   V.    EDMCKDS.  83 

It  is  not  a  pledge.  These  chattels  were  not  delivered,  and  they 
were  not  capable  of  (Iclivcry  at  the  time  of  the  contract.  They 
liad  no  existence.  At  tlic  coninion  law,  there  cannot  he  a  technical 
pledge  of  property  not  tlicn  in  existence  or  to  l)e  acquired  by  the 
pledgor  in  futuro  (Story  on  Bailments,  ^i^  286,  291). 

It  is  equally  clear  tiiat  the  contract  eannot  operate  a.s  a  legal 
-ale  or  niortga^fc  of  the  ehattels.  To  constitute  a  valid  sale  at  law, 
the  vendor  must  have  a  present  property,  either  actual  or  potential, 
in  the  thing  sold  {Graniham  v.  Ifnirlei/,  Ilobart's  R.  1.32;  Co.  Lit. 
•.'(J5,  a,  note  1;  Robinson  v.  MacdonncU,  5  Maule  &  S.  228;  2 
Kent's  Com.  408;  1  Parsons  on  Cont.  437;  Story  on  Sales, 
^ij  185,  18G). 

It  is  not  necessary  that  the  vendor  should  have  the  actual  prf)p- 
erty,  or  that  the  chattels  should  have  an  actual  existence.  It  is 
<'nough  that  he  have  it  potentially.  The  distinction  was  taken  in 
the  early  case  of  Grantham  v.  Ilairlei/,  already  referred  to.  The 
lessor  in  that  ease  covenanted  tliat  the  lessee  of  a  term  might  take 
the  corn  that  should  be  growing  at  the  end  of  the  term.  It  was 
held  that  the  words  were  good  to  transfer  the  property  as  soon 
as  it  was  extant,  the  les.sor  of  the  land  having  the  crops  not  actually, 
but  potentially.  So  it  was  said,  a  parson  may  grant  all  the  titlus 
of  wool  that  he  may  have  in  a  certain  year.  But  a  man  cannot 
grant  all  the  wool  that  shall  grow  upon  his  sheep  that  he  shall 
hereafter  buy,  for  there  he  hath  it  neither  actually  nor  potentially. 
Till'  distinction  will  ho  found  recognized  in  most  of  the  leading 
eases,  and  fully  stated  by  the  elementary  writers  already  cited. 

In  this  ca.se  the  lessee  had  neither  actual  nor  potential  property 
in  the  chattels  mortgaged.  They  were  articles  which  it  was  con- 
templated should  be  thereafter  purchased  by  the  lessee,  and  the 
agreement  is,  that  when  and  so  often  as  any  additional  furniture 
shall  be  purchased  and  placed  on  the  premises  by  the  les.see,  it  shall 
belong  to  the  lessor  as  collateral  security  for  the  payment  of  rent, 
and  shall  not  be  sold  or  otherwise  disposed  of  or  removed  from  the 
l^reniises  during  the  term.  It  will  be  assumed,  as  the  authorities 
<  learly  establish,  that  the  agreement  does  not  ennstilute  a  valid 
transfer  or  mortgage  at  law  of  the  after  acquired  i-hattcls.  The 
real  question  is,  whether  the  contract  creates  an  equitable  mort- 
gage of  the  ehattels  which  a  court  of  equity  will  enforce  and  \no- 
tect  as  against  a  subsequent  execution  creditor. 

In  the  case  of  Lanrjfon  v.  Norton,  1  Hare.  TjIO,  tliis  (piestion 
was  carefully  examined  and  decided  by  Vice-Chancellor  Wigrani. 
The  owner  of  a  whaling  ship,  then  on  her  voyage  to  the  South 
Seas,  in  order  to  scn-ure  to  tlie  assigniMs  certain  in<lebtediu'ss  for 
Milvances.  assigned  the  ship,  with  her  aj>purtenances,  and  aUo  all 
il  and  bead   matter  atid  other  cargo  whicli  might  Ik'  caught  and 


64  CONVEYANCE.  [CIIAP.  I. 

brought  home  in  the  said  ship  on  and  from  her  then  present  voy- 
age. It  was  held  that  the  assignment  was,  as  against  the  assignor, 
a  valid  assignment  in  equity,  as  well  of  the  future  cargo  to  be  taken 
during  the  particular  voyage  as  of  the  cargo,  if  any,  which  existed 
at  the  time  of  the  assignment;  and  the  master,  having  delivered 
up  possession  of  the  ship  and  cargo  to  the  mortgagees  immediately 
upon  his  return  from  the  voyage,  it  was  further  held,  that  the 
equitable  title  of  the  mortgagees  to  the  cargo  was  perfected,  and 
could  not  be  defeated  by  a  judgment  creditor  of  the  assignor,  who 
afterward  sued  out  a  writ  of  jieri  facias,  and  proceeded  to  take  the 
ship  and  cargo  in  execution.  It  may  be  suggested  that  the  owner 
of  the  ship  might  be  deemed  to  have  a  potential  ownership  in  the 
whales  to  be  thereafter  caught  during  that  particular  voyage,  and 
that  upon  this  ground  the  assignment  might  be  held  valid  at  law. 
It  was  held  otherwise,  and  a  similar  assignment  was  declared  to 
be  invalid  at  law  by  Lord  Ellenborough,  in  Robinson  v.  Macdonncll, 
5  Maule  &  Sel.  228.  But  if  by  any  latitude  of  interpretation 
that  view  might  be  taken,  it  manifestly  did  not  influence  the  result 
of  the  cause. 

In  the  course  of  his  opinion,  the  Yice-Chancellor  says :  "  I  lay 
out  of  the  view  all  questions  as  to  the  operation  of  the  instrument 
at  law,  and  look  at  the  case  only  as  a  question  in  equity.'"  And 
again  he  says :  "  I  rely  in  this  case  on  the  general  principle,  that 
there  having  been  such  a  contract  as  would  in  equity  entitle  the 
plaintiffs,  as  against  the  owner,  to  the  cargo  when  it  arrived,  and 
the  title  under  that  contract  having  been  perfected  by  a  posses- 
sion lawfully  taken  under  the  deed,  which  there  is  no  attempt 
on  the  part  of  the  owner  to  impeach,  the  subsequent  judgment 
creditor  cannot  take  that  property  from  the  plaintiffs."  It  may  bo 
again  suggested  that  there  is  this  further  dissimilarity  between  the 
cases.  In  the  reported  case,  the  ship  and  cargo,  on  her  return 
from  the  voyage,  was  delivered  to  the  mortgagees,  and  thus  the 
equitable  title  of  the  mortgagees  was  perfect(?d;  whereas  in  the 
present  case  the  chattels  were  not  delivered  to  the  mortgagee,  but 
remained  in  the  possession  of  the  mortgagor.  It  is  true  the  chat- 
tels were  not  in  the  actual  possession  of  the  lessor,  but  they  were 
delivered  to  the  lessee  upon  the  demised  premises,  where,  in  ac- 
cordance with  the  contemplation  of  the  parties  and  the  terms  of 
tbe  agreement,  ihey  were  to  be  used  by  the  tenant,  and  from  which 
they  were  not  to  l)e  removed  during  the  continuance  of  the  term. 
This  in  no  wise  affected  the  validity  of  the  contract,  but  was  a 
delivery  according  to  the  terms  and  spirit  of  the  contract,  which 
],erf('cted  the  equitable  title  of  the  mortgagee.  In  this  regard 
there  is  no  real  dissimilarity  between  the  cases. 

In  the  more  recent  case  of  Milchell  v.  Winsloiv,  2  Story's  E. 


SEC.  II.]  SMITH  llt.sT    r.    KDMINDS.  <;5 

630,  this  question  undorwont  a  iiion-  claltoriitc  f.xamnation,  l»v  Mr. 
Justice  Story,  in  the  (.'ireuit  Court  of  tlie  I'nited  Slates.  'VUr 
Court  lu'hl  tluit  to  make  a  ^'raiit  or  assi^Minicnt  valid  at  hiw.  the 
lhin«,'  which  is  the  suhjcct  of  it  must  have  au  existence,  actual  or 
potential,  at  the  time  of  such  ^'rant  or  assi;,Miment.  But  the  court- 
of  equity  support  assignments,  not  only  of  ehoses  in  action,  hut  of 
contingent  interests  and  expectations,  and  also  of  things  which 
have  no  ])resent  actual  or  potential  existence,  hut  rest  in  mere  possi- 
hility  only.    .    .    . 

In  the  cour.^e  of  a  very  elahorate  opinion,  after  quoting  at  some 
length  from  the  opinion  of  the  Vice-Chancellor  in  Lnn;/ton  v.  Ifor- 
ion,  Judge  Story  said:  "  Xow  it  seems  to  me  that  this  reasoning 
is  exceedingly  cogent  and  striking,  and  it  stands  upon  grounds  en- 
tirely satisfactory  and  conclusive  upon  the  whole  suhject."  \n  1 
as  the  result  of  his  investigation,  he  adds:  "It  .seems  to  me  the 
clear  result  of  all  the  authorities,  that  wherever  the  parties  hy  their 
contract  intended  to  create  a  ])ositive  lien  or  charge,  either  u|iiin 
real  or  personal  jiroperty,  wheth(>r  then  owned  hy  the  assignor  or 
not,  or  if  pergonal  property,  whether  it  is  then  in  esse  or  not,  it 
attaches  in  equity  as  a  lien  or  charge  upon  the  particular  propertv, 
as  soon  as  the  assignor  or  contractor  acquires  a  title  thereto,  against 
the  latter,  and  all  pcr.>;ons  asserting  a  claim  thereto  under  him. 
either  voluntary  or  willi  notice,  or  in  hankruptcy."  These  cases, 
I  think,  in  principle  clearly  control  the  jiresent  case,  and  I  am 
quite  satisfied  to  rest  my  conclusion  upon  their  authoritv.  Ii, 
would  he  ditlicult.  indeed,  upon  a  question  of  erpiitv,  to  cite  higher 
authority,  u|ion  either  side  of  the  Atlantic,  than  the  eminent  judg<- 
who.se  opinions  have  heen  referred  to. 

A  further  question  occurs,  viz..  whetlier.  adiuilting  the  equitahle 
mortgage  to  he  valid  against  the  mortgagor,  and  all  persons  claim- 
ing under  him  with  notice,  it  will  he  enforced  against  a  suhsequeiit 
judgment  creditor  of  the  mortgagor.  It  was  so  held  hv  Vice- 
Chaneellor  Wigram  in  the  case  of  Lnngfon  v.  IFortoti.  already  citeil. 
The  suhject  afterwards  underwent  a  more  elahorate  examination 
hy  the  same  learned  judge,  in  the  case  of  Wliihmrlh  v.  (niui/din. 
'^  Hare,  IK!,  where  the  grounds  of  hi.s  conclusion  are  clearly  nnd 
convincingly  staled.    .    .    . 

T/if  III ol ion  lo  dissolve  the  injunction  is  denied  trith  costs. 


^g  CONVEYANCE.  [CHAF.  I. 


LOOKER  V.  PECKWELL. 

Supreme  Court  of  New  Jersey,  1876. 
(38  N.  J.  Law,  253.) 

In  replevin.     On  error  to  the  Essex  Circuit. 

The  opinion  of  the  Court  was  delivered  by 

Van  Syckel.  J.  This  cause  was  tried  in  the  Essex  County  Cir- 
<-uit  Court,  by  consent  of  parties,  before  the  Court  without  a  jury, 
upon  admitted  facts.  A  brief  statement  will  present  the  point  in 
issue.  One  John  M.  Mackenzie,  to  secure  his  debt  to  the  plaintiff. 
<^\ecuted  to  him  a  mortgage  upon  the  fixtures,  stock  and  materials, 
&c.,  of  his  bakery  in  Newark,  described  therein  as  follows:  "All 
tbc  bake-house  fixtures  and  utensils  now  being  in  and  about  my 
bakery.  No.  413  Broad  street;  also,  all  flour,  &c.,  and  all  other 
stock  manufactured,  and  unmanufactured,  and  all  materials  what- 
soever being  in  and  about  said  bakery,  or  that  may  at  any  time 
during  the  continuance  of  this  mortgage  be  purchased  and  ob- 
tained to  replenish  and  replace  the  same  or  any  part  thereof,  to- 
gether with,"  &c. 

The  mortgage  was  duly  registered,  as  required  by  law.  After 
the  delivery  of  the  mortgage,  Mackenzie,  in  order  to  replenish  his 
stock,  purchased  twenty  barrels  of  flour,  which  Avere  delivered  to 
iiim  on  the  sidewalk  in  front  of  his  bakery,  where  they  were  seized 
l)y  the  defendant  as  slieriff,  by  virtue  of  an  execution  in  his  hands, 
upon  a  judgment  in  favor  of  Totten  against  said  Mackenzie,  for 
goods  sold  to  him  after  the  making  and  registering  of  the  mort- 
gage, and  before  tlie  purchase  of  said  twenty  barrels  of  flour,  which 
were  purchased  of  other  parties.  The  question  submitted  on  the 
case  is,  whether  the  twenty  barrels  of  flour  were  subject  to  the  lien 
of  the  mortgage? 

Perkins,  tit.  Grants,  §  65,  says:  "It  is  a  common  learning  in 
llie  law,  that  a  man  cannot  grant  or  charge  that  which  he  hath  not." 
A  grant  will  operate  only  upon  goods  which  the  grantor  has  actually 
or  ])otentially  at  the  time  of  the  grant. 

Chief  Justice  Tindall  fully  recognized  this  rule  in  lAinn  v.  Tlior- 
l'>n.  1  Com.  Bench,  370,  which  has  since  been  received  as  authority 
l)otb  in  England  and  this  country,  as  applicable  to  sales  as  well 
a-  1m  mortgages. 

Tb(!  suggestion  of  Chief  Justice  Tindall,  that  the  grant  migh*: 
be  <()  framed  as  to  give  the  grantee  a  right  between  themselves  1 1 
seize  after-acquired  goods  of  the  grantor,  was  acted  upon  in  Co»- 
(jrpvp  V.  Evem,  10  Exch.  208;  Uopp  v.  Hayley.  5  Ellis  &  B.  830, 


.    .   i:.]  ItlM'.TT    V.    CAIlTrK.  67 

;iinl  in  otlur  lascs  cited  below,  Init  tin-  doctrine  litld  in  the  priii- 
<i|)al  case  lias  not  been  sbaki'n  ;  on  tlie  cuntrary,  it  is  in  a  mass  of 
<'ases  declared  to  be  settled,  if  not  elcnu-ntary  law  {(lah-  v.  Bnrndl, 
:  Q.  B.  850;  i'hi,1rU  v.  Galsivorthy.  (\  ('.  IV  [S.  S.]  -171  ;  Jones  v. 
liichanhon,  10  Mete.  181  ;  Barnard  v.  Eaton,  2  Cush.  20 1 ;  Rice  v. 
^lone,  1  Allen,  TiOr, ;  Lotr  v.  Pcir.  108  Mass.  317;  Van  Ifoozer  v. 
l^orif.  31  Barl).  0;  and  many  oIIhm'  eases  cited  in  Benjamin  on 
Sales,  i<  :•>,  note  A-). 

Tliat  this  is  the  rule  at  law,  is  regarded  by  Chancellor  Green  in 
>fititlturst  V.  Edmunds,  1  McCarter,  408,  as  beyond  controversy. 
lli>  says  that  to  constitute  a  valid  lepil  sale,  the  vendor  must  have 
a  present  property,  either  actual  or  potential,  in  the  thin^'  sold. 

The  judgment  of  the  Court  below  in  favor  of  the  defendant  was 
right,  and  should  be  affirmed. 


BRETT  V.  CAin  I;K. 

District  Court  of  tiik  rs'iTHD  Statks,  1875. 

(2  Lowe} I.  A'iH.) 

Bill  in  equity  by  the  assignee  in  bankruptcy  of  one  Osborne  N. 
Sargent,  against  a  mortgagee^  of  the  stock  of  stationery  and  other 
similar  goods.     It  appeannl  that  Sargent  bought  out  the  stock  in 
trade  of  the  defendant  Carter,  as  carried  on  by  him  at  a  certain 
place,  in  Xovember,   1871,  and  on  the  same  day  he  gave  back  a 
mortgage  to  secure  the  payment  of  the  ])urchase  money  by  install- 
ments, represented  by  promissory  notes  extending  over  a  jieriod  of 
f'lir  years.     The   mortgage  conveyed   thi'  stock   "and   any  other 
"tds  which  may  from  time  to  time,  during  tlie  existence  of  thi? 
mortgage,  be  purchased  by  the  grantor  and  ])ut  into  said  store  to 
replace  any  part  of  said  stock  which  may  have  been  disposed  of." 
.\mong  the  covenants  was  one,  that,  if  the  stock  should  be  dimi' 
iii-^lu'd  "faster  than  said  sum  hereby  secured  is  jtaid.  said  grant<>r 
to  furnish  further  security  for  said  sum,  whenever  re(|uired  by 
:d  grantee." 

Twct  of  the  notes  were  didv  paid,  but  one  thai  «ame  due  in  N'o- 
luber,  1875,  was  not  paid  in  full,  and  tlie  defendant  deinande<l 
ither  security,  and  a  mortgige  was  given  of  such  stock  ns  hail 
•n  ac(|uired  during  tlu>  year.  This  mortgage  was  given  nbo\it 
o  weeks  bc^fore  the  petition  in  bankruj)tcy  was  filed,  and  the 
'•ory  of  the  bill  was  that  it  was  a  |)referenee.  The  complainant-* 
'"^"•nrfl'5  fts'ked  leave  to  amend,  and  allege  the  fir-t  mortgage  to 


(58  CONVEYANCE.  [CHAP.  1. 

be  void,  on  the  ground  that  the  mortgagor  was  tacitly  permitted  to 
sell  the  goods  in  the  ordinary  course  of  his  trade. 

The  defendant  insisted  that  both  mortgages  were  valid. 
Lowell,  J.  The  Court  of  Appeals  of  Xew  York  decided,  by  a 
bench  which  was  equally  divided  in  opinion,  that  a  mortgage  of 
chattels  which  permits  the  mortgagor  to  continue  in  possession  and 
to  sell  the  goods  in  the  ordinary  course  of  business,  is  void  on  its 
face,  as  mere  matter  of  law  {Griswold  v.  Sheldon,  4  Comstock, 
581).  This  decision  has  had  a  remarkable  following,  and  its  doc- 
trine appears  to  have  become  the  settled  law  of  New  York,  Ohio; 
and  Illinois.  It  is  not  the  law  of  England,  Maine,  Massachusetts, 
Michigan,  or  Iowa.  In  several  States  it  has  not  been  passed  upon. 
But  as  this  new  doctrine,  or,  rather,  revival  of  an  old  one,  has  been 
said  by  Mr.  Justice  Davis,  of  the  Supreme  Court,  to  be  so  general 
and  just  that  it  may  be  presumed  to  be  the  law  of  Indiana,  in  the 
absence  of  express  and  unambiguous  decisions  of  the  courts  of 
that  State  to  the  contrary,  and  as  I  venture  to  doubt  both  the  gen- 
erality and  the  justice  of  the  doctrine,  it  becomes  me,  with  all  tin* 
respect  I  feel  for  that  opinion,  to  state  my  reasons  for  not  acceding 
to  it.  If  the  rule,  whichever  way  it  may  be,  were  a  settled  rule  of 
property  in  Massachusetts,  inquiry  into  its  history  or  justice  would 
be  unnecessary ;  but  altliough  I  have  no  doubt  my  decision  will  ac- 
cord with  the  law  of  J\lassachusetts,  I  have  not  found  a  case  in  this 
State  in  which  the  decisions  in  New  York  were  reviewed,  and  it 
is  possibly  still  a  question  for  discussion. 

I  had  supposed  it  to  be  well  settled,  after  much  debate  and  con- 
flict of  opinion,  certainly,  but  substantially  settled,  that  when  a 
vendor  or  mortgagor  was  permitted  to  retain  the  possession  and 
control  of  his  goods  and  act  as  apparent  owner,  the  question  whether 
this  was  a  fraud  or  not  was  one  of  fact  for  the  jury,  excepting 
under  a  pccidiar  clause  of  the  bankrupt  law  of  England.  It  is 
so  pronounced  by  Mr.  May,  in  his  valuable  treatise  on  Voluniarif 
and  Fraudulent  Conveyances,  p.  126,  and  by  the  cases  he  cites, 
and  by  the  learned  editors,  both  English  and  American,  of  Smith's 
Leading  Cases,  notes  to  Tu-yne's  Case,  Vol.  I.,  p.  1,  &c.  By  the 
law  of  England,  as  I  understand  it,  there  are  no  constructive  or- 
artificial  frauds,  or,  if  the  term  is  preferred,  frauds  in  law,  re- 
maining, excepting,  first,  such  as  are  expressly  made  so  by  statute ; 
as,  for  instance,  wlien  a  bankrupt  retains  the  order  and  disposition 
of  goods,  as  apparent  owner,  with  the  consent  of  the  true  owner. 
We  have  not  adoj)ted  this  ])art  of  the  bankrupt  law,  as  was  somewhat 
emphatically  said  in  a  late  case  in  the  Supreme  Court,  Savjyer  v. 
Turpin,  dl^JJ.  S.  (1  Otto)  114,  121;  or,  second.  Where  the  "act  is 
necessarily  a  fraud  on  creditors,  as  where  an  insolvent  person  gives 
away  a  part  of  his  estate  for  no  valuable  consideration,  or  the  whole 


.sKr.  11.1  UKKTT    r.    (AllTKlC.  69 

f  ii  to  one  antecedent  civditnr.  These,  to  be  sure,  an-  ('xainjdc-. 
I)iit  very  IVw  otluTs  loiild  l)c  addiu-rd,  and  I  understand  the  triu- 
law  both  liere  and  in  I\n;,dand  to  havi-  Ix't-n,  until  latt-ly,  that  a 
«i>nveyance  for  valual)le  present  consideration  is  never  >i  fraud  in 
law  on  the  faee  of  the  deed,  and,  if  fraud  is  alle;^ed  to  exist,  it  iniHt 
be  proved  as  a  fae(  ;  and  that  was  the  law  even  before  re;;istration 
was   recpiired    for   tln^   benefit    of   persons  dealing   with    the   iiinrt- 

Il  is  very  straiii^e  that  after  niir  Leffislaturcs  have  met  the  dif- 
lieulty  in  Twyne's  Case,  by  rcipiiring  rejrist ration,  which  pives  n<»; 
only  constructive,  but   in  most  eases  actual   lattice  of  mort;:a;:e>, 
i\d  when  many  of  them  have  jtrovided  that  fraud  shall  be  a  (pies- 
nn  of  fact   for  the  jury,  the  decisions  which  I  have  cited,  and 
!her.s  following  them,  should  have  reverted  to  the  harsher  doc- 
trine whicli  had  already  ^^rown  obsolete  before  the  laws  ])rovided 
any  notice  at  all,  or  any  rule  of  evidenci'  about  fraud. 

It  is  ])lain  that  such  a  doctrine  virtually  ])revents  a  trader  from 

iiiortfiaging  his  stock  at  any  time  for  any  useful  purpose,  for  if  he 

cannot  sell  in  the  ordinary  course  of  trade,  or  only  as  the  trustee 

and  ajient  of  the  mortpl.ixee,  be  inij^ht  as  well  fjive  jmssession  to 

the  mort<i:a^^'e  at  once  and  <;o  out  <»f  !)usiness.     In  this  case  he  neve 

luld  have  be<run  business,   for  the  whole  stock  was  supplied  by 

:ie  defendant.     1  would  reler  in  this  connection  to  the  very  aid*- 

jiinions  of  .Tud^rt'  Dillon  in  /Iii(/lis  v.  Cnri/,  20  Iowa,  '^9[),  ami  of 

.ludire  Campbell   in   Gni/  v.  liidirrll,  7   Mich.  510,  in  which  they 

refuse  to  follow  the  decisions  in  Xew  York,  and  tjive  reasons  f.^r 

that  refusal,  which,  in  my  jud^Muent,  are  unansweralde. 

If  it  be  said  that  this  is  one  of  those  cases  in  which  fraud  i-  a 
iicessary  result  (»f  the  deed,  all  I  can  say  is  that  this  Itrinirs  u-  to 
an  ultimate  fact  of  ftbservation  and  e\|)erience,  and  I  am  unable  to 
see  the  necessity.     Ind(>ed,  it  is  much  more  dillicult  for  me  to  M-e 
how  creditors  can  be  defrauded  in  such  a  case,  when  they  are  told 
in  the  deeil  itself  that  the  debtor  has  no  credit  and  no  property  (hat 
he  can  call  his  own,  than  that  the  mortpi.iree  is  most  outrajreou<ly 
defrauded  by  such  a  rule,  which  devotes  his  property  to  the  pay- 
ment of  another  person's  old  del)ts  (he  very  instant   (hat  he  has 
parted  with  the  po.s.scssion,  takinj;  back  a  security  which  is  admitted 
to  1k^  honestly  <riven.     Take  this  very  ca.se  as  an  illustration.     It  i- 
admittecl  there  was  no  fraud  in  fact;  (hat  the  trader's  whole  stot-k 
Mas  supplied  by  (he  defendant;  (hat  the  mor(;;a;:e  shows  that  all 
the  stock,  ])re,s«'nt  and   future,  is  hypothecated,  not  as  a  cover  or 
blind,  for  th(>re  was  none,  but  to  the  payment  of  a  certain  deltt  bv 
•rtain  installments.     \o  offer  is  made  to  prove  that  any  one  was 
'"ceived.  or  even  was  i':ni>rant  of  the  mort,<;ap\  but  I  am  asked  (o 
lid  fraud  in  law  when  I  know,  and  it  is  adinitt«>d.  there  was  ni>ne 


70  CONVEYANCE.  [CIIAP.  I. 

in  fact.  Besides  cases  already  cited,  see  Briggs  v.  Parhman.  2  Met. 
2oS;  Jones  v.  Iluggeford,  3  id.  515;  Barnard  v.  Eaton,  2  Cush. 
294;  Cohh  v.  Farr,  16  Gray,  597;  Mitchell  v.  ^Vinslolo,  2  Story, 
G30;  Ahhott  v.  Goodwin,  20  Maine,  408. 

The  second  point  in  this  case  is  no  less  interesting  than  the  first. 
By  the  mortgage,  the  stock  that  shall  be  put  into  the  shop  by  the 
mortgagor  is  included  in  the  conveyance.  It  is  undoubtedly  the 
hiw  of  courts  of  equity,  as  cases  presently  to  be  cited  will  show, 
that  after  acquired  chattels  definitely  pointed  out,  as,  for  instance, 
l)y  reference  to  the  ship,  mill,  or  place  into  which  they  are  to  be 
l)rought,  may  be  lawfully  assigned  as  security.  The  common  law 
recognizes  such  transfers  of  land  by  way  of  estoppel,  and  of  chat- 
tels when  they  are  the  produce  of  land  or  of  chattels  already  owned 
by  the  transferrer,  but  not  of  future  chattels  sinpUciter,  unless 
there  be  some  novus  actus  interveniens  after  the  chattels  are  ac- 
quired; that  is  to  say,  either  some  new  transfer,  or  possession 
taken  under  the  old.  It  may  be  cause  of  regret  that  the  law 
should  be  different  in  the  courts  of  common  law  and  equity,  but 
this  is  of  no  importance  in  bankruptcy,  because  it  has  been  the  law 
for  a  great  while  that  an  assignee  in  bankruptcy  takes  only  the 
beneficial  interest  of  the  bankrupt;  and  the  courts  of  law  have 
admitted  equitable  defences,  such  as  equitable  liens,  &c.,  to  be  set 
up  in  such  cases,  years  before  they  had  power  by  statute  or  usage 
to  admit  equitable  pleas  in  ordinary  controversies ;  and  it  was  every 
day's  practice  to  find  these  courts  passing  upon  equitable  titles  in 
behalf  of  a  defendant,  which  they  professed  to  know  nothing  about, 
and  certainly  coidd  not  deal  with,  if  relied  on  by  a  plaintiff.  Such 
was  and  is  the  law,  and  a  very  just  law.  as  far  as  it  goes. 

But  granting  the  rule  in  equity  to  be  that  after-acquired  chat- 
tels may  be  mortgaged,  the  point  that  has  given  me  most  difficulty 
is  whether  such  is  the  law  of  Massachusetts.  I  suppose  that  the 
Federal  courts,  in  all  matters  of  title  to  property,  whether  real  or 
personal,  when  there  is  no  question  of  commercial  or  maritime  or 
general  law,  and  none  of  the  conflict  of  laws,  are  as  much  bound 
in  equity  as  at  common  law  by  the  jurisjirudonce  of  tlie  State  in 
which  they  sit.  Or,  in  other  words,  I  understand  that  the  thirty- 
fourth  section  of  the  judiciary  act,  making  the  laws  of  the  State 
the  rule  in  actions  at  common  law,  is  declaratory  only,  and  that  on 
both  sides  of  this  Court  I  am  bound  to  follow  the  law  of  ]\Iass- 
achusetts  in  the  local  questions,  and  the  general  law  in  general 
([uestions. 

Now,  the  only  decision  I  can  find  in  equity  in  this  State  upon 
this  snbjcet  oertainly  decides  very  distinctly  that  even  in  equity  a 
mortgage  of  after-acquired  cliattcls  is  invalid  {Moodji  v.  Wright, 
13  Met.  17).     In  that  case  the  Court  refused  to  follow  the  then  re- 


SM'.   II. J  HUKTT    C.    (AHTKII.  TI 

cent  dcei.sion  of  Storv.  J.,  in  Mil'lnll  v.  H'i^.s/oh',  2'  Story,  r»:{(). 
and  relied  largely  on  tin-  (li<tuin  of  ii  very  di>tingui.shed  jud^'c 
Baron  rarke,  who  said,  in  Mo<j(j  v.  Hakcr,  3  M.  &  W.  105,  tlial 
there  was  no  siicli  lien  in  equity.  Some  years  after  these  de- 
cisions were  rendered  the  House  of  TiOrds  unanimously  followed 
the  doctrine  of  .Judge  Story,  and  reversed  a  decision  of  Lord  ('aiii|i- 
bell,  whieh  had  heen  founded  on  the  dictum  already  referred  to. 
and  Baron  Parke  concurred  in  the  reversal  (Ilolroi/d  v.  MnrsJnill, 
10  II.  of  L.  ini ).  This  was  not  a  new  doctrine  in  courts  of  equity. 
(See  Curtis  v.  Aiihn;  1  Jae.  &  W.  532;  Re  Ship  Warre,  8  Price. 
2G9;  Lantjton  v.  Jlorton,  1  Hare,  540;  Doughs  v.  Russell,  4  Sim. 
524;  1  Myl.  c^-  K.  128;  /?«  Howe,  1  Paige,  120.) 

These  cases  have  heen  repeatedly  followed  in  England,  and  even 
more  often  in  this  country,  and,  so  far  as  I  am  aware,  with  not 
a  single  decision  the  other  way  of  late  years.  It  is  true  that  a 
great  many  of  the  cases  arose  upon  mortgages  given  hy  railroatl 
companies,  and  some  few  judges  have  founded  a  distinction  upon 
that  circumstance.  But  there  is  no  difference  in  principle  between 
the  mortgage  hy  such  a  corporation  of  its  rolling  stock  not  yet 
in  esse  and  that  hy  a  trader  of  his  future  stock  in  trade  in  a  par- 
ticular .shop.  The  truth  merely  is,  that  from  the  nature  of  the  for- 
mer, the  large  sums  which  they  deal  with,  and  the  time  at  which 
th<'y  must  he  negotiated,  which  is  before  the  road  is  finished,  at- 
tention was  called  to  the  great  injustice  that  would  be  done  in  dis- 
])lacing  the  first  mortgage  in  favor  either  of  general  creditors  or 
even  of  subsequent  mortgagees;  b\it  similar  injustice  will  Im*  done 
in  all  such  cases  to  the  extent  of  the  value  involved.  The  following 
are  some  of  these  decisions:  Ifohoi/d  v.  }fars}ial},  10  H.  of  L.  101  ; 
Prnnock  v.  Coc,  23  How.  117;  Morrill  v.  Xot/es.  5(!  Maine.  l.'.S; 
Pierce  V.  Emery,  32  N.  II.  484;  Benjamin  v.  Elmira  R.  R.  ('".. 
40  Barb.  441 ;  Philn.  c(r.  Co.  v.  Worlpper,  G4  Penn.  St.  (U  Smith  > 
3nr, ;  Phillips  V.  Winsluw.  IS  B.  Mon.  431;  Sillers  v.  Lester.  IS 
Miss.  513  ;  Pirrce  v.  Mil.  R.  R.  Co..  2  I  Wis.  551. 

Considering  the  decision  of  Judge  Story  in  this  cinuit,  and  the 
reasons  given  by  tlie  Court  of  Massachusetts  for  not  following  it. 
and  the  entire  consistency  of  all  (he  recent  decisions  with  .Tuilge 
Story's  views,  and  the  disa|)pearance  of  Baron  Parke's  di<-(um.  I 
am  not  prepared  to  say,  that  if  the  suj)reme  judicial  court  wen* 
now  asked  to  review  their  decision  in  Moodif  v.  Wrii/ht.  it  is  at  all 

rtain  they  would  not  reverse  it,  and  under  the  circum<tance>  I 
do  not  feel  bound  to  hold  (hat  that  case  furnishes  a  settled  rule  of 
property  which  I  must  fnllnw.  So  far  from  that,  I  believe  that  the 
law  of  Massachusetts  in  e(|ui(y  is  that  a  mortgage  of  after-acquired 
chattels  is  valid. 

I  am  of  the  opinion  that  the  mortgage  of  1874  created  a  valid 


7->  CONVEYANCE.  [CIIAP.  I. 

lien  in  behalf  of  the  defendant  upon  the  stock  of  goods  in  the  shop 
at  the  time  of  the  bankruptcy,  and  that  the  mortgage  of  1875  does 
not  vitiate  this  lien.  The  fixtures,  however,  which  were  not  men- 
tioned in  the  first  mortgage,  cannot  be  held  by  the  second,  because 
that  was  given  after  the  bankrupt  had  become  insolvent,  to  the 
knowledge  of  the  defendant. ^ 

Decree  accordinghj. 


KRIBBS  V.  ALFORD, 

Court  of  Appeals  of  Xew  York,  1890. 
(120  .Y.  r.  519.) 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme 
Court  in  the  fifth  judicial  department,  entered  upon  an  order  made 
the  first  Tuesday  of  June,  1887,  which  affirmed  a  judgment  in  favor 
of  plaintiff  entered  upon  the  report  of  a  referee.  The  nature  of  the 
action  and  the  facts  are  sufficiently  stated  in  the  opinion. 

Parker,  J.  On  the  loth  day  of  May,  188.0,  one  Johnson,  then 
being  the  owner  in  fee  of  certain  lands,  executed  and  delivered  to 
Thomas  Argue  an  instrument  in  writing  (which  for  convenience 
will  hereafter  be  termed  a  lease),  which  conferred  upon  the  latter 
the  exclusive  right  to  produce  oil  and  gas  from  said  land  for  a 
period  of  twelve  3rears.  For  that  purpose  it  permitted  him  to  go 
upon  the  land  and  make  necessary  erections;  but  as  to  any  other 
use  Johnson  reserved  the  possession  and  right  of  enjoyment.  It 
gave  to  Argue  the  right  to  remove  any  and  all  tools,  boilers,  en- 
gines and  machinery;  also  the  casing  to  the  wells  and  drive-pipe, 
if  Johnson  should  refuse  to  pay  a  fair  price  therefor. 

Pursuant  to  the  terms  of  the  lease  Argue  and  his  assignees 
placed  upon  the  property  engines,  boilers  and  other  machinery 
necessary  to  carry  on  the  operations  for  which  the  lease  provided, 
and  in  view  of  the  intent  of  the  parties  as  manifested  by  the  terms 
of  the  lease  and  otherwise,  these  articles  retained  their  character 
of  ))ersonalty  after  annexation  {Potter  v.  Cromwell,  40  N.  Y. 
287;  Murdoch  v.  Gifford,  18  id.  28;  Iloi/le  v.  P.  £  M.  R.  B.  Co., 
51  id.  314,  324;  McRea  v.  C.  N.  Banl',  GQ  id.  489-495). 

In  October,  1880,  Argue  assigned  his  interest  in  the  lease  to  Al- 
bert Garrett  and  Adam  Prentice.     Thereafter  Adam  Prentice,  to 

'  Stharfcthurn  v.  liishop,  .3.')  la.  00  ( 1872) .  aerord.  This  is  the  prevailiiifr 
view.  The  contrary  opinion,  wliidi  formerly  prevailed  in  Illinois  {Hunt 
V.  litiUock.  2:5  111.  .•J20  flSOO]:  J'almrr  v.  Forbes,  id.  301)  seems  to  have 
boon  ilissipatcd.     Borden  v.  Croal:,  1.31  III.  G8   (1889). 


SEC.  II.]  KIMIU5S  /•.  Ai.roiti).  73 

secure  the  payment  of  $950.50,  executed  and  delivered  to  tlic  plain- 
(ilT  ;i  inort^'a^'c  on  hi.>^  undivided  inten'st  in  llic  lease  and  vipon  all 
"  liis  intt'ie.-^l  in  the  oil  \vell.<  now  (here(»n  and  to  be  by  him  jthieed 
1  hereon,  with  all  his  interest  in  tlu!  structures,  fi.xtures.  e((uij)nients 
jind  appurtenances  now  on  said  lease  or  hereafter  to  be  placed 
thereon."  On  the  10th  of  January,  ISSj,  a  copy  of  tlie  inort<(agc 
was  Hied  in  the  Town  Clerk's  ollice,  and  thereafter  it  was  duly 
refiled.  Subse<iuently,  and  on  tin-  I'tth  day  of  Au;,'ust,  1.SH2,  Gar- 
rett and  Prentice  sold  and  assi<;ned  all  their  ri<^hts  and  interests 
under  the  lease  to  the  defendants  Alford  and  Curtis,  who  thereafter 
finished  one  well,  put  down  two  others,  and  added  lar<;ely  to  the 
l)|aiil  l)y  way  of  en^MUes,  boilers  and  other  nuuhinery. 

And  the  substantial  question  ])resented  by  this  appeal  is,  whether 
the  tubings,  casings,  engines,  boilers,  shafting  and  other  machinery 
purchased  and  placed  u])on  the  proj>erty  after  the  giving  of  the 
mortgage  are  embraced  within  it.  True,  the  appellant  contends 
that  his  title  to  the  chattels  is  not  burdened  with  the  ])lainti(T's 
mortgage,  because,  as  he  alleges,  Alford  and  Curtis  purcha.sed  in 
good  faith  and  without  notice;  but  this  claim  is  not  well  founded, 
for  while  a  search,  which  failed  to  disclose  the  existence  of  a  mort- 
gage, was  timely  made  in  the  Town  Clerk's  otlice,  the  referee  has 
found  upon  suflicient  evidence  to  support  it,  that  the  mortgage  was 
filed  as  a  chattel  mortgage  in  the  proper  Town  Clerk's  oflice,  and 
within  thirty  days  of  the  expiration  of  the  year  thereafter  it  was 
refiled  with  the  statement  re(piired  by  statute.  Alford  and  Curtis 
are,  therefore,  chargeable  with  constructive  notice,  and  the  lien  of 
the  plaintiff  is  not  affected  by  their  failure  to  find  the  mortgage. 

In  some  jurisdictions  validity  is  denied  to  a  contract  in  so  far  as 
it  purports  to  embrace  property  to  be  acquired  after  date.  The 
reason  assigned  for  this  holding  is  tersely  stated  in  Perkins  (sec. 
♦lo)  :  ''  It  is  a  common  learning  in  the  law  that  a  man  cannot  grant 
or  charge  that  which  he  hath  not."  In  others  it  is  held  to  be  in- 
valid in  law  and  yet  operative  in  i'<piity.  T'^ne.xplaini'd,  this  seems 
to  JM'  a  solecism,  and  results  from  a  use  of  language  which  fails  to 
accurately  convey  the  idea  intended.  Invalidity  at  law  imports 
nothing  more  than  that  a  mortgage  of  i)ro|)(>rly  thereafter  to  be 
acquired  is  ineffectual  as  a  grant  to  pass  the  legal  title.  A  court  of 
equity,  in  giving  effect  to  siu-h  a  jjrovision,  does  not  put  it.self  in 
ooiifliet  with  that  princi|)le.  It  does  not  hold  that  a  conveyance 
of  that  which  does  not  exist  oj)erates  as  a  present  transfer  in  equity, 
any  more  than  it  does  in  law.  Hut  it  constru«>s  the  instrument  as 
operating  by  way  of  pnscni  contrail  to  give  a  lien,  which,  as  be- 
tween the  parties,  takes  effect  anil  attaches  to  the  sultjeet  of  it  as 
poon  as  it  comes  into  the  ownership  of  the  party.  Such  we  diHMu 
the  rule  to  be  in  equity   in  this  State   {Mcl'nfjiri/  v.   Wootliti.  (1,'i 


74  CONVEYANCE.  [CHAr.  I. 

N.  Y.  459;  Wisncr  v.  Ociuapaugh,  Tl  ((/.  113;  Coats  v.  Donnell, 
94  id  168-177). 

As  between  the  mortgagor,  or  his  assignee,  and  the  mortgagee, 
therefore,  the  chattel  mortgage  operated  to  create  a  lien  in  equity 
as  to  the  chattels  purchased  and  placed  upon  the  property  by  the 
mortgagor  subsequent  to  its  date.  This  lien  the  trial  court  rightly 
enforced  by  its  judgment.  But  it  went  further  and  declared,  in 
effect,  that  the  lien  attached  to  the  personalty  placed  upon  the 
property  by  the  assignees  of  the  mortgagor  as  well.  This,  we  think, 
was  error.  The  assignees  did  not  contract  that  the  machinery  to 
be  placed  upon  the  property  by  them  should  be  subject  to  the  pro- 
visions of  the  mortgage.  They  did  not  assume  or  agree  to  pay  the 
mortgage  or  carry  out  its  provisions.  Indeed,  the  assignment  con- 
tained no  condition  or  covenant  whatsoever,  and  the  assignees  did 
not  even  know  of  the  existence  of  the  mortgage.  Their  acceptance 
of  the  lease  bound  them  to  fulfill  the  covenants  running  with 
the  land  (113  Penn  St.  83;  Spencers  Case,  1  Smith's  L.  C.  145). 
But  it  did  not,  in  addition,  burden  them  with  the  obligation  to 
make  good  the  personal  covenants  given  by  the  lessee  to  third  par- 
ties as  security  for  an  indebtedness,  because  they  had  constructive 
notice  of  the  existence  of  the  mortgage  the  lien  of  plaintiff  can 
be  enforced,  and  the  defendants  deprived  of  the  machinery  on  the 
premises  at  the  time  of  the  purchase  by  them  of  the  lease.  But  the 
lien  provided  for  by  the  instrument  could  in  any  event  only  extend 
to  property  thereafter  acquired  by  the  mortgagor.  It  could  not 
attach  to  chattels  to  which  the  mortgagor  has  not  acquired  either 
title  or  possession.  Indeed,  it  does  not,  by  its  terms,  purport  to 
embrace  any  other  after-acquired  property  than  that  placed  thereon 
])y  the  mortgagor. 

It  follows,  from  the  views  expressed,  that  the  judgment  should 
be  reversed  and  a  new  trial  granted,  with  costs  of  this  court  to  the 
appellant,  unless,  within  thirty  days,  the  plaintiff  stipulate  to 
modify  the  judgment  by  excepting  therefrom  the  articles  placed 
on  the  property  after  the  assignment  to  Alford  and  Curtis,  and 
described  in  Schedule  D.,  in  which  event  the  judgment  as  modified 
is  affirmed,  with  costs  to  the  appellant. 

All  concur  except  Bradley  and  Haight,  JJ.,  not  sitting. 

Judgment  accordingly. 


BKc.  U.J  kociii:sii:k  mist.  cm.  /•.  u.vsky.  7."> 

TiiK  K()(iii:s'i'i;i:  insriLuxc  co.  v.  haskv. 

CoLKT  OF  Ai'Ii:ai.s  of  Nkw  Vohk,   Is'.tJ. 

(1  i-j  \.  )'.  :.■;(>.) 

ApjH-al  fmiu  tirdrr  of  tlir  (iuinTiil  Tirm  of  tin-  Su|tit'mc'  Court 
ill  the  iifth  jiulic-ial  di-partiiR-nt,  madt'  October  4.  iSifJ,  whicli  re- 
versed a  jud^'inent  in  favor  of  defendant,  entered  \\\)nn  a  verdiel 
directed  bv  the  court,  and  granted  a  new  trial. 

In  February,  1800,  the  plaintifT  recovered  a  jud;,'inent  against 
one  Lovcll  for  $1  17.41.  In  April,  IHIK).  Lovdl,  being  the  ie.^.^ec 
of  certain  farm  lands,  in  order  to  secure  one  Page  as  an  accommo- 
dation indorser  and  for  the  repayment  of  money  borrowed  from 
him,  e.vecuted  and  delivered  to  him  a  chattel  mortgage;  which 
covered  "  the  grass  now  growing  upon  the  premises  leased,  etc. ; 
al.so  all  the  corn,  potatoes,  oats  and  beans,  which  are  now  sown  f>r 
planted,  or  which  arc  hereafter  sown  or  planted  during  the  ne.xt 
year,  etc."  At  the  time,  but  a  small  ])art  of  the  land  had  been 
planted  with  potatoes,  and  the  greater  part  of  the  planting  of  pota- 
toes, and  all  that  of  the  beans,  was  done  in  the  following  month. 
On  July  5th  an  execution  was  issued  upon  j)laintifr's  judgment, 
and  the  sheriff  levied  upon  the  growing  crops  and  advertised  their 
sale  in  August;  at  which  sale  jdaintifT  juirchased  them.  After  the 
levy  by  the  sheritT,  Page,  the  chattel  mortgagee,  on  .July  ir)th  fore- 
closed under  his  mortgage,  gave  notice  and  sold  the  growing  crops 
to  the  defendant.  Defendant  took  possession  of  the  property  so 
])urchased  and  this  action  was  i^rought  to  recover  its  possession. 
The  trial  judge,  being  moved  l)y  each  of  the  ])arties  for  a  verdict 
in  his  favor,  directed  it  for  the  plaintiff  as  to  the  beans  and  for  the 
defendant  as  to  the  potatoes  and  ordered  the  exception  taken  to 
that  direction  to  be  heard,  in  the  first  instance,  at  the  Oeneral 
Term.  That  court  sustained  the  plaintiff's  ext-epfion  to  the  ruling 
of  the  trial  judge  and  ordered  a  new  trial;  but  allowed  an  appeal 
to  (his  court,  on  the  ground  that  a  (piestion  of  law  was  involved 
which  ought  to  be  reviewed. 

(Jh.vy.  J.  I  think  this  case  does  not,  in  principle,  differ  from 
any  other  case,  where  a  chattel  mortgage  has  b<vn  givt-n  ui>on 
j»roj)erty  in  exjM'cfaney  and  which  has  no  potential  existem-e  at  the 
time  of  its  execution.  The  fact  that  the  subject  of  the  mortgage 
is  a  crop  to  be  planted  and  raised  in  tiie  future  upon  land  does 
not  afTect  the  determination  of  this  (piestion  jjpon  estal)Iishe<l  prin- 
cij)Ies.  It  mav  Ik'  that  j)reeisely  such  a  ease,  in  it<  faets,  ha>  not 
been  passed  upon  in  this  court  ;    but  there  are  e\pn'«isinns  of  opin- 


76  CONVEYANCE.  [t  IIAP.  I. 

ion,  in  several  cases  of  a  kindred  nature,  in  the  reports  of  this  court 
and  of  other  courts  in  this  State,  wliich  leave  us  in  no  doubt  as 
to  the  doctrine  which  should  govern.  The  proposition  that  a  mort- 
gage upon  chattels  having  no  actual,  nor  potential,  existence,  can 
operate  to  cliarge  them  with  a  lien,  when  they  come  into  existence, 
as  against  an  attaching,  or  an  execution  creditor,  has  frequently 
been  discountenanced  and  repudiated.  Grantham  v.  Ilaivleij,  Ho- 
bart,  133,  is  the  general  source  of  autliority  for  the  proposition  that 
one  may  grant  what  he  has  only  potentially,  and  there  is  no  good 
reason  for  doubting  that  that  which  has  a  potential,  or  possible 
existence,  like  the  spontaneous  product  of  the  earth,  or  the  in- 
crease of  that  which  is  in  existence,  may  properly  be  the  subject  of 
sale,  or  of  mortgage.  The  right  to  it,  when  it  comes  into  exist- 
ence, is  regarded  as  a  present  vested  right.  That  which  is,  how- 
ever, the  annual  product  of  labor  and  of  the  cultivation  of  the 
earth  cannot  be  said  to  have  either  an  actual,  or  a  potential  exist- 
ence before  a  planting. 

This  action  being  one  at  law.  the  inquiry  is  limited  to  ascertaining 
the  strictly  legal  rights  of  two  contending  creditors  to  the  property 
of  their  debtor,  Powell,  in  the  crops  which  he  had  raised.  It  is 
unlike  some  of  the  cases,  which  have  arisen  between  the  lessor  of 
land  and  his  lessee.  In  such  a  case,  a  different  principle  might 
operate  to  create  and  support  the  lien  of  the  landlord  upon  the 
crops,  as  they  come  into  existence  upon  the  land.  The  title  to  the 
land  being  in  him.  an  agreement  between  him  and  the  lessee  for  a 
lien  upon  the  crops  to  be  raised,  to  secure  the  payment  of  the  rent, 
Avould  operate  and  be  given  legal  effect,  as  a  reservation,  at  the 
time,  of  the  title  to  the  product  of  the  land.  That  was  the  case  of 
Andreiv  v.  Neivcomh,  33  N.  Y.  417,  where  the  owner  of  land 
agreed  with  another  that  he  might  cultivate  it  at  a  certain  rent ; 
the  crop  to  remain  the  property  of  the  landlord,  until  the  tenant 
should  give  him  security  for  the  rent.  Judge  Denio  repudiated  the 
idea  that  the  arrangement  could  bo  called  a  conditional  sale  of 
the  flax;  because  the  subject  was  not  in  existence.  He  held  that 
the  idea  of  a  pledge  or  of  a  sale  had  no  application  and  that  the 
effect  of  the  contract  was  to  give  to  the  landlord  the  original  title 
to  the  crop.  His  remarks  upon  the  subsequent  vesting  of  the 
title  to  crops,  when  they  come  into  being,  have  reference  to  such  an 
arrangement  between  landlord  and  tenant  and  not  to  the  case  of  a 
mortgage,  or  conditional  sale  to  some  third  person  of  crops  yet  to. 
l)e  planted.  IMr.  Thomas,  in  his  work  on  Chattel  Mortgages,  upon 
the  subject  of  mortgaging  a  crop  not  yet  planted,  says  (§  149) 
"the  weigbt  of  authority  inclines  to  the  view  that  the  lien  is  an 
equitable  one  and  differs,  in  some  respects,  from  the  charge  created 
by  a  mortgage  of  property  in  existence  at  the  date  of  the  agree- 


sKf.  n.]  i;()cm:sTi:K  nisr.  co.   v.  uasky.  77 

iiiiiit  ;  "'  and,  a^ain,  In-  .-ay>  **  tlu'  aiillitirilics  an'  mainly  in  ilic 
circct  that  such  a  niort^^a^Xr  conveys  no  tilh-  or  interest  as  a;rain-t 
attaching',  or  juil^Miicnl  crciliiors  of  the  niort;,'a;,'()r."  AI)OUt  this 
t|uestion  of  mort^agin^  personal  |)r()|)erty,  to  he  sul»sc»|uently  ac- 
•  [uirecl,  nuieh  has  hcen  written  in  the  hooks,  which  I  dccin  unneces- 
sary to  resume  here  at  any  great  length.  It  results  from  a  n-view 
of  the  autiiorities  that  a  mortgage  cannot  he  given  future  etr<ct  as 
a  lien  upon  personal  property,  which,  at  the  time  of  its  <lelivery, 
was  not  in  existence,  actually  or  potentially,  when  the  rights  of 
creditors  have  intervened.  At  law  such  a  mortgage  must  he  con- 
ceded to  he  void.  The  mortgage  could  have  no  positive  operation 
to  transfer  in  prcTf^enti  proj)erly  not  in  esse.  At  furthest,  it  might 
operate  hy  way  of  a  jiresent  contract  hetween  the  i)arlies  that  tlu; 
(  reditor  should  have  a  lien  npon  the  property  to  he  subsequently 
ac{|uircd  hy  his  dchtor,  which  equity  would  enforce  as  again-t  the 
latter. 

In  Bank'  of  Lansingburgh  v.  Cranj.  1  Barl».  T)!-.',  I'aige,  J.,  ob- 
>«rved:  "  I  strongly  incline  to  the  opinion  that  a  chattel  mortgage 
can  only  operate  on  property  in  actual  existence  at  the  time  of  its 
execution;  that  it  cannot  be  given  on  the  future  products  of  real 
estate;  and  that  if  given  one  day,  or  one  week,  before  the  product 
of  the  land  comes  into  existence,  it  is  as  inoperative  as  if  the  chattel 
mortgage  had  been  given  on  a  crop  of  grass  or  grain,  one.  two.  or 
three  years  previous  to  its  production." 

In  a  subse([ucnt  case,  the  same  learned  judge  considered  the 
nature  of  a  mortgage  relating  to  property  not  then  in  existence 
and  its  effect  as  to  creditors  of  the  mortgagor.  In  Otis  v.  ,Sj7/,  8 
Rarb.  102,  tlie  i)laintiff  claimed  under  a  chattel  mortgage,  which, 
after  describing  the  property  mortgaged,  contained  the  following 
clause:  "All  scythes  manufactured  out  of  the  said  iron  and  steel 
and  all  scythes,  iron,  steel  and  coal  which  may  be  purchased  in  lieu 
of  the  property  aforesaid."  Subsequently,  the  property  was  taken 
under  exec-utions  issued  on  judgments  and  the  action  was  brought 
for  its  taking  and  detention.  Paige,  J.,  refers  to  his  opinion  in 
Hank  of  Lansingburgh  v.  Cranj.  that  a  chattel  mortgage  could  only 
operate  on  pro|)erty  in  actual  existence  at  the  time  of  its  execution. 
He  elaborately  discusses  the  question  of  whether  such  a  nmrtgage 
was  a  lien  Uj)on  the  |)ro|)erty  when  acquired,  as  against  the  creditor-? 
of  the  mortgagor,  and  reviews  very  many  authorities  in  l*'ngland 
and  some  in  this  country.  11  is  conclusions  were  advcTse  to  the 
proposition,  lie  held  that,  as  to  subseipu-ntly  acquired  propiTty, 
the  mortgage  could  only  be  regarded  as  a  niere  contract  to  give  a 
further  mortgage  \ipon  such  pn»perty  and  that  no  specific  lien  wa«* 
created  thereby.  He  says,  "  1  have  eotJie  to  the  c<»nelusion,  as  the  re- 
sult of  all  the  authorities,  that   if  the  mortgage  in  this  case  did 


Yg  COXVEYANCE.  [CHAP.  I. 

iunount  to  a  contract  to  execute  a  further  mortgage  on  subsequently  I 
iK-quired  property,  it  was  good  as  an  executory  contract  only  and 
did  not  constitute  a  lien  on  the  articles  of  the  kind  mentioned 
therein  when  subsequently  purchased."     In  Gardner  v.  McEwen, 
19  X.  Y.  123,  the  chattel  mortgage  to  the  plaintiff,  upon  prop- 
erty in  the  store,  "  or  which  might  thereafter  be  purchased  and  put 
into  store,"  was  held  inoperative  to  convey  the  title  to  the  after- 
acquired  property,  as  against  the  defendant,  who  purchased  it  at  a 
sale  under  execution  upon  a  judgment    against    the    mortgagor. 
McCaffrey  v.  ^Voodin,  65  X.  Y.  459.  was    an    action    in    trover. 
Plaintiff  was  lessee  and  defendant  was  agent  for  the  lessor.     The. 
former  covenanted  in  the  lease  that  the  latter  should  have  "  a  lien 
as  security  for  the  payment  of  the  rent  "'  on  all  the  personal  prop- 
ertv,  etc.,'  which  should  be  put  upon  the  premises,  "  and  such  lien 
to  be  enforced,  on  the  non-payment  of  the  rent,  by  the  taking  and 
the  sale  of  such  property  in  the  same  manner  as  in  cases  of  chattel 
mortgages  on  default  thereof."     By  virtue  of  this  provision  in  the  i 
lease,  the  defendant  took  the  farm  produce.     The  decision  upheld  | 
the  right  of  the  landlord  to  do  so ;   holding  that  as  the  crops  camo 
into  existence  they  vested  in  the  landlord.     It  is  to  be  noted  that 
the  court  considered  the  case  as  one  to  be  governed  by  equitable 
principles,  observing  that  "the  matter  comes  up  solely  between 
the  parties,  there  being  no  intervening  rights  of  creditors."     Re- 
ferring to  Gardner  v.  McEwen  (supra),  it  was  remarked  that  that 
"  is  a  case  between  the  mortgagee  and  creditors  and  was  affected 
Ity  our  act   concerning  filing  chattel   mortgages."     Treating   the 
question  as  one  for  the  application  of  equitable  principles,  it  was 
held  that  the  lessor  was  entitled  to  set  up  her  equitable  rights,  as  a 
defense  to  the  plaintiff's   (the  lessee's)   action  of  trover.     In  the 
same  case.  Gray,  C,  observed  that,  if  the  relation  of  mortgagor  and 
mortgagee  liad  been  created  between  the  parties,  "  it  was  inopera- 
tive upon  any  property  which  at  the  time  of  its  execution  was  not 
actually,  or  potentially,  either  possessed  or  owned  by  McCaffrey." 
Tn  Cressey  v.  Sahre,  17  Hun,  120,  where  the  opinion  was  delivered 
bv  Boardman,  J.,  and  was  concurred  in  by  Justices  Learned  and 
Bockes,  a  chattel  mortgage  upon  potatoes  (among  other  articles  of 
property),  which  were  not  yet  planted,  was  held  inoperative.     The 
distinction  was  there  mentioned  between  a  case  like  McCaffrey  v. 
\Yo()din,  where  the  question  of  title  was  between  the  parties  to  the; 
contract  and  one  where  it  arose  between  the  mortgagee  and  a  third 
person.    In  Coats  v.  Donnell,  94  N".  Y.  1G8,  Andrews,  J.,  observed 
that  "  a  contract  for  a  lien  on  property  not  in  esse  may  be  effectual 
in  equity  to  give  a  lien  as  l)ptween  the  parties,  when  the  property 
cftmes  into  existence  and  wbere  tliere  are  no  intervening  rights  of 
creditors  or  third  persons."    Kribbs  v.  Alford,  120  N.  Y.  519, 


t^Kf.  11.]  KOCIIIlsrr.l!    DJST.    CO.    r.    ICASEY.  79 

nrognizi's  tlir  invalidity  al   law  of  a  .  halt. -I   rl;,'agr  of  property 

thereafter  to  l)e  aeiiuireil,  l)iit  liol<l>  that  as  lu'tweeii  the  partie.s 
their  eontraet  \voi;l.l  he  <on>lrue(l  in  eipiily  a.<  creating  an  equitabh* 
lien,  which  couhl  he  eiifitreeil. 

The  iilea  of  a  elialtd  niort-a.-re  i-  that  of  a  conveyance  of  per- 
nal  jiroiM-rly  to  se.iire  the  (ichl  of  the  mortgagor;  whicli,  being 
...nilitional  at  the  time,  lieiomc^  ahMilute  if.  at  a  fixed  time,  the 
pmpertv  is  not  redeemed,  ami  the  statute  makes  it  valid,  as  against 
creditors  of  the  mortgagor,  only  when  filed  as  directed.  The  stat- 
ute provides  for  the  liling  as  a  suhstitute  for  "an  immediate  de- 
livery," or  '*  an  actual  aixl  continiud  change  of  possession  of  the 
things  mortgagi'd."  Siuh  jjrovisions  seem  to  me  to  exclude  the 
idea  of  a  chattel  mortgage  upon  non-existent  things;  or  that  sueli 
an  instrument  could  operate  to  defeat  the  li<'n  of  an  attaching,  or 
an  execution  creditor  upon  subsequently  ac(iuired  propiTty.  Re- 
garding the  chattel  mortgage  in  ([uestion  as  a  mere  executory  agree- 
ment to  give  a  lien  when  the  property  eame  into  existence,  some 
further  act  was  necessary  in  order  to  make  it  an  actual  and  effec- 
tual lien  as  against  creditors.  But  there  was  no  further  act  by  the 
parties  to  the  instrument  to  create  such  an  actual  lien  and  the  levy 
of  the  execution  upon  the  croj)?  operated  to  transfer  their  posses- 
sion from  the  owner  to  that  of  the  sherifT.  As  against  his  posses- 
sion the  equities  of  the  mortgagee  are  unavailing  for  any  purpose. 
Bi'tween  the  two  creditors  it  is  a  question  of  who  had  gained  th.j 
legal  right  to  have  the  crops  in  satisfaction  of  his  claim  and  the 
equitable  right  of  the  mortgagee  to  them,  as  against  his  debtor,  was 
defeated  by  the  seizure  at  the  instance  of  the  judgment  creditor. 
We  are  satisfied  as  to  the  correctness  of  the  conclusion  reached  by 
the  General  Term  below,  that  there  should  have  been  a  direction  of 
a  verdict  for  the  plaint i(T  f(»r  the  potatoes  and  beans,  obtained  from 
the  planting  done  after  the  execution  and  delivery  of  the  mortgage. 
The  order  apjjealed  from  should  be  atVirmed  and,  un.hr  the 
stipulation,  judgment  ab.-oluto  should  be  ordcnd  for  the  plaintilT, 
with  costs  in  all  the  courts.' 

All  concur,  except  Karl.  .1..  not  voting. 

Onhrrd  nrrordiiujhi. 

'  Hutt  V.  i:ilill.   1!1  Wall.  :.44    (187:n  ;    ir/...7. »    \.  /).<•/..».  «;«   I..\va.  721 
ISStl).  contra.     Mut   src  Comslnrk  v.  Srnhs,  7   Wis.    l.V.)    (IS-IH).  denyinj; 
.  ir<-it  to  ii  iii(irt},'aj;o  of  ii  crop  nuulo  nfter  phinting. 


go  CONVEYANCE.  [CUAP.  I. 


PIERCE  V.  EMERY. 

Supreme  Judicial  Court  of  New  Hampshire,  1856. 

(32  N.  II.  48-i.) 

Bill  in  Equity.  The  following  facts  appear  from  the  state- 
ments of  the  bill.i 

The  Portsmouth  and  Concord  Railroad,  a  corporation  established 
under  the  laws  of  New  Hampshire,  made  to  the  complainants, 
Joshua  W.  Pierce,  Alfred  W.  Haven,  Josiah  G.  Hadley  and  to 
Alexander  Ladd,  deceased,  Avhose  executrix,  Maria  T.  Ladd,  is  the 
remaining  plaintiff,  sundry  mortgages,  dated  respectively  February 
12,  1850,  July  6,  1850,  March  10,  1851,  May  29,  1851,  August  19, 

1851,  and  March  3,  1852,  and  also  made  sundry  other  mortgages 
to  Joshua  W.  Pierce  and  Alfred  W.  Haven,  two  of  the  complain- 
ants, dated  respectively  June  26,  1852,  July  13,  1852,  August  16, 

1852,  October  15,  1852,  November  16,  1852,  December  26,  1852, 
February  12,  1853,  June  27,  185-1,  September  23,  1854,  and  April 
12,  1855. 

The  mortgages  were  of  personal  property,  and  the  bill  set  forth 
a  description  of  it  as  contained  in  the  different  mortgages,  and 
specified  the  debts  and  liabilities  secured  by  each.  By  the  first 
two  mortgages,  made  prior  to  August  20,  1850,  besides  specific 
articles  named  in  the  mortgages,  all  the  personal  property  of  the 
railroad  was  mortgaged ;  and  by  the  subsequent  mortgages  the  fur- 
niture of  the  road,  locomotives,  cars,  fencing  stuff,  fuel,  and  other 
personal  property,  were  mortgaged  from  time  to  time,  in  some  cases 
to  secure  debts  that  accrued  before  August  20,  1850,  and  in  others^ 
debts  which  accrued  after  that  date;  but  none  of  the  mortgages 
were  given  on  the  sale  of  property  to  the  road  for  security  of  the 
purchase  money. 

The  mortgage  of  June  26,  1852,  conveyed  all  the  right,  title  and 
interest  of  the  railroad  to  the  railroad  iron  imported  in  the  ship 
General  Berry,  then  Ix'longing  to  the  road,  subject  to  the  lien  of 
the  United  States  for  duties,  being  aljout  591  tons,  to  secure  a  note 
for  $10,000,  dated  April  26,  1852.'  ... 

.  The  several  mortgages  under  which  the  plaintiffs  claim  remain 
in  whole  or  in  part  unsatisfied.  All  the  property  described  in  the 
mortgages  made  after  August  20,  1850,  was  purchased  by  and  came 
to  the  possession  of  the  road  subsequently  to  that  date;  and  all  the 
property  named  in  the  mortgages  running  to  Pierce  and  Haven, 

'  Tliis   sliitoiiioTit    of   f;»cts  lias  been   abbreviated. 


SK<-.  II. 1  I'IKKCi:    r.    KMKKY.  81 

with  the  cxi't'pt ion  of  the  iron,  \va>  paiil  for  with  money  U-nt  to  lii.- 
road  l)V  tlu'  parties  nanuMl  in  those  niort^'a;,'es,  as  is  stated  therein. 
In  all  these  niorlj^ap'S  it  is  stated  tiiat  they  were  piven  for  the  se- 
curity of  the  jjartics  named  in  tlu'in  res|)(rtivoly.  All  these  niort- 
papes  were  duly  executed  and  recorded  in  Portsmouth,  which  was 
hy  law  estahlished  as  the  |)lace  of  husiness  for  the  road.   .   .  . 

On  the  i;5th  of  July,  IH.JO,  the  Legislature  of  this  State  pas>ed 
an  act  entitled  '*  An  act  to  aid  the  construction  of  the  rorlsmoutli 
;ind  Concord  Railroad,"  authorizinfj  the  road  to  issue  bonds  to  the 
amount  of  $;5r)0,()()0,  payable,  with  inten'st,  in  not  less  than  ten. 
nor  more  than  twenty  years;  the  act  to  take  efTect  when  the  st<>.k- 
holders  should  accept  and  adopt  it.   .   .   . 

On  the  3d  of  Au<rust,  1850,  the  stockholders  met,  accepted  the 
act,  and  authorized  the  directors  to  appoint  trustees,  make  a  mort- 
gage, and  issue  bonds  at  their  discretion,  (^n  the  201  h  of  August, 
1850,  the  directors  made  a  mortgage  to  Kobert  Rice,  William 
Plumer,  Jr.,  and  Josiah  Minot,  trustees  for  those  wlio  were  or 
sliould  become  holders  of  tlie  bonds,  to  secure  payment  of  bonds  to 
the  amount  of  $350,000,  issued  the  same  day.  The  original  trus- 
tees, by  death  and  resignation,  are  now  out  of  that  ofbce,  ami  the 
defendants,  James  W.  Emery,  Thonuis  L.  Tullock  and  Xathaniil 
White,  are  substituted  by  appointments  made  under  the  act  and 
mortgage. 

The  mortgage  deed  to  the  trustees  recites  that  the  trustee-  luul 
been  appointed  under  the  act  to  take  and  hold  security  on  all  the' 
property  of  said  company,  and  all  its  rights,  franchises,  powers  and 
jjrivileges,  in  mortgage  and  in  trust,  for  the  paym(>nt  and  security 
of  whoever  then  or  tluTcafter  might  become  the  lawful  holders  of 
haid  l)onds,  or  any  of  them,  and  conveys  to  the  trustees,  in  the  name 
of  the  Portsmouth  and  Coiuord  Railroad,  "the  railroad  of  said 
corporation,  together  with  all  its  rights,  powers,  franchises  ami 
l)rivileges,"  in  the  towns  in  which  it  was  laid  out,  "with  all  the 
lands,  buildings  and  fixtures  thereto  belonging,  or  which  might 
thereafter  thereto  bi-long,  with  all  the  rights,  franchises,  powers  and 
privileges  now  belonging  to  and  held,  or  which  may  hereafter  be- 
long to.  or  be  held,  by  said  corpfiralion  :  <oj,M'ther  with  the  loeomi>- 
tive  engines,  passeng(>r,  baggage,  dirt,  freight  and  hand  cars,  an<l 
all  the  other  personal  property  of  said  corporation,  as  the  same  now 
is  in  us(^  by  said  c«irporation,  or  as  the  same  may  bo  hereafter 
changed  and  renewed  by  said  corporation;  to  have  and  to  hold  the 
said  railroad,  franchises  and  eslate  aforesaid,  whether  real  or  per- 
sonal, with  all  the  privileges  and  appurlenance-;.  legislative  grant', 
powers,  rights,  and  privileges,  now  or  hereafter  granted,  thereto 
belonging."  in  trust  for  the  bond-holders,  and  in  mortgage  for  se- 
curity of  the  bonds;  and  the  trustees  are  empowered  by  the  d»>ed. 


32  COXVEYANCE.  [CHAP.  I. 

on  breach  of  the  condition,  to  sell  "  the  said  railroad,"  and  to  make 
all  necessary  conveyances,  "  passing  all  the  property,  real,  personal 
and  mixed,  rights,  powers,  franchises  and  privileges  of  this  corpo- 
ration," to  the  purchaser  or  purchasers. 

On  the  same  20th  of  August  the  directors  issued  bonds  to  the 
amount  of  $350,000,  from  which  the  road  realized  $289,535,  and 
no  more.  At  that  time  the  road  owed  about  $158,700,  and  have 
since  expended  in  constructing  and  furnishing  the  road  at  least 
$573,000,  and  of  the  debts  then  owing  more  than  $100,000  have 
been  paid. 

The  condition  of  the  mortgage  to  the  trustees  having  been  broken, 
the  present  trustees,  Emery,  Tullock  and  White,  at  the  request  of 
certain  bond-holders,  according  to  the  terms  of  the  mortgage,  on 
the  14th  day  of  May,  1855,  applied  to  the  directors  to  surrender  to 
them  all  the  mortgaged  premises;  and  the  directors  by  deed  of 
surrender,  dated  May  31,1855,  surrendered  and  transferred  to  them 
all  the  property,  rights,  powers,  franchises  and  privileges  named  in 
the  deed  of  mortgage,  to  hold  according  to  the  terms  and  conditions 
thereof.  The  trustees  have  taken  possession  of  the  road,  and  under 
their  mortgage  claim  the  property  mortgaged  to  the  complainants ; 
and  the  property  has  been  delivered  into  the  hands  of  the  trustees, 
under  an  agreement  that  it  should  be  used  in  operating  the  road, 
and  a  compensation  paid  for  it. 

The  stockholders  have  voted  that  it  is  inexpedient  to  redeem 
the  road  and  its  property  from  the  mortgage  to  the  trustees,  and 
under  the  provisions  of  the  mortgage  the  trustees  will  be  bound 
to  sell,  in  about  eight  months  from  the  31st  of  May,  1855,  and 
they  threaten  to  include  in  their  sale  the  property  mortgaged  to 
the  complainants. 

The  original  trustees,  when  they  took  their  mortgage,  had  notice 
of  the  prior  mortgages,  and  also  many  persons  who  afterwards  be- 
came purchasers  and  holders  of  the  bonds. 

The  present  trustees  and  the  Portsmouth  and  Concord  Eailroad 
are  the  parties  defendant  to  the  bill. 

The  bill  prays  that  the  trustees  may  be  decreed  to  pay  the  com- 
plainants the  debt  secured  by  their  mortgage,  before  they  sell 
the  property  mortgaged  to  the  complainants,  and  bo  enjoined  not 
to  sell  until  they  pay;  or,  if  allowed  to  proceed  with  the  sale, 
may  be  decreed  to  pay  out  of  the  proceeds  the  debts  secured  by 
the  complainants'  mortgage,  for  a  foreclosure  and  for  general 
relief. 

Perley,  C.  J.^  Corporations,  as  a  general  rule,  have  power  to 
sell  their  property,  real  and  personal,  and  to  mortgage  it  for  the 
'  Portions  of  the  opinion  have  been  omitted. 


^^^. ,  II.]  nr.ncE  r.  kmkky.  S'\ 

-iturity  of  tlieir  dihts  (Com.  Dig.,  Corporation,  F,  18;  Jidrnj  v 
Mifcluinl.'i'    h\rrli(nitjr    Co..  1   Sand.  Cli.  l*H() ;  DrsjHilrh    Line    nf 
J'<ichfls  V.  licUamy  Manuf.  Co.,  V*  N.  II.  'i(H\) . 

Railroad."*,  b}'  the  law  of  this  State,  are  public  corporntions,  so 
far  as  to  bo  subject  in  many  re.'^pects  to  fjenoral  lepjislation  and  tin* 
lontrol  of  the  public  authorities.  They  are  creat<'d  lo  answer  a 
pulilic  ohjctt.  and  are  bound  to  the  State  for  tin;  jx'rfnrmance  of 
iheir  pul)lic  duty.  They  can  do  no  act  which  would  amount  to  a 
n-nunciation  of  their  duty  to  the  public,  or  which  would  directly 
.md  necessarily  disal)le  them  fmni  performing:  it.  They  cannot 
ronvey  away  their  franchis(>  and  corjiorate  rii:lits,  nor  perhaps  the 
track  and  riijht  of  way  which  they  take  ami  hold  for  the  necessary 
use  of  their  road. 

But  they  may  contract  debts;  may  purchase  on  credit;  ancl 
we  -see  nothing  in  the  nature  of  their  busini'ss,  or  in  their  rehu 
tion  to  the  pul)lic,  which  should  prevent  them  from  making  ;i 
\alid  mortgage  of  th-^ir  personal  property,  not  afTi.xed  to  the  road, 
I  hough  used  in  the  operation  of  it.  Instead  of  disabling  the  roaU 
from  performing  its  public  duty,  a  mortgage  might  assist  in 
doing  it,  in  the  same  way  tliat  otiier  corporations  or  indiv'  lual-; 
are  aided  in  carrying  on  their  business  by  mortgages  of  thelf 
property. 

The  two  mortgages  made  to  the  complainants  before  the  mort- 
L:age  to  the  trustees  for  the  bond-holders,  we  think  are  valid  to  hold 
the  personal  proj)erty  specifically  described  in  them  for  the  security 
of  so  much  of  the  del)ts  as  remain  unjiaid.  The  bill  does  not  stace 
liow  much  of  those  debts  arc  still  due.  Rut  the  complainants  have 
no  right  in  the  road  by  virtue  of  those  mortgages;  th(\v  must  as- 
^ert  their  security  by  taking  the  property  away,  as  in  the  case  o*  a 
mortgage  by  an  individual. 

A  dilferent  and  more  ditlicult  question  arises  as  to  the  claim  <>f 
the  complainants  under  mortgages  made  after  the  20th  of  August. 
1850,  the  date  of  the  mortgage  to  the  trustt'cs  for  the  bond- 
holders. 

The  ground  taken  by  the  bond-holders  is  that  the  act  of  the 
Ix'gislature  authoriz«'d  a  mortgage,  not  only  of  the  pro|)erty  which 
at  the  time  belonged  to  the  road,  but  of  all  the  fninchi.ses  and  cor- 
porate rights  of  the  road,  and  the  road  its«'lf;  that  the  trustees 
under  such  a  mortgage  would  take,  as  security  for  the  bonds,  the 
railroad  and  all  its  franchi.ses  and  rights,  as  one  entire  thing,  and 
tiiat.  as  incident  to  this  mortgage  of  the  road  and  its  franchiw.  all 
the  property,  real  and  jiersonal,  which  juight  at  any  time  afterward-; 
IwH'ome  vested  in  the  road,  would  be  covered  bv  the  mortgage,  and 
held  by  the  trustees,  stibject  to  the  right  in  the  dire«'tors.  until 
breach  of  the  condition,  of  managing  the  road  for  the  benefit  of  all 


84  COXVEYAXCE.  [CHAP.  I, 

concerned,  and  of  selling  sueli  of  the  ])roperty  from  time  to  time  as 
might  be  convenient  in  the  course  of  the  business,  provided  they 
substituted  other  property  of  equal  value;  that  when  the  truster's 
should  make  a  sale  under  their  mortgage,  all  the  property,  and  all 
the  franchises  and  corporate  rights  of  the  road  would  pass  to  the 
purchasers,  subject  in  their  hands  to  the  public  liabilities  and  duties 
of  the  corporation;  that  the  mortgage  deed  in  this  case  exhausts 
the  powers  conferred  by  the  act,  and  covers  the  road  and  its  fran- 
chises, and  the  accruing  property,  as  an  accession  to  the  thing  mort- 
gaged and  as  part  and  parcel  of  it;  that  consequently  the  lien  of 
the  mortgage  to  the  trustees  attached  upon  property  subsequently 
acquired  immediately  upon  its  vesting  in  the  road,  and  the  claim  of 
the  complainants  must  be  postponed  to  the  mortgage  made  for  se- 
curity of  the  bond-holders.  Whereas,  the  complainants  maintain 
that  the  act  confers  no  power  to  make  such  a  mortgage,  and  that 
the  mortgage  to  the  trustees  does  not  cover  property  of  the  road 
cubsequently  acquired. 

We  take  it  to  be  a  general  rule  of  the  common  law  that  nothing 
can  be  mortgaged  that  is  not  in  existence,  and  does  not  at  the  time 
of  the  mortgage  belong  to  the  mortgagor  (Tapfield  v.  Ilillman. 
4  M.  &  G.  240^  Lunn  v.  Thurston,  1  M.,  G.  &  S.  383;  ^yinslow  v. 
Merchants'  Ins.  Co.,  4  Met.  306;  Jones  v.  Richardson,  10  Met.  4S8 ; 
Moody  V.  Wright,  13  Met.  17). 

This  rule,  that  a  mortgage  cannot  cover  future  acquisitions,  would 
seem  to  have  been  established  on  the  technical  ground  that  a  mort- 
gage is  a  sale  upon  condition,  and  by  the  common  law  there  could 
be  no  sale  of  a  thing  not  in  esse,  and  not  at  the  time  the  property 
of  the  seller. 

By  the  civil  law  a  mortgage  may  cover  the  future  property  of 
the  mortgagor  (Domat.,  part  1,  book  3,  tit.  1,  §  1,  articles  5  and  7). 
And  in  some  jurisdictions  where  the  maxims  of  the  common  law 
prevail,  mortgages  have  been  sustained  covering  the  future  and 
shifting  stock  of  a  trading  or  manufacturing  establishment;  as  in 
the  case  of  Holly  v.  Brown,  14  Conn.  255.  So  in  Abbott  v.  Good- 
win, 20  Maine,  408,  a  mortgage  of  a  stock  in  trade  and  of  the  sub- 
stituted goods  was  held  to  be  valid.  And  such  a  mortgage  w'as  siis- 
tained  against  an  assignee  in  bankruptcy  in  Mitchell  v.  Winslotr. 
2  Story,  030.  In  these  cases,  not  merely  the  existing  property,  but 
also  the  business  and  establishment  appear  to  have  been  regarded 
as  the  subjects  of  the  mortgage;  and  the  mortgagor,  while  he  re- 
mained in  possession,  was  looked  upon  In  the  light  of  an  agent  for 
the  mortgagee,  so  far  as  his  interest  was  concerned,  with  an  implied 
authority  to  buy  and  sell,  and  manage  generally,  according  to  the 
usual  course  of  the  business. 

Even  where  the  strict  rule  against  the  mortgaging  of  subsequently 


SKI  .  11.1  PIERCK    V.    KMERY.  85 

;i((|iiinMl  |ir<>iHitv  i>  cnt'orccd,  if  the  iiiort<:;i<,'«'  imrport  to  cover  such 
|in)|H'rty.  iind  tlic  iii(iit^'a«,'<'c'  take  possession,  with  assent  of  the 
iiiort^M;,'or,  hi'fore  another  title  attaches,  he  will  hold  from  tinie  to 
I'MK',  not  as  niort«,'a<^ee,  hut  as  pawnee,  nmltr  the  eontraet  eon- 
taiiu'd  in  the  inort^^a^'e  {lioirhi/  v.  liirr,  11  Met.  :]:\:\).  And  in 
niort^'af,'es  (d"  real  estate  it  is  a  familiar  ndi-  that  Itiiildin^is.  and 
other  thing's  annexed  to  land  after  the  mi»rt;:a.L:e,  are  rejjarded  as 
accessions  to  the  oriy;inal  suhjeet  of  the  mort;:a;:e,  and  c(»vered  hy 
it  (Pettingill  v.  Evans,  5  N.  II.  54). 

There  is,  therefore,  no  intrinsic  ditlieully  in  a  inortpifje  which 
should  cover  the  future  and  shiftin;^  stock  and  property  of  a  trading' 
r  manufacturin«,^  estaldishmenl,  or  of  a  corpoiation.     Hut  hy  the 
ummon  law.  accordin<,f  (o  tjie  weij^Iit  of  authority  in  other  juri.sdie- 
tions,  and  as  we  understand  the  rule  to  be  in  this  State,  no  mort- 
;:a«ie  can  he  made  to  cover  any  personal  property,  except  specific 
articles  helonj^in^'  to  the  niort«2:a<;or  at  th(>  time  of  the  mort^'af,'e: 
nd,  unaided  hy  the  special  act  of  the  Lefjislature,  the  railroad  in 
lis  case  would  have  no  power  to  make  a  mortgage  that  should  have 
iie  effect  contendeil  for  liy  the  hondholders.     The  question  whether 
•le  trustees  can  hold  sul)st'(|uenlly  acquin^l  property  a^'ainst   the 
aim   of   the  complainants,    will,   therefore,   dejteiul   on   the  cim- 
-I ruction  of  that  act  and  of  the  mortgafje  deed  made  und«'r  it.     Did 
liie  act  authorize  the  road  to  make  a  mortfra<re  which  should  cover 
jiroperty  of  the  road  afterwards  actiuired?  and  if  so,  did  the  direc- 
tors make  such  a  mort_<i:a^e  in  this  instance? 

The  word  ''  franchise,"  so  often  u.sed  in  the  act  and  in  the  deed, 
has  various  significations,  both  in  a  lej^'al  and  jH)i)ular  sense.  A  cor- 
poration is  itself  a  franchise  helonginf^  to  the  menihers  of  the  cor- 
|inration;  and  a  corporation.  l)ein<:  itself  a  franchise,  may  hold 
other  franchises,  as  rights  and  franchises  of  the  corporation.  .V 
municipal  corporation,  for  instance,  may  have  the  franchise  of  a 
iiarket,  or  of  a  local  court;  and  the  dilTerent  powers  of  a  private 
corporation,  like  the  right  to  hold  and  dispose  of  property,  are  its 
franchises.  In  a  more  j)opular  sense  the  ])olitical  right  of  subjects 
;ind  citizens  are  called  franchises,  like  the  electoral  franchis«>  (Com. 
hig..  Franchise,  F.  1.;  .\ngell  it  .\mes  on  Corp  ^> :  Tf"'  K'n'n  v. 
London,  Skinner,  :n<>.  WW). 

\  cor|)oralion.  being  itself  a  franchise,  consists  and  is  made  up 
"f  its  rights  and  franchises;  and  when  all  its  franchises  are  gone, 
l>y  surrender,  by  forfeiture  judicially  ascertained.  I)y  limitation  of 
the  grant,  or  in  any  other  way,  tin*  corp(»ration  has  no  longer  any 
practical  existence.  If  the  franchise  or  franchises  are  of  a  natiire 
to  continue  after  they  are  hxt  by  the  corporation,  they  may  be  re- 
I'ranted  to  another  corporation,  or  to  other  individiials ;  but  tho 
!ornier  corporation  is  substantially  dissolved  (2  Kent's  Com.  305, 


86  COXVEYAN-CE.  [CHAP.  I, 

and  note  a,  308  and  309 ;    The  King  v.  Pasmore,  3  T.  R.  100 ; 
Com.  V.  Hancock  Bridge,  2  Gray,  59,  GO). 

The  grant  of  a  corporation  is  a  contract  between  the  State  grant- 
ing it  and  the  grantees.  It  is  peculiarly  and  emphatically  so  in 
the  ca>c  of  railroad  corporations,  which  are  created  npon  public 
considerations,  and  clothed  with  extensive  and  extraordinary  pow- 
ers, for  the  purpose  of  enabling  them  to  accomplish  the  public 
object  contemplated  in  the  grant.  The  members  and  stockholders 
have  private  rights;  but  the  corporations  are  also  bound  to  the 
discharge  of  their  public  duties,  and  cannot,  without  the  aid  of 
special  legislation,  disable  themselves  from  performing  their  duty 
to  the  public  by  alienating  or  transferring  their  corporate  rights 
and  franchises.  They  may  sell  or  mortgage  their  personal  prop- 
erty, but  they  cannot  sell  or  mortgage  with  it  the  right  to  manage 
and  control  the  road,  nor  any  other  corporate  right  or  franchise 
(The  King  v.  The  Severn  &  w\je  R.  W.  Co.,  2  B.  &  Aid.  646  ;  Reg.  v. 
The  Eastern  Counties  R.  IF.,  10  Adol.  &  Ellis,  531 ;  Reg.  v.  South 
Wales  R.  W.  Co.,  14  Ad.  &  Ellis  (N.  S.)  902;  Clark  v.  Washington. 
12  Wheaton,  46,  54;  Winchester  &  Lexington  Turnpike  R.  Co.  v. 
Vimont,  5  B.  Monroe,  1 ;  Arthur  v.  The  Commercial  <f-  R.  R.  Bank, 
9  S.  &  M.  394). 

If  this  corporation  had  authority  to  make  a  mortgage  that  should 
convey  the  franchise  and  corporate  rights,  the  power  must  be  de- 
rived from  the  special  act.  It  is  a  very  familiar  rule  in  the  inter- 
pretation of  statutes  that  all  parts  of  the  act  must  be  considered 
together,  and  such  construction  given  to  it  as  will  best  answer  the 
intention  of  the  makers.  To  accomplish  this  object,  in  some  cases 
the  letter  of  the  statute  may  be  restrained  by  an  equitable  construc- 
tion; in  others,  enlarged;  and  sometimes  the  construction  may  be 
even  contrary  to  the  letter  {Ilolhrook  v.  Ilolhrook,  1  Pick.  250; 
Somerset  v.  Dighton,  12  Mass.  384).  On  examination  of  this  act 
it  will  at  once  be  seen  that  the  several  parts  cannot  all  take  effect 
in  the  sense  that  would  most  naturally  belong  to  each,  if  they  were 
considered  separately.  In  the  third  section  the  directors  are  author- 
ized to  mortgage  "  the  whole  or  a  part  of  the  real  or  personal  estate 
of  said  corporation."  Stopping  here,  and  taking  this  clause  by 
itself,  no  inference  can  be  drawn  from  it  of  an  intention  to  give  the 
power  of  mortgaging  the  franchises  or  future  acquisitions  and 
accessions  of  personal  or  real  estate.  This  is  the  clause  in  which 
the  authority  to  mortgage  is  directly  conferred.  If  a  more  extensive 
power  were  intended  to  be  given  by  the  act,  why  is  no  mention  mad^:" 
of  it  here  ?  The  argument  drawn  from  this  part  of  the  act  against 
the  construction  contended  for  by  the  bondholders,  goes  upon  tiie 
ground  tliat  this  clause  was  intended  to  include  and  define  all  the 
powers  of  mortgaging  conferred  by  the  act. 


ShX'.    11.] 


I'lKltCK    1-.    EMKHY.  87 


But  l)y  tlu'  same  scrtioii  the  trusltfs  arc  authorized  to  sell,  ac- 
cording to  till'  conditions  and  limitations  that  may  he  contained  in 
the  mortgage  deed,  "the  real  and  personal  estate,  and  all  rights, 
franchises,  j)o\vcrs  and  privileges  named  in  said  mortgage  deed." 
The  directors  therefore  are  authorized  to  name  in  the  mortgag<- 
deed,  not  only  the  real  and  personal  estate,  hut  rights,  franchises, 
powers  and  privileges  of  the  corporation.  The  rights  and  fran- 
chises named  in  the  deed  are  to  he  disposed  of  hy  sale,  to  enforce 
the  mortgage  security  in  the  same  way  with  the  j)roj)erty  morl 
gaged;  and  there  is  nothing  from  which  it  can  he  inferred  that  the 
riglits  and  franchises,  and  the  property  of  the  corporation,  are  not 
to  l)e  named  in  the  same  way  and  c(niveyed  in  the  same  way  hy  tin- 
deed ;  that  is  to  say,  the  rights  and  franchises  are  to  he  conveyeil 
and  mortgaged  like  the  property,  and  are  to  he  disposed  of  under 
the  mortgage  for  the  same  purpose,  and  in  exactly  the  same  man- 
ner. The  directors  may  name  in  the  mortgage — in  other  wonls. 
they  may  convey  in  mortgage — any  j)art  or  all  the  real  and  y)er- 
sonal  property,  and  any  or  all  the  rights,  franchises,  powers  ami 
])rivileges  of  the  corporation.  The  act  sets  no  limit  on  their  di- 
cretionarv  power  in  this  respect;  and  whatever  the  directors  nani>' 
in  the  mortgage  which  they  give  in  hehalf  of  the  road,  is  to  hi- 
.lisjmsed  of  in  the  same  way  for  the  satisfaction  of  the  mortgage 
deht,  whether  it  he  the  property  or  the  rights  and  franchises  of  th.- 
corporation.  The  power  to  mortgage  the  rights  and  franchises, 
as  well  as  the  property  of  the  corporation,  is  plainly  and  necessarily 
implied  from  these  provisions  of  the  act. 

The  act,  therefore,  docs  not  limit  the  power  of  mortgaging  to 
real  and  personal  property  on  hand  at  the  time,  hut  gives  author- 
ity to  mortgage  the  rights  and  franchises  of  the  corporation,  whi<'h 
could  not  he  (lone  without  the  aid  of  the  act.  And  it  cannot  he 
maintained  that  the  authority  to  mortgage  real  and  personal  prop- 
erty given  in  one  part  of  the  act,  was  intended  to  he  exclusive  of 
all  further  power,  when  the  further  power  of  mortgaging  the  right -^ 
and  franchises  of  the  corporation  is  clearly  given  hy  necessary  im- 
])lication  in  another  part  of  the  same  section.    .    .    . 

The  directors  then  had  jmwer  under  the  act   to  name  in  their 
mortgage,  and  to  convey  in  mortgage  to  trustees,  all  the  properly, 
and  all  the  rights,  franchises,  powers  and  privileges  of  the  corpora 
tion.     If  thev  made  such  a  mortgage  it  would  convey  to  the  mori 
gagees  all  the  right  ami  power  which  the  corjjoration  hail  to  acquire 
aTid  hold  proper! v.  for  the  power  to  ac(juire  and  liold  property  i* 
one  of  the  rights  ami   franchises  of  the  corporation.     That   right 
would  1m'  conveyed  and  transferred  from  the  road  to  the  trust*^'- 
hy  th(>  mortgage  deed,  in  the  same  way  that  the  proj>erty  was  eon 
veyed  and  transferred.  s\d)jeet  to  the  condition  of  the  mortgairc: 


gg  ■  CONVEYAlSrCE.  [CIIAP.  I. 

and  the  subsequently  acquired  property  would  pass  under  the  mort- 
gage as  incident  to  the  right  of  acquiring  and  holding  it,  which 
would  be  vested  in  the  trustees  by  the  mortgage. 

The  purchasers  under  the  deed  of  the  trustees  "  acquire  all  the 
rights,  franchises,  powers  and  privileges  which  said  corporation 
possessed,  and  the  use  of  said  railroad,  with  all  its  property  and 
rights  of  property,  for  the  same  purposes  and  to  the  same  extent 
that  said  corporation  could  use  the  same,  if  said  deeds  had  not  been 
made,  subject  to  the  same  liabilities  as  to  the  use  of  said  railroad 
tliat  said  corporation  would  be  under  if  said  deed  had  not  been 
made."  All  this  the  purchasers  take  through  a  sale  authorized  to 
enforce  the  mortgage  security;  and  we  cannot  understand  that 
iinything  different  from  this,  or  less  than  this,  was  authorized  to  be  * 
mortgaged  and  covered  by  the  mortgage  for  the  security  of  the 
mortgage  debts.  It  is  contrary  to  all  the  received  notions  of  a 
mortgage  that  anything  should  be  sold  under  it  to  pay  the  debts 
secured,  that  was  not  mortgaged  and  covered  by  it  before  the  sale. 

It  would  seem  to  be  the  plain  intention  of  the  act  to  preserve 
the  corporate  rights  and  franchises,  and  maintain  the  corporate 
liabilities  in  the  hands  of  the  purchasers  at  the  trustees'  sale.  All 
till'  rights  and  franchises  of  the  corporation,  and  the  use  of  the  road, 
are  transferred  to  them  l)y  the  deed  of  the  trustees,  and  they  hold 
tlu'  corporate  rights  and  franchises,  subject  to  the  same  liabilities 
as  to  the  use  of  the  road  by  which  the  corporation  was  bound  before 
the  sale.  They  have  all  the  property  and  all  the  rights  and  fran- 
chises, and  are  likewise  bound  to  perform  all  the  public  duties  of 
the  corporation.  It  is  not  easy  to  see  how  the  original  corpora- 
tion, in  the  hands  of  the  former  corporators,  could,  after  such  a 
"sale,  have  any  practical  or  even  legal  and  theoretical  existence. 
They  could  hold  no  property ;  they  could  maintain  no  action,  nor 
elect  any  corporate  officer;  these  powers  are  all  rights  and  fran- 
chises of  the  corporation,  created  and  granted  by  the  act  of  incor- 
poration, and  are  all  transferred  and  conveyed  by  the  deed  of  the 
trustees  to  the  purchasers  under  their  sale.  In  some  cases,  after 
the  franchises  of  a  corporation  are  lost  by  forfeiture,  the  corpora- 
tion is  still  held  to  exist  in  contemplation  of  law,  so  far  as  to  bo 
capal)le  of  being  revived  by  a  regrant  from  the  government.  But 
here  the  franchises  would  not  be  forfeited  to  the  State,  but  trans- 
ferred to  the  purchasers ;  and  the  State  could  not  revive  tlie  old 
corporation  \)\  a  regrant  of  the  franchises,  which  had  become  vested 
in  tlie  purchasers.  The  sale  would  in  substance  transfer  the  road 
and  the  corporation  to  the  purchasers. 

There  may  be  a  difficulty,  which  it  is  not  necessary  to  anticipate, 
in  saying  how  the  purchasers  shall  exercise  some  of  these  rights. 
There  is  no  provision  in  the  act  for  their  doing  it  through  the 


sEr.  n.]  piKKci:  /•-  i:mi:i{v.  89 

uwicliinrrv  of  lln'  nlil  ( orpinat ii>ii.     'I'licy  inay.  pcrliai)-,  Ik-  n-^'anlc"! 
MHiK'what  in  tlic  lij^lit  of  new  ^'laiitcrs  of  the  old  framliiscs. 

If,  then,  till'  piircliascrs  iiinlrr  (lie  t nislccs'  sale  fake  what  was 
4»ri;^iiially  inortfjafji'il,  ami  lal<c  :ill  tli'-  iiiopcrly.  rijrhts  an<l  fran- 
i-liisi's  of  the  eor|)oratioii.  to  liohl  and  enjoy  as  the  corporation  hchl 
and  enjoyed  them,  they  take  snhstantially  the  corporation  itself; 
iuid  the  corporation  itself  was  the  thin;;  ori^zinally  mort;:a;,'ed.   .  .   . 

An  analysis  of  the  act  and  an  examination  of  the  several  parts, 
whi'n  taken  to^jether  and  compared  with  each  other,  lead  to  the 
ionclusion  that  the  T>e;,Mslatiire  intended  to  fjrant  the  power  of 
inortpi;;in.«;  all  the  ])roperty  and  all  the  ri;:hts  and  franchises  of 
the  corporation,  including  the  right  to  property  suhscquently  ac- 
<Hiircd.  Wc  have  not  been  able  to  discover  anything  in  the  act 
which  directly  contradicts,  or  by  any  necessary  implication  ex- 
cludes this  construction.  There  are  express  grants  of  ]>articular 
powers  in  difTerent  parts  of  the  act,  from  which  the  argument  is 
drawn,  that  nothing  more  than  is  there  expressed  was  intended  to 
be  granted  elsewhere.  For  instance,  in  one  clause  authority  is 
given  to  mortgage  all  or  part  of  tiie  real  or  personal  property  of 
the  road,  lint  it  is  rpiite  plain  from  other  ]>rovisions  that  this  was 
not  intended  to  be  the  limit  of  the  authority  conferred.  The  pro- 
visions for  the  sale  and  transfer  to  the  purchasers  under  the  mort- 
gage of  all  the  rights  and  franchises  are  practically  inconsistent 
with  such  a  narrowed  construction  of  the  act.  The  material  and 
substantial  provisions  of  the  act  cannot  be  carried  into  effect  with- 
out construing  it  to  give  the  power  of  mortgaging  the  road,  and 
all  its  rights  and  franchises,  as  an  entire  thing,  and  subsef|uently 
acquired  property,  as  an  incident  to  the  general  subject  of  tlio 
mortgage,  and  an  accession  to  it. 

The  general  design  and  object  of  the  act  favor  the  same  con- 
.-i ruction.  The  corporation  already  had  power  under  the  gj'neral 
law  to  mortgage  their  property  then  in  pos.«;ession,  and  for  that 
])urpose  had  no  need  of  sj)ecial  legislation.  The  act  must  havo 
intended  to  enlarge  that  jiower,  and  authorize  the  road  to  make  a 
mortgage  substantially  different  from  such  as  are  allowed  at  com- 
mon law;  and  that  intention  would  not  be  answered  if  the  act 
should  be  so  construed  as  to  limit  the  power  of  mortgaging  to  prop- 
erty then  owned  by  the  road.  The  act  is  entitled  "  .\n  art  to  aid 
in  the  construction  of  the  ]'ort<nioulb  and  Conconl  Railroad."' 
The  road  was  unfinished,  and  tin-  monr\  borri>wed  on  the  security 
of  the  mortgage  was  to  go  into  the  roail.  to  assist  in  tlu"  enterprise 
and  undertaking.  The  statements  of  the  bill  show  that  at  the 
time  when  the  mortgage  to  the  trustt>es  was  nuide,  all  tin/  p<»rsonal 
Jtroperty  of  the  road  had  been  already  mortgaged  to  these  com- 
j>lainanls  for  the  security  of  other  debts.     There  is  nothing  in  tho 


9^  COXVEYANCE.  [CIIAP.  I. 

cafe  which  furnishes  any  ground  to  infer  that  the  road  had  then 
ary  unincumbered  property  capable  of  being  mortgaged.  If  so, 
and  the  mortgage  to  the  trustees  could  attach  on  nothing  but 
property  then  belonging  to  the  road,  all  that  the  bond-holders  would 
have  under  their  mortgage  for  security  of  their  demands  would  bo 
a  right  in  equity  to  redeem  property  of  the  road  already  mort- 
gaged for  other  debts.  This,  we  think,  is  not  the  security  upon 
which  the  bondholders  supposed  they  were  lending  their  money, 
nor  the  security  which  the  Legislature  intended  to  give  them  by 
the  act.  The  general  design  must  have  been  to  give  those  who 
advanced  money  to  complete  the  road  on  credit  of  the  mortgage 
specially  authorized  by  the  act,  a  substantial  and  available  security, 
ai^d  a  preference  over  other  subsequent  creditors. 

But  if  all  subsequently  acquired  property  might  be  mortgaged 
tr  secure  other  debts,  new  and  old,  and  those  mortgages  were  up- 
held against  the  bond-holders,  money  might  be  obtained  on  such 
security  to  carry  on  the  road,  to  pay  interest  on  the  bonds,  or  even 
to  pay  dividends,  and  when  possession  should  be  taken  for  the 
bond-holders,  perhaps  at  the  end  of  ten  or  twenty  years,  they  might 
have  little  for  their  security  but  the  franchise  and  road-bed ;  for 
much  of  the  iron  and  other  materials  since  affixed  to  the  road  arc 
covered  in  terms  by  the  complainants'  mortgages,  and  claimed 
under  them.  If  other  creditors  of  the  road  had  stood  on  such  terms 
with  the  directors  and  managers  as  would  enable  them  to  obtain 
mortgages  of  the  newly  acquired  property,  as  it  fell  from  time  to 
time  into  the  hands  of  the  corporation,  the  bond-holders,  instead 
of  having  a  preference,  would  have  been  the  last  creditors  likely  to 
realize  anything  from  their  security,  in  case  the  road  should  turn 
out  to  bo  insolvent. 

The  object  of  the  act  being  to  give  the  bond-holders  a  substantial 
and  available  security  for  their  money,  and  a  preference  over  other 
creditors  not  previously  secured,  can  only  be  answered  by  so  con- 
struing the  law  as  to  give  the  bond-holders  security  upon  the  road 
itself,  as  the  general  subject  matter  of  their  mortgage,  and  upon 
the  changing  and  shifting  property  of  the  road  as  part  and  parcel, 
by  accession,  of  the  thing  mortgaged. 

The  question  is  certainly  not  free  from  difficulty;  but 'whether 
Ave  look  to  the  particular  provisions,  or  follow  what  we  must  un- 
derstand to  have  been  the  general  object  and  design  of  the  law,  wo 
are  on  the  whole  brought  to  the  conclusion  that  it  authorized  the 
directors  to  mortgage,  not  only  the  property  then  belonging  to  the 
road,  l)ut  all  the  franchises  and  rights  of  the  corporation,  and,  in 
substance,  the  road  and  corporation  itself.  That  if  the  director.-^ 
made  such  a  mortgage,  as  incident  to  the  franchise  and  corporate 
rights  mortgaged,    subsequently    acquired    property,    immediately 


SKO.  II.]  riEIKi:    r.    KMKKY.  91 

iij)on  its  vesting'  in  the  corporation,  wtniM,  ii>  an  inci<icnt  and  l»y 
accession,  bcfonu!  part  of  the  tliin«^  ori^'inally  niortpi^fd,  ami  <>f 
the  mortgage  security.  The  right  to  take  and  hold  j»roperty  being 
one  of  the  franchises  mortgaged,  the  corporation  would  have  no 
jmwer  to  take  or  hold  properly,  e.\ce|)t  hy  virtue  of  that  franchi?"- 
and  under  the  mortgage*  hy  which  the  franchise  was  covered. 

We  are  of  oj)inion,  then,  that  the  act  authorized  the  corporation 
to  mortgage  the  whole  road  as  an  entire  thing,  with  all  its  corporate 
rights  and  franchises,  and  incidentally,  and  hy  way  of  accession, 
all  tiie  subsequently  accjuired  ])roperly  of  the  road.  l)i<1  the  din-"-- 
tors  in  fact  make  such  a  mortgage?    .    .    . 

Taking  the  whole  deed  together  the  intention  is  very  ajjpanni 
to  mortgage,  not  merely  proj)erty  then  belonging  to  the  road,  hut 
the  road  itself  and  all  its  franchises,  as  one  entire  thing,  and,  as  an 
incident  and  accession,  all  property  of  the  corjmration  afterward- 
acquired.  And  such  we  think  was  the  legal  operation  of  the  deed 
under  the  act.    .    .    . 

The  demurrer  must  be  overruled,  as  it  is  taken  to  the  whole  hill, 
and  the  comjilainants  are  entitled  to  part  of  the  relief  for  which 
they  pray.  The  demurrer  may.  howev(>r,  he  amended  so  as  to 
apply  to  part  only  of  the  bill,  and  the  defendants  answer  to  the 
residue.^ 

^Phillips  V.  Winsloic,  18  B.  Mon.  (Ky.)  4.31  (1857),  accord.  See  aN.. 
Dinsmorc  v.  Ravine  d  Misn.  It.  R.  Co.,  12  Wis.  «14n.  (J.'jll  (18(50)  ;  Farmrrs' 
Loan  rf  Trufit  Co.  v.  Fisher,  17  Wis.  114  (18(>3),  and  Pierce  v.  .Vihcauke,: 
d  St.  Paul  R.  R.  Co.,  24  Wis.  551    (18(;9). 

In  IloHc  V.  Freeman,  14  Gray,  5(i(!  (18(10),  tlio  Supn-mc  .Tmlicial  Court 
of  Massaclmsctts  sustained  a  niortfjago  of  the  road  and  property  of  a  rail- 
road "  and  all  additions  made  tlicroto  by  addin<j  new  lo(<ini<>ti\e-<,  cars,  and 
otiier  tilings,"  on  the  ground  of  an  express  le<:islativc  ratification  tliercof. 
"This  legislative  act  ohviates  the  sec-on<I  oljeclion  to  the  rijrht  to  main 
tain  the  action — that  a  niortf^aj^e  will  not  ])ass  chattels  or  personal  property 
not  in  existence,  or  not  owned  hy  the  niort^ajior,  at  the  date  of  the  niort- 
jrape.  Tlie  lej^al  princi|)les,  stated  hy  the  defendant  on  (his  puiiit,  are 
entirely  correct  in  reference  to  ordinary  niort^apes,  and  would  have  l>een 
fatal  to  this  action  if  no  lej^islative  authority  had  intervened,  ratifying 
and  confirininj^  this  particular  niort;;a;ie.  l?ut  the  statute  did  (hus  initi- 
vene,  confirming  the  mor(};a;^r,  and  thus  jjivinp  ctTcrt  to  all  parts  of  it. 
includinj;  the  j)rovision  as  to  after  nc<piired  machinery  and  ears.  Thin 
njortpape  was  duly  recorded,  ami  thus,  hy  means  of  (he  record  and  (he 
'•tatute,  (he  lien  (hereliy  <rea(ed  was  duly  notified  (o  all  |>erson^  Iiavimj 
husiness  relati(Uis  with  the  Vermont  and  Ma-^ai-husctts  Railroad  Com- 
pany."— Per  Dewey,  .T. 

The  matter  is  now  rej^ulated  hy  j;eiicnil  >lalu(e  in  Massiuhus»-((s  (Mji««. 
r»ih.  Sta(.,  1SS2.  Ch.  112.  5  72).  So  in  -ev.-ral  o(her  S(a(es  (Conn.  (J-ii. 
S(a(..   ISS.S.  5   :t.-,72;    Minn.  Ccn.  Stat..   1S!»4,   §  272  IK 


93  COXVEYAXCE.  [ciIAP.  I 


:Mori{ILl  v.  Xoyes,  56  Mc.  458  (1863).  The  question  wliethet 
a  mortgage  of  personal  proj^erty  not  in  existence,  or  not  owned  at 
the  time  by  the  mortgager,  can  be  made  available  by  the  mort- 
gagee, as  a  lien  upon  property  afterward  acquired,  has  been  dis- 
cussed in  many  recent  cases,  with  some  apparent  difference  of 
opinion. 

Some  of  the  courts  have  denied  that  any  difference  exists,  and 
have  attempted  to  reconcile  the  cases  on  the  ground  that  such  a 
mortgage,  though  void  at  law,  is  valid  in  equity.  But  this  is  a 
loose  use  of  language,  that  tends  more  to  confuse  than  to  reconcile. 
If  such  a  mortgage  is  absolutely  void,  for  want  of  any  subject  mat- 
ter to  support  it,  then  it  should  be  so  held  in  equity,  as  well  as  at 
law.  But,  if  not  thus  void,  to  what  extent,  and  in  what  sense,  is 
it  valid?  It  is  only  by  conceding  its  validity,  that  it  is  pertinent 
to  inquire  whether  the  remedy  is  in  equity,  or  by  a  suit  at  law. 

In  other  cases  the  reasoning  is  syllogistic  and  summ-ary.  "Qui 
lion  liabct,  ille  non  dat."  A  mortgage  is  a  grant.  Therefore  a 
mortgage  of  what  one  does  not  own,  or  of  what  is  not  in  esse, 
is  void.  Bui  a  mortgage  is  a  grant,  to  lx>  defeated  upon  a  condition. 
This  makes  it  merely  the  creation  of  a  lien,  with  certain  rights  to 
secure  and  enforce  it.  A  lien  may  be  created  without  a  grant. 
And  sometimes  a  contract  intended  as  a  grant,  but  ineffectual  as 
such,  will  be  upheld  in  equity  as  a  lien.  So  that  the  syllogism  is  by 
no  means  certain  to  dispose  of  the  question. 

As  a  general  proposition  it  may  be  said,  that  a  mortgage  of  such 
goods  as  may  be  in  a  store  on  a  future  day — or  of  such  furniture 
as  may  be  in  a  house — or  of  such  machinery  as  may  be  in  a  mill — 
or  of  such  stock  as  may  be  on  a  farm — when  no  particular  prop- 
erty is  referred  to,  will  not  convey  any  title  to,  or  create  any  lien 
upon,  such  property  subsequently  acquired,  which  can  be  upheld  or 
enforced  in  a  suit  at  law  {Head  v.  Goodwin,  37  Maine,  181;  Bar- 
nard V.  Eaton,  2  Cush.  294;  Codman  v.  Freeman,  3  Cush.  306; 
Otis  V.  Sill,  8  Barb.  102;  Gardner  v.  McEwen,  19  X.  Y.  [5  Smith], 
123;  Tapfield  v.  Ilillman,  46  Eng.  C.  L.  243;  Luim  v.  Thornton, 
50  Eng.  C.  L.  379;  Gale  v.  Bnrnell,  53  Eng.  C.  L.  850).  In  Con- 
necticut, a  mortgage  of  a  shifting  stock  of  goods  in  a  store,  was 
held  to  create  the  same  lien  upon  goods  subsequently  purchased 
as  upon  those  owned  at  the  time  {Holly  v.  Brown,  14  Conn.  255). 
A  similar  decision  was  made  in  this  State,  in  the  case  of  Head  v. 
Goodwin,  37  Maine,  181.  But  that  case  was  questioned  in  Jones 
V.  Richardson,  10  Met.  481;  and  it  was  substantially  overruled  in 
Pratt  V.  Chase,  40  Maine,  269.  The  question  is  therefore  no  longer 
an  open  one  in  this  Court. 

It  should  be  noticed,  however,  that  in  nearly  all  the  cases  cited, 


BEC.  ll.J  MOliHU.L    r.    No\i:s.  03 

(he  mortgages  woro  cxcocilingly  iiulcfiniti'.  Sonn-  <>(  iIhih  (I<- 
HtrilK'd  no  j)iir(i(ular  ])n)|)('rly  which  ci-uM  Ix'  idcnf  iticd  ;  hut  th<v 
uore  inortgagos  of  incri'  coiitiiigciicics  of  >\u\\  projurly  -.[<  thr  mort- 
gagors might  purchase,  if  thov  should  purchase  any.  They  wm.' 
void  for  uncertainty,  if  for  no  other  reason  ( Winsloiv  v.  Mrr- 
chants'  Inn.  Co.,  1  Met.  ;m\).  K.xccpl  the  ease  of  Oils  v.  >'///.  8 
l^arh.  10"^',  they  prohnhly  would  not  have  heen  upheld  in  e<|uity,  any 
more  than  at  law  (M(>'j<j  v.  Baker,  3  Mees.  »Jc  Welsh.  1!>.j;  MuihIh  v. 
WrUjhl,  13  Met.  17). 

We  can  understand  these  eases  better  by  referring  to  another 
class  in  which  conveyances  of  property,  not  in  existence  at  the 
time,  have  heen  ujiheld,  either  at  law  or  in  equity.  And  we  think 
it  will  be  seen  that  sales  or  mortgages  of  such  property  have  been 
sustained  when  withiu  the  following  rules: 

1.  The  contract  must  relate  to  some  particular  property  de- 
scribed therein,  which,  though  not  in  existence,  must  be  reasonably 
certain  to  come  into  existence,  so  that  the  minds  of  the  parties  may 
be  in  agreement  as  to  what  it  is  to  be,  and,  if  the  sale  is  alxsolute, 
what,  with  reasonable  certainty,  taking  the  ordinary  contingencies 
into  consideration,  is  the  present  value? 

'i.  The  vendor  or  mortgagor  must  have  a  present,  actual  interest 
in  it,  or  concerning  it.  As  is  said  in  illustrating  Kide  It.  of 
Bacon's  ^laxims,  "  the  law  doth  not  allow  of  grants,  except  ther.' 
Ik'  the  foundation  of  an  interest  in  the  grantor."  There  must  be 
something  in  prcscnli.  of  which  the  thing  ('/(  fiiluro  is  to  be  the 
])roduct,  or  with  which  it  is  to  be  connected,  as  necessary  for  its 
use,  or  as  incident  to  it,  constituting  a  tangible,  existing  basis  for 
the  contract. 

The  ai)idication  of  these  ])rinciples  to  the  multifarious  atTairs 
of  a  business  peo])le,  may  sometimes  be  dillicult.  And  in  the  vari- 
ous enterprises  that  are  likely  to  be  undertaken  in  a  country  dis- 
tinguished for  its  manufactures,  and  its  domestic  and  foreign  com- 
merce, new  applications  of  them  from  time  to  time  may  be  re- 
«|uired.  \\\i{  the  illustrations  to  be  found  in  the  decided  cases  will 
l>e  sullicient  for  our  present  ])urpose. 

Thus,  one  may  sell  all  the  wool  which  shall  grow  for  a  term  of 
years  on  sheep  owned  by  him  at  the  time;  but  not  the  wool  to  l>o 
grown  on  so  many  sheep,  if  he  does  not  own  them  ((Jranllunn  \. 
Ilawlci/.  llobart.  \.V^  ;  Sniilli  v.  Alkins,  18  Verm.  l«:i  ).  So  he  mav 
sell  the  grass,  or  any  crop  that  does  not  require  annual  renewal, 
that  shall  grow  upon  his  farm  for  a  term  of  years  (Jmcls  v. 
>'»/u7//.  1  Coms.  00;  Bank  of  Lnn.tingburg  v.  Cranj.  1  Barb.  -M'.'; 
Millininn  v.  Xchrr,  t?0  Barb.  37). 

If  one  contracts  for  the  construction  of  a  carriage,  or  a  ve>sel, 
for  himself,  and  pays  therefor,  he  acquires  no  title  until  it  is  com- 


94  CONVEYANCE.  [CHAP.  i. 

l)letc'(l  and  delivered  (Mudow  v.  Mangles,  2  Taunt.  318;  Comfort 
V.  Kierstcd,  20  Barb.  472).  But  if  he  hiiijs  a  chattel  in  process  of 
construction,  and  it  is  delivered  to  him,  though  afterward  to  be 
finished,  the  title  passes,  and  the  additions  made  to  it  for  the  pur- 
l)Osc  of  completing  it  become  his  property  from  the  time  when  they 
arc  attached  to  it.  The  only  reason  why  the  conveyance  of  a  vessel 
on  the  stocks  was  not  upheld  as  a  mortgage,  in  Bonseij  v.  Amee,  8 
rick.  236,  was  because  there  was  no  delivery,  and  the  registry  law 
had  not  then  been  enacted,  which  renders  a  delivery  unnecessary 
(Call  V.  Gray_,  37  N".  H.  428).  A  mortgage  of  unfinished  chattels 
gives  the  mortgagee  a  good  title  to  them  when  finished  {Harding 
v.  Cohurn,  13  Met.  33  ;  J  ends  v.  Goffe,  1  R.  I.  511 ;  Perry  v.  Pet- 
tingill  33  N".  H.  433). 

So  the  owner  of  a  ship  may  assign  the  freight  of  a  voyage  which 
has  been  commenced.  In  re  ship  Ware,  8  Price,  269;  Douglas  v. 
Eussel  1  M.  &  K.  (7  Eng.  Ch.)  488.  Or  he  may  sell  the  oil  and 
cargo  to  be  brought  home  from  a  whaling  voyage  then  being  prose- 
cuted (Langton  v.  Horion,  1  Hare,  549;  Fletcher  v.  Morey,  2 
Story,  555).  And  a  laborer,  employed  by  another,  may  assign  his 
wages  afterwards  to  bo  earned ;  but  not  unless  they  are  to  be  earned 
under  an  existing  contract  {Miilhall  v.  Quinn,  1  Gray,  105;  Tiviss 
V.  Cheever,  2  Allen,  40;  Lannan  v.  Smith,  7  Gray,  150). 

In  the  case  at  bar,  the  subject  matter  of  the  contract  was  suffi- 
ciently definite  and  certain;  its  subsequent  existence  was  reason- 
ably sure ;  and  the  mortgagers  had  an  existing  interest  in,  and  title 
to,  the  other  property  then  mortgaged  of  which  this  was  to  be  an 
essential  part,  necessary  for  its  use,  to  be  added  to  it  for  the  pur- 
])Ose  of  finishing  it.  It  is  entirely  unlike  the  case  of  a  changing 
stock  of  goods. 

The  mortgagers  had  a  charter  for  a  railroad,  with  all  the  neces- 
sary franchises  and  rights  for  its  construction,  equipment,  and 
operation.  The  mortgagee  had  previously  contracted  to  construct 
and  equip  it  for  the  company ;  and  the  work  had  been  commenced. 
Tie  was  to  be  paid  partly  in  the  bonds  of  the  company,  which  would 
sell  in  the  market.  Thereupon  they  mortgaged  to  him,  and  in  trust 
for  the  holders  of  tlie  bonds,  their  franchise,  road,  rights  of  way, 
materials,  ])uildings,  completed  or  in  process  of  construction,  "in- 
cluding all  cars,  engines  and  furniture,  that  have  been  or  may  be 
purchased  for  or  by  said  coin])any,'"  to  secure  tlie  contract  "for  the 
construction  and  ('(|ui))iiiciit  of  s:iid  railroad."  and  to  secure  the 
payment  of  the  l)oii(ls  to  bo  issued  to  the  Tuortgagee.  to  him,  "or 
1o  his  assigns,  wlio  shall  become  the  holders  of  said  bonds." 

A  large  part  of  I  he  miincrous  railroads  in  this  country  have 
b(>en  constructed  by  tho  aid  of  mortgages  to  individuals  or  to  trus- 
tees.    Many  of  these  mortgages,  perliaps  most  of  1he7n.  embrace. 


SK^  ,,  •)  Moititii.i,  V.  noyp:s.  95 

>I)C'cifically,  engines  and  cars,  to  be  subsequently  ae^iuireil.  As 
Iht'v  are  made  to  secure  bonds  not  to  be  due  for  many  years,  and 
(he  rolliu",'  stock  is  perisbable,  unless  sucli  future  acciuisitions  can 
1k'  nu»rt^'a;,'cd,  as  incident  to,  and  essential  to  tbc  use  of,  tlic  rail- 
road itself,  the  security  is  lialile  to  be  K^t'sitly  diminished.  The 
question  is  one  of  great  importance  in  respect  to  the  interests  in- 
volved in  its  determination.  Nor  is  it  a  new  one.  It  has  been 
considered  by  several  courts  of  the  highest  respectability;  and 
such  mortgages  have  l)een  sustained,  not  only  as  to  existing  prop- 
erty, but  as  to  that  subsequently  acquired  {Pierre  v.  Emery.  33 
N.  IL  484  ;  Seymour  v.  C.  £  N.  F.  Railroad  Co.,2ry  Barb.  286 ;  Trust 
Co.  V.  Ileuilricksnn,  25  Barb.  484;  Coe  v.  Hart  di-  nl,  fi  Am.  Law 
UVg.  'ii:\  J'ennock  v.  Coe.  '23  Howard,  117;  Phillips  v.  Winsloir, 
18  B.  Monroe,  531). 

In  nearly  all  these  cases  the  question  is  discussed  with  much 
researeli  and  force  of  reasoning.  And,  in  the  absence  of  contrary 
decisions,  they  constitute  a  weight  of  authority  not  to  be  disre- 
garded, unless  it  can  be  clearly  shown  that  they  are  erroneous. 

In  some  of  them,  the  companies  were  specially  empowered  by 
legislative  acts  to  mortgage  their  property  and  franchises.  In  the 
ease  of  Howe  v.  Freeman,  14  Gray,  5(5(;,  such  a  mortgage  was  up- 
held on  the  subsequent  confirming  statute,  with  an  intimation  that 
otherwise  it  would  have  failed.  But  the  general  question  was  not 
lonsidered  by  the  Court.  The  power  of  a  corporation,  without  any 
legislative  act,  to  mortgage  its  franchises  with  other  property,  to 
secure  its  lial)ilities.  has  never  been  questioned  in  this  State,  though 
such  mortgages  have  been  common  for  many  years,  and  rights 
under  them  have  been  determined  in  this  Court.  The  weight  of 
authority  in  this  country  is  in  favor  of  the  doctrine  that  the  power 
to  mortgage  is  incident  to  the  rights  granted  by  the  Act  of  incor- 
]>oration.    .    .    . 

In  the  case  of  Trust  Company  v.  Ilendrirkson  it  was  held  that, 
as  between  mortgagors  and  mortgagees,  the  engines  and  cars  were 
fi.Ttures,  so  that,  without  any  exjjress  grant,  they  would  have  be- 
come the  jirojXTty  of  tlie  mortgagees  by  being  attached  to  the  rail- 
road.    If  they  were  fixtures,   that   result   would   follow,  although 
they  were  not  in  existence  when  the  mortgage  was  given.     That 
they  have  some  of  the  qualities  of  fixtures  cannot  be  denied.     They 
are  fitt<'d  to  the  gauge  of  (he  road,  and  are  adapted  to  (he  particular 
n-;e  upon  it.     In  the  modern  cases,  whether  an  article  is  a  fixture 
is   determined    more    by    such    (•onsiderati<uis,    than    by    its    being 
actually  attached  to  the  jaiul.     Without  the  rolling  stock,  the  road 
is  not  onlv  worthless  to  the  company,  but  it  ceases  to  be  of  any 
pul)lie  use.      hnportant  j)ublic  interests  are  therefore  involved   in 
the  iiue>tion. 


96  CONVEYANCE.  [ClIAP.  I. 

•  But,  if  the  engines  and  cars  are  not  fixtures,  tliey  are  so  con- 
nected with  tlie  railroad,  and  so  indispensable  to  its  operation,  that 
there  is  a  clear  distinction  between  them  and  other  kinds  of  per- 
sonal property.  They  may  well  be  held  to  be  exceptions  to  the 
general  rule  that  property  not  in  esse  cannot  be  conveyed.  We  do 
not  mean  to  intimate  that  rolling  stock  to  be  subsequently  ac- 
quired could  be  mortgaged  without  the  railroad.  But  when  the 
railroad  itself  is  mortgaged,  with  the  franchise,  the  rolling  stock  to 
be  acquired  for  the  purpose  of  completing  or  repairing  it  is  so 
appurtenant  to  it,  that  the  company  have  a  present,  existing  inter- 
est in  it,  sufficient  to  uphold  the  grant  of  both  together — the  one 
as  incident  to  the  other.  Their  title  to  the  railroad  is  "  the  foun- 
dation of  an  interest "  in  the  cars  and  engines  to  be  acquired  for 
its  use. 

"  If  the  rolling  stock  on  the  road  should  be  removed,"  says, 
McLean,  J.,  in  the  case  of  Coe  v.  Ilart,  "  it  would  defeat  the  liens 
of  creditors  to  many  millions  of  dollars,  and  put  an  end  to  the 
construction,  if  not  to  the  maintenance  of  railroads."  In  the  case 
of  Ludlow  V.  Ilurd,  6  Am.  L.  Reg.  493,  Storer,  J.,  remarks :  "  It 
is  very  clear  that  we  must  regard  it  (the  rolling  stock),  as  appur- 
tenant to  a  railroad;  it  is  necessary  for  the  working  of  it  that  all 
this  species  of  property  should  become  a  part  of  the  road  itself.  It 
is  essential  to  its  use ;  and  if  denied,  it  is  destructive  to  the  purpose 
for  which  it  was  built."  And  in  the  case  of  PhiUips  v.  ^V^nslow, 
before  cited,  the  Court  say  that,  in  order  to  render  the  mortgage 
of  the  railroad  effectual,  "  it  is  necessary  that  it  should  embrace  all 
such  future  acquisitions  of  the  company  as  are  proper  accessions  to 
the  thing  pledged,  and  essential  to  its  enjoyment." 

That  a  mortgage  of  a  railroad  and  the  franchises  of  the  com- 
pany, with  all  the  rolling  stock  then  owned  and  to  be  afterwards 
acquired  and  placed  on  the  road,  will  create  a  valid  lien  upon 
cars  and  engines  subsequently  purchased,  there  would  seem  to 
be  no  longer  any  doubt  (Redfield  on  Railways,  §  235,  notes 
21  to  24;  Pierce's  Am.  Railroad  Law,  531;  Am.  Law.  Reg.,  Jidy, 
1863,  527). 

The  decisions  sustaining  such  mortgages  are  not  understood  to 
be  in  conflict  with  those  in  which  other  mortgages  of  such  property 
have  not  been  upheld.  The  general  rule,  that  property  not  in  esse 
cannot  be  conveyed,  is  not  abrogated.  Nor  will  such  mortgages  be 
upheld  in  equity,  any  more  than  at  law,  unless  they  are  within 
some  of  the  exceptions  to  the  rule.  But,  if  a  mortgage  is  within 
any  of  the  exceptions  it  will  be  sustained,  and  the  parties  will  be 
entitled  to  appropriate  remedies. 

What  remedies  will  be  open  to  them  must  depend  upon  the  cir- 
cumstances of  each  case.     In  Holroyd  v.  Marshall,  9  Jur.  N.  S.  213, 


8KC.  II.]  ri^ATT    r.    N.    Y.    Jt    SKA    nKACIl    ItAII.WAY    CO.  97 

recently  decick'il  liy  tlie  House  of  Lortls,  a  registered  mortgage  of 
inacliinery  in  a  mill,  to^'etliiT  with  all  that  should  afterward  Ijo 
placed  therein  in  addition  t(»,  (jr  in  suh.stitution  for  that  wiiich 
was  tliere  at  the  time,  was  held  to  have  created  a  valid  lien  upon 
the  j)ortion  afterwards  purchased,  from  the  time  when  it  wa.'* 
brought  within  the  terms  of  the  grant.  And  the  rights  of  the  mort- 
gagee were  sustained  in  equity,  on  the  ground  that  the  mortgagor, 
as  soon  as  he  purchased  the  additional  machinery  and  j)Ut  il  into 
the  mill,  held  it  in  trust  for  the  mortgagee.  Whether  we  should 
uphold  such  a  mortgage,  is  a  question  upon  which  it  is  unnecessary 
to  express  any  oi)inion.  The  case  seems  to  be  in  conflict  with  that 
of  Moody  V.  ]Vri(jht,  13  Met.  17.  But  in  those  cases  in  which  a 
mortgage  of  such  property  is  valid,  there  would  seem  to  be  no  doubt 
that  it  can  be  enforced  in  equity  as  a  case  of  trust.    .    .    . 

Upon  the  whole  case,  we  are  of  the  opinion  that  the  mortgiige  to 
Myers  created  a  valid  lien  upon  the  engines  and  cars  as  they  were 
purchased  and  placed  upon  (he  road  for  the  purpose  of  equipjjing 
it;  and  that  the  holders  of  the  bonds  secured  by  that  mortgage  will 
be  entitled,  if  they  claim  it,  to  have  the  trust  enforced,  not  only 
against  the  railroad,  but  against  the  rolling  stock  subsequently 
accjuircd.'  riaindlf's  rwnsuil. 

Appleton,  C.  J.,  Kent,  Walt<ui  ami  Dickerson,  JJ.,  concurred. 


PLATT  V.  NEW  YORK  &  SKA  RK  \(  H  IJ AIIAVAV  CO. 

Supreme  Coirt  of  Xkw  YoitK.  Ai-pkllati:  Division-.  ISOC). 

(!t  A  pp.  Div.  Sr.) 

Appeal  by  the  petitioner.  August  Meidling,  as  guardian  ad  litem 
of  August  Meidling,  Jr.,  an  infant,  from  an  order  of  the  Supreme 
Court,  made  at  the  Kings  County  Special  Term  and  entered  in 
the  oHiee  of  the  Clerk  of  the  County  of  Kings  on  the  ^i'.n\  day  of 
-May.  ISiX;,  denying  the  petitioner's  motion  to  vacaU'  an  order  ap- 
pointing a  receiver  and  also  a  judgment  entered  in  the  action,  ^r 
to  modify  the  same. 

'  Uillrr  V.  liutlniid  »f  \VnHhingtnn  R.  R.  Co.,  .10  Vt.  4.';2.  4.'»rt  (ISrt.l^: 
h'tirmrr.'i'  Loan  rf  Trunt  Co.  v.  ,S7.  Joseph  rf  Prtncr  City  Rif.  Cft..  ."I 
Dillon,  412  (is:,'-)),  arcnrd.  Sep  also  I'almrr  v.  Forbes,  23  111.  .101  (18«0). 
Iliis  view  liHt  hr<'omp  fix*"*!  in  sovnnl  Stiitrs  by  stiitiito  ( N'rr.  Krv.  I... 
1804.  5  :\H03;  Wis.  Stat..  iHilS.  $  IS.IKK  Comimro  //oi//,-  v.  I'titttsburqh  .P 
yionirrnl  R .  R.  Co..  ,'>4  \.  Y.  ,{14  (1S7.1),  and  Williamson  v.  .Vrir  Jer*rv 
f^outhrni  R.  R.  Co.,  20  N.  .1.  K.j.  .ni    (1878). 

7 


98  CONVEYANCE.  [CHAF    I. 

This  action  was  brought  for  the  purpose  of  foreclosing  a  mort- 
gage executed  by  the  New  York  &  Sea  Beach  Railway  Company. 
On  January  11,  1896,  the  plaintiffs  in  this  action  procured  an  order 
iippointing  a  receiver  of  said  company,  and  of  all  the  property  then 
owned  by  it.  Subsequently  a  judgment  of  foreclosure  was  en- 
tered by  which  the  receivership  was  continued  and  a  sale  directed 
of  all  the  property  in  the  receiver's  hands.  Thereupon  the  appel- 
lant, who  is  a  judgment  creditor  of  the  New  York  &  Sea  Beach 
"Railway  Company,  instituted  this  proceeding  for  the  purpose  of 
having  the  order  appointing  the  receiver  and  the  judgment  of 
foreclosure  and  sale  so  modified  as  to  affect  only  such  property  as 
the  mortgagor  had  when  the  mortgage  was  executed. 

Hatch,  J.  The  validity  of  the  mortgage  is  not  controverted. 
But  it  is  claimed  that  under  it  no  lien  was  acquired  upon  the  per- 
sonal property  purchased  subsequent  to  its  execution,  as  against 
the  petitioner  therein.  That  the  lien  should  attach  to  after-ac- 
quired property  is  within  the  express  terms  of  the  mortgage,  and  it 
is  not  disputed  that  such  is  its  effect  as  between  the  parties  thereto. 
By  the  provisions  of  the  statute  (Laws  1850,  c.  140,  §  28,  subd.  10), 
authority  was  conferred  to  mortgage  the  corporate  property  and 
franchises  for  the  purpose  of  completing,  furnishing  or  operating 
the  railroad.  And  this  authority  has  been  continued  in  the  same 
language  under  the  revision  of  the  railroad  law  (Laws  1892,  c.  67G, 
§  4,  subd.  10).  The  statute  contemplates  that  it  may  be  necessary 
to  borrow  money  for  the  purpose  of  the  physical  creation  of  the 
road  and  putting  it  in  operation.  It  is  quite  evident  that  in  the 
accomplishment  of  this  purpose  property  would  be  created  and  ac- 
quired that  had  no  actual  or  potential  existence  at  the  time  when 
the  loan  was  made  and  the  mortgage  given.  It  is  the  usual  course 
of  procedure  in  the  construction  of  a  railroad  that  money  is  raised 
l)y  mortgage  on  its  property,  and  that  the  structure  is  built  and 
operated  to  a  large  extent  by  means  of  the  loans  thus  obtained,  and 
much  of  the  property  is  created  and  acquired  after  the  loan  is  made. 
The  statute  makes  no  distinction  between  property  necessary  for 
the  completion  and  furnishing  of  the  road  and  that  which  is  essen- 
tial to  its  operation.  By  the  terms  of  the  law,  therefore,  it  was 
contemplated  that,  for  the  money  thus  obtained  the  property  ac- 
quired should  be  pledged  as  the  security  for  its  repayment,  and  this 
cannot  be  accomplished  without  holding  that  the  lien  of  the  mort- 
gage attaches  to  such  property  as  shall  be  necessary  for  that  pur- 
pose, whether  it  is  in  existence  at  the  time  when  the  mortgage  is 
given  or  is  subsequently  acquired  and  whether  such  property  be 
such  as  is  denominated  real  or  personal.  So  it  was  early  held  that 
such  a  mortgage  created  in  equity  a  lien  upon  property  subse- 
quently acquired  superior  to  the  lien  of  a  subsequent  incumbrance 


MfA'.  II. J  I'l.ATT    C.    N.    V.    A    SKA    IlI'VC   II     I! A 11. WAY    CO.  99 

liv  mortgaj^i'  or  jiul^nu'iit  {Sfi/rnuur  v.  Cananda'njua  tf-  Xintjunt 
Falls  n.  U.  Co.,  '^T)  Harl).  2H1;  lifiijamin  v.  El  mini,  Jcffrrsoii  & 
i'amimlaifjita  li.  Ji.  Co.,  19  id.  4 IT;  ,s7rj(Hs  v.  Uu/.son,  t  Al)l).  Ct. 
App.  Dec,  302).  In  those  cases  the  question  arose  respecting  licn.s 
xipon  sul)soquently  aniuired  real  properly.  But  the  discussion 
fchows  tliat  tlie  court  considered  the  rule  apjdieable  as  well  to  per- 
gonal as  to  ri-al  pr()i)erty.  Such  has  been  the  uniform  rule  appliecl 
in  the  Federal  courts  {Mitchell  v.  Winslow,  2  Story,  G30;  Central 
Trust  Co.  V.  Kneeland,  138  U.  S.  419). 

The  diiriculties  which  liave  arisen  relate  not  so  much  to  the  rec- 
iijrnition  of  the  mort^'a^'c  as  a  lien,  ft)r  the  doctrine  of  the  above- 
<'itod  cases  has  never  been  questioned,  but  rather  to  the  steps  neces- 
sary to  be  taken  to  evidence  the  lien.  The  first  debate  arose  over 
the  question  whether  the  rolling  stock  and  equipment  of  the  road 
retained  its  character  as  personal  property,  and  if  so,  was  it  requis- 
ite that  the  mortgage  should  be  filed  as  a  mortgage  of  chattels. 
The  Supreme  Court  divided  upon  the  question,  and  decisions  were 
rendered  both  ways.  The  Court  of  Appeals,  in  Hoyle  v.  Phiilshurg 
it-  Montreal  R.  R.  Co.,  54  IST.  Y.  314,  settled  the  question  by  holding 
that  it  was  personal  property,  and  that  the  mortgage  covering  it 
must  be  filed  as  a  mortgage  of  chattels,  as  prescribed  by  the  act  of 
1833,  or  the  same  would  be  void  as  against  the  general  creditors  of 
the  corporation.  To  meet  this  conclusion,  the  Legislature,  in 
18G8.  passed  an  act  (Laws  of  1808,  c.  770).  providing  that  it  shall 
not  be  necessary  to  file  such  mortgage,  as  a  mortgage  of  chattels 
when  it  covers  real  and  personal  property  and  is  recorded  as  a 
mortgage  of  real  estate  in  each  county  in  or  through  which  the 
railroad  nins.  By  this  act  the  status  of  such  ]>roperty.  so  far  as  it 
relates  to  liens  by  way  of  mortgage  is  made  jiractically  subject  to 
the  same  rules  and  is  placed  upon  the  same  footing  as  real  ]>rop- 
erty.  The  business  carried  on  by  railroads,  the  great  extent  of 
territory  which  they  cover,  and  the  fact  that  the  rolling  stock  is  at 
all  times  widely  distributed,  not  only  throughout  the  State  through 
which  its  lines  mainly  run,  but  also  throughout  the  dilTereiit  States 
<tf  the  Union,  create  an  essential  difTerence  between  it  and  property 
whose  situs  is  practically  fixed.  Tiiis,  couj)led  with  the  necessity 
which  exists  for  certainty  of  securing  to  tbosi*  atlvancing  money, 
usually  in  V(>ry  large  amounts,  upon  the  faith  of  railroad  j>roperty 
and  the  practical  ditliculty,  if  not  imjjossiltility,  of  a  railroad  being 
able  to  realize  upon  its  property  in  this  manntr.  if  the  technical 
rules  respecting  liens  u|)on  jiersonal  pnqierty  should  obtain,  evi- 
dently created  an  int(>nt  in  the  mind  of  the  Legislature  to  make 
puch  property  subject  to  the  same  rules,  so  far  as  prai-ticalile.  as 
apply  to  liens  upon  real  ))roperty.  It  is  quite  evident  that  if  it 
#bould  be  held  necessary  to  constantly  revise  such  n  mortpnge.  in 


100  CONVEYANCE.  [chap.  I. 

prdcr  to  cover  what  lias  been,  it  may  be,  purchased  by  the  inone}- 
advanced  or  to  supply  operating  needs  and  replenish  what  is  de- 
stroyed, it  would  render  such  security  so  doubtful  and  precarious 
as  not  only  to  impair,  but  to  practically  destroy  its  value.  Wo 
can  see  no  reason  for  drawing  a  distinction  in  this  regard  b&tween 
real  and  personal  property.  On  the  contrary,  as  the  authority  for 
the  mortgage  of  both  is  derived  from  the  same  source,  and  the  same 
reasons  exist  why  both  should  be  available  and  answerable  as  se- 
curity, we  think  it  more  in  harmony  with  the  legislative  intent  to- 
subject  it  to  the  same  rules  {N.  Y.  Security  Co.  v.  Saratoga  Gas- 
Co.,  88  Hun,  569).  This  view  does  not  bring  us  in  conflict  with 
B.  D.  Co.  V.  Rasey,  142  N.  Y,  570.  That  case  proceeded  from  the- 
well-settled  legal  rule  that  a  mortgage  of  chattels,  having  no  actual 
or  potential  existence  when  the  mortgage  was  given,  is  void  as  to 
intervening  creditors.  For  reasons  already  stated  that  rule  has  no 
application  to  a  mortgage  of  this  character. 

It  follows  that  the  order  appealed  from  should  be  aflfirmed.^ 

Order  affirmed. 


TAILBY  v.  THE  OFFICIAL  RECEIVER. 

House  of  Lords^  1888. 

(L.  B.  13  App.  Cas.  523.) 

Appeal  from  a  decision  of  the  Court  of  Appeal.^ 
By  a  bill  of  sale  made  the  13th  of  May,  1879,  H.  G.  Izon,  de- 
scribed as  a  packing  case  manufacturer  of  87  Parade,  Birmingham, 
assigned  to  Tyrell  for  valuable  consideration  (inter  alia)  "  all  and 
singular  the  stock-in-trade,  fixtures,  shop  and  office  furniture,  tools, 
machinery,  implements  and  effects  now  being  or  which  during  con- 
tinuance of  this  security  may  be  in  upon  or  about  the  premises 
of  the  said  mortgagor  situate  at  87  Parade  aforesaid  or  any  othei 
place  or  places  at  which  during  the  continuance  of  this  security 
he  may  carry  on  business.  .  .  .  And  also  all  the  book  debts 
due  and  owing  or  which  may  during  the  continuance  of  this  security 
become  due  and  owing  to  the  said  mortgagor,  which  fixtures,  stock- 
in-trade,  machinery,  furniture,  chattels,  goods,  effects  and  debts 
are  for  the  most  part  and  as  near  as  may  be  mentioned  in  the  re- 
spective schedules  hereunder  written." 

'  .Vflirmcd  by  tlio  Court  of  Appeals,  on  opinion  below,  153  N.  Y.  670  ( 1897  ), 
»  18  Q.  B.  D.  2o.—Rep. 


sK< .  II.]  TAii.iiY   r.  Tin:  oriMciAi.  i:i:(i:ivi:i:.  l<il 

In  Xovi'iiiht  r,  ISSI,  Tyncll  li;i\iii^'  diiMi.  lii>  executors  assi^Mietl 
lo  Tailby.  (he  present  appellaiU.  certain  l)()()k  (lel)t>  (speeilied  in 
a  -ehednlc)  owing  to  I/.on.  and  among  tlicm  ii  debt  of  about  I'll 
ubieh  had  become  due  to  him  from  Wilson  Brothers  &  Co.  since 
the  bill  of  sale,  and  due  notice  of  this  assignment  was  thereupon 
given  to  Wilson  Brothers  &  Co. 

In    I>eccml)er   Izon  became  bankrupt.     In  January,    188."),  and 

:iMer  the  adjudication  in  bankruptcy  Wilson  Brothers  &  Co.  paid 

Taill)y    the    debt    above-mentioned.      The    oHicial    receiver   in 

l/on's  bankruptcy  afterward  sued  Tailby  in  the  County  Court  of 

Warwiekshire  for  the  amount  of  the  debt,  as  money  had  and  re- 

ve.l. 

The  county  court  judge  gave  judgment  for  the  jtlaiiitiir  on  the 
ground  that  the  assignment  of  future  book  debts  generallv,  with- 
out any  delimitation  as  to  time,  i)lacc,  or  amount,  was  too  vague 
to  be  suj)j)orti'd. 

The  (^leen's  Bench  Division  (Hawkins  and  Matthew.  JJ.)  re- 
\ersed  this  decision  and  entered  judgment  for  the  defendant. ^ 
That  judgment  was  reversed  by  the  Court  of  Appeal  (T.ord  Ksher. 
M.  H.,  Lindley  and  Lojies,  L.,1.1.)  who  restored  the  judgment  for 
the  i)laintifr.- 

Against  this  judgment  Tailby  appealed. 

LoHD  M.vcx.VGHTi-x.-"'  The  claim  of  tlie  purchaser  was  rested  on 
Well-known  princij)les.  It  has  long  been  settled  that  future  prop- 
erty, ])ossibilities  and  expectancies  are  assignable  in  equity  for 
value.  The  mode  or  form  of  assignment  is  absolutely  immaterial 
})rovided  the  intention  of  the  parties  is  clear.  To  elTectuate  the 
intention  an  assignment  for  value,  in  terms  ])resent  and  imme- 
diate, has  always  been  ri>garded  in  c(iuity  as  a  contract  biiuling 
on  the  conscience  of  the  assignor  and  .so  binding  the  subject-matter 
of  the  contract  when  it  comes  into  existence,  if  it  is  of  such  a 
nature  and  so  described  as  to  be  capable  of  being  ascertained  and 
Entitled, 
riic  jjosition  of  the  purchaser  was  assailed  on  one  point,  and 
one  point  oidy.  It  was  not  disputed  that  Tyrrell  gave  valuable 
<'onsideration  for  the  bill  of  sale,  or  that  Tyrrell's  executors  were 
within  their  rights  in  .selling  whatever  was  comprisi-d  in  the  secur- 
ity. It  was  not  denied  that  the  debt  j)urehas«'d  was  a  book  debt 
which  became  due  and  owing  to  Izon  during  the  continuance  of  the 
Mvurity.  nor  was  any  question  raised  as  to  the  j«unicieney  of  the 
•'Mice  which  the  purchaser  gave  to  Messrs.  Wilson  BrotluTs  &  Co. 

17  Q.  n.  n.  HA.— If,,,.      '18  Q.  n.  n.  2:..— /?«/). 

Portions  of  the  opinion  arc  oinittcti.     Tlio  opinions  of  tlu"   ImtA  Chan- 
ilor    ( Hcr.schcll )    and   of   TA)nls  Watson   and    Fitzporald.   I,..T.T..   aro  aNo 
omitted. 


102  CONVEYANCE.  [CU.vr.  1. 

The  contention  of  the  learned  counsel  for  the  respondent  was^  tlib 
They  asserted  as  a  proposition  of  law  that  an  assignment  of  fuii;  : 
book  debts  not  limited  to  any  specified  business  is  too  vague  to  lur., 
any  effect.     Starting  from  that  proposition  they  asked  your  Lord 
ships  to  come  to  the  conclusion  that  the  assignment  of  book  deblcs 
in  tJie  present  case  was  void  from  the  beginning  as  including  in  its 
terms  book  debts  which  could  not  be  made  the  subject  of  valid  a-^- 
f^ignment.     I  do  not  stop  to  consider  whether  that  is  a  necessary  or 
legitimate  conclusion.     It  is  a  startling  result  certainly,  and  1  shiU 
have  a  word  to  say  about  it  by-and-by.     At  present  I  am  merely 
inquiring  whether  the  original  proposition  is  sound.     In  the  lead- 
ing judgment  in  the  Court  of  Appeal  it  is  said  that  the  doctrin'. 
which  covers  the  proposition  is  well  established,  because  "  in  every 
one  of  the  cases  in  point  that  were  cited  its  existence  has  been  m 
sumed."     The  principle  of  the  doctrine,  however,  is  not  stated ;  tlu 
doctrine  itself  is  not  defined;   the  cases  which  are  supposed  to  be 
in  point  are  not  reviewed  or  even  named.     But  the  high  authority 
of  the  learned  judges  who  have  adopted  this  view  makes  it  neces 
sary  to  examine  the  matter  closely.     The  learned  counsel  for  th; 
respondent  gave  your  Lordships  every  assistance  that  ingenuity  ant 
industry  could  supply;  and  the  result  of  their  labors  may  fairly  b( 
summed  up  as  follows :    The  origin  of  the  doctrine,  modern  thougl 
it  be,  is  lost  in  obscurity.    Before  Ilolroyd  v.  Marshall  10  H.  L.  C 
191,  no  support  for  it  can  be  found.     Possibly  it  may  be  evolvcc 
from  Ilolroyd  v.  Marshall     Lopes,  L.  J.,  seems  to  think  so.     I 
assumed  a  definite  form  in  Belding  v.  Read,  3  H.  &  C.  955.     H 
was  recognized  by  Fry,  J.,  in  In  re  Count  D'Epineuil,  20  Ch.  D 
758,  and  it  received  the  stamp  of  authority  from  what  was  said  o 
implied  by  two  of    the  learned    judges  who  decided  Clements 
Matthews,  11  Q.  B.  D.  808.     No  other  authority  or  semblance  o; 
authority  was  produced.     My  Lords,  I  have  read  Ilolroyd  v.  Mar 
shall  many  times,  and  I  can  discover  no  trace  of  the  doctrine  there 
Belding  v.  Bead,  as  Bowen,  L.  J.,  points  out,  was  founded  upon 
misapprehension  of  Lord  Westbury's  judgment  in  Ilolroyd  v.  Mar 
shall.     In  In  re  Count  D'Epineuil,  the  learned  judge,  as  he  stated 
in  In  re  Clarice,  30  Ch.  D.  318,  thought  himself  bound  by  Belding 
v.  Read,  and  simply  followed  the  decision  in  that  case.     As  for  the 
order  made  in  In  re  Count  D'Epineuil,  it  seems  to  me  to  have  been 
only  too  favorable  to  the  claimant.     I  much  doubt  whether  a  mem- 
orandum like  that  on  which  the  claimant  relied  could  create  a 
specific  lien  of  any  sort  or  kind.     Finally,  Cotton,  L.  J.,  has  hin\- 
self  disclaimed  the  hidden  meaning  attributed  to  his  judgment  in 
Clements  v.  Matthews. 

So  much  for  authority.     What  foundation  is  there  for  the  doc- 
trine apart  from  authority?     The  learned  counsel  for  the  respon- 


REc,  n.]  TAii.HY   r.  Tin:  okficiai,  kkckivkh.  103 

(It'nt  dill  not  pivti'ml  to  bo  wisor  tliau  tin*  (.'niirt  of  A])|»(m1.  Tlu-y. 
too,  neither  defined  the  doctrine  the  aid  of  wliich  they  invoked, 
nor  stated  anv  jirineiple  on  whieli  it  eouhl  he  suiiposod  to  rest. 
Thcv  contented  themselves  with  enik-avorinj,'  to  maintain  the  propo- 
tiition  that  an  assipiment  hy  a  trader  of  future  hook  (h-hts  not  eon- 
'ined  to  a  specified  business  is  too  vague  to  be  eireetual.  \Vh\ 
-houhl  this  be  so?  If  future  book  debts  be  assigned,  the  subject- 
matter  of  assignment  is  eapal)lc  of  Ix'ing  identified  as  and  when  the 
hook  debts  come  into  existence,  whether  tlie  descrijjtion  be  restrieti-d 
to  a  particuhir  business  or  not.  Indeed  the  restriction  may  nnd-r 
the  task  of  identification  all  the  more  diflicult.  An  energetic 
tradesman  naturally  develops  and  extends  his  business.  One  busi- 
ness runs  into  another,  and  the  line  of  demarcation  is  often  indis- 
tinct and  undefined.  The  linendraper  of  to-day  in  the  course  of  a 
few  years  may  come  to  be  the  proprietor  of  an  estal)lishment  pro- 
viding evervthing  that  man  wants,  or  woman  either,  from  the  cradle 
to  the  grave.  In  such  a  case  I  can  easily  conceive  that  ditlicult 
questions  might  arise  if  the  hook  debts  assigned  were  limited  to  a 
particular  business. 

It  was  admitted  by  the  learned  counsel  for  the  respondent,  that 
a  trader  mav  assign  his  future  book  debts  in  a  specified  i)usines>. 
Why  should  the  line  be  drawn  there?  Between  men  of  full  age 
and  competent  understanding  ought  there  to  be  any  limit  to  the 
freedom  of  contract  but  that  imjjosed  by  positive  law  or  dictated 
by  considerations  of  morality  or  public  policy?  The  limit  pro- 
posed is  purely  arbitrary,  and  I  think  meaningless  ami  unreason- 
able. The  ruie  laid  down  by  the  Court  of  Appeal  would  not  help 
to  identify  or  ascertain  the  subject-matter  of  the  contract  in  any 
case.  It  might  have  the  opposite  cfTect.  It  would  be  no  benefit  to 
the  assignor's  general  creditors.  It  might  prevent  a  man  from 
raising  monev  on  the  credit  of  his  expectations  in  his  existing  busi- 
ness— on  that  which  is  admitted  to  be  capable  of  assignment — in 
consequence  of  the  obvious  risk  that  some  alteration  in  the  char- 
acter of  the  business  might  impair  or  defeat  the  security. 

Under  these  circumstances  I  think  your  Lordships  will  come  to 
the  conclusion  that  the  ])roposition  on  which  the  respondent  relics 
ns  the  foundation  of  his  case  cannot  be  sui)i)ortcd  on  prineii)lc.  and 
tliat  the  authorities  on  which  it  was  supposed  to  rest  may  be  traced 
to  a  decision  of  the  Court  of  Kxchequcr  which  it.self  is  founded  on 
an  errcMieous  view  of  the  j)rin<iplcs  recognized  in  this  llou-o  in 
Iff)lroi/(l  V.  Miirshnll. 

My  Lord<,  1  should  wi.-h  to  .say  a  few  words  about  IlohnifiJ  v. 
}farshall.  l)ecinise  I  am  inclined  to  think  that  Behlitig  v.  Rend 
is  not  the  only  case  in  which  Lord  Westhury's  observation^  linve 
l>oen   misunderstood.     To  understand   Lord   Westhury's  jtidgment 


104  CONVEYANCE.  [CHAP.  I. 

aright,  I  think  it  is  necessary  to  bear  in  mind  the  state  of  the  law 
at  the  time,  and  the  point  to  which  his  Lordship  was  addressing 
liimself.     Holroyd  v.  Marshall  hiid  down  no  new  law,  nor  did  it 
extend  the  principles  of  equity  in  the  slightest  degree.     Long  be- 
fore Holroyd  v.  Marshall  was  determined  it  was  well  settled  that 
an  assignment  of  future  property  for  value  operates  in  equity  by 
way  of  agreement,  binding  the  conscience  of  the  assignor,  and  so 
binding  the  property  from  the  moment  when  the  contract  becomes 
capable  of  being  performed,  on  the  principle  that  equity  considers 
as  done  that  which  ought  to  be  done,  and  in  accordance  with  the 
maxim  which  Lord  Tliurlow  said  he  took  to  be  universal,  "  that 
whenever  persons  agree  concerning  any  particular  subject,  that,  in 
a  Court  of  Equity,  as  against  the  party  himself,  and  any  claiming 
under  him,  voluntarily  or  with  notice,  raises  a  trust "  (Legard  v. 
Hodges,  1  Ves.  Junr.  478).     It  had  also  been  determined  by  the 
highest  tribunals  in  the  country,  short  of    this    House — by    Lord 
Lyndhurst  as    Lord  Chancellor  in  England,  and    by  Sir  Edward 
Sugden  as  Lord  Chancellor  in  Ireland — that  an  agreement  bind- 
ing property  for  valuable  consideration  had  precedence  over  the 
claim  of    a    judgment    creditor.     Some  confusion,  however,  has 
recently  been  introduced  by  a  decision  of  a  most  eminent  judge^ 
who  was  naturally  less  familiar  with  the  doctrines  of  equity  than 
with  the  principles  of   common  law.     In   that  state  of  things,  in 
Holroyd  v.  Marshall,  in  a  contest   between  an  equitable    assignee 
and   an   execution   creditor,    Stuart,  V.  C,  decided   in   favor   of 
the  equitable  assignee.     His  decision  was  reversed  by  Lord  Camp- 
bell, L.  C,  in  a  judgment  which  seemed  to  strike  at  the  root  of 
all  equitable  titles.     Lord  Campbell  did  not  hold  that  the  equit- 
able assignee  obtained  no  interest  in  the  property  the  subject  of 
the   contract  when   it   came   into   existence.     He   held  that   the 
equitable  assignee  did  obtain  an  interest  in  equity.     But  at  the 
same  time  he  held  that  the  interest  was  of  such  a  fugitive  char- 
acter,  so   shadowy,  and   so   precarious,  that   it   could   not   stand 
against  the  legal  "title  of  the  execution  creditor,  without  the  help 
of  some  now  act  to  give  it  substance  and  strength.     It  was  to  this 
view,  I  think,  that  Lord  Westbury  addressed  himself;    and  by  way 
of  shewing  how  real  and  substantial  were  equitable  interests  spring- 
ing from  agreements  based  on  valuable  consideration,  he  referred 
to  tlie  doctrines  of  specific  performance,  illustrating  his  argument 
by  examples.     One  of  the  examples,  perhaps,  requires  some  quali- 
fication.    That,  however,  docs  not  affect  the  argument.     The  argu- 
ment is  clear  and  convincing;  but  it  must  not  be  wrested  from  its 
purpose.     It  is  difficult  to  suppose  that  Lord  Westbury  intended 
to  lay  down  as  a  rule  to  guide  or  perplex  the  Court,  that  considera- 
tions applicable  to  cases  of  specific  performance,  properly  so-called, 


8KC.   II.]  TAILHV    r.    TMK    OlTK  lAl,    I!  i:i   KIVKH.  !(».'» 

wluTo  the  contract  is  executory,  are  to  In-  applied  to  every  case  of 
equitable  assi«jninent  dealing  with  future  property.  Lord  Sclbornf 
has,  I  think,  done  good  service  in  jjointing  out  that  confusion  is 
sometimes  caused  by  transfi'rring  such  considerations  to  questions 
which  arise  as  to  the  propriety  of  the  Court  re([uiring  some- 
thing or  other  to  be  done  in  specie  (Wolverhampton  nutl  WnlsnU 
liailuay  Compnivj  v.  London  and  North  Wcxtern  Railway  Com- 
panji.  JjiWY.  Iicji.  in  V.(].  1.'1'3).  His  Lordship  observes  that  there 
is  sonu^  fallacy  and  ambiguity  in  the  way  in  which  in  cases  of  that 
kind  those  words  ''specific  performance,"  are  very  frecpiently 
used.  Greater  confusion  still.  I  think,  would  be  caused  by  trans- 
ferring considerations  applical)le  to  suits  for  specific  porform- 
anci^ — involving,  as  they  do.  some  of  the  nicest  distinctions  and 
most  dillieult  (piostions  that  come  before  the  Court — to  cases  of 
equitable  assignment  or  specific  lien  where  nothing  remains  to  be 
done  in  order  to  define  the  rights  of  the  parties,  but  the  Court 
is  merely  asked  to  protect  rights  completely  defined  as  between 
the  parties  to  the  contract,  or  to  give  effect  to  such  rights  either 
by  granting  an  injunction  or  by  appointing  a  receiver,  or  by  ad- 
judicating on  questions  between  rival  claimants. 

The  truth  is  that  cases  of  equitable  assignment  or  specific  lien, 
where  the  consideration  has  passed,  depend  on  the  real  meaning* 
of  the  agreement  between  the  parties.  The  diiliculty,  generally 
speaking,  is  to  ascertain  the  true  scope  and  effect  of  the  agreement. 
When  that  is  ascertained  you  have  only  to  apply  the  principle  that 
equity  considers  that  done  which  ought  to  be  done  if  that  principle 
is  applicable  under  the  circumstances  of  the  case.  The  doctrines 
relating  to  specific  performance  do  not,  I  think,  afford  a  test  or  a 
measure  of  the  rights  created.  There  are  cases  where  the  rights 
of  the  parties  may  be  worked  out  by  means  of  specific  performance, 
though  no  s])ecific  lien  is  effected  by  the  agreement  itself.  More 
fre(|ucntly  a  specific  lien  is  effected  though  no  case  of  specific  per- 
formance is  contemjdated.   .  .  . 

In  the  result,  therefore,  and  for  the  reasons  I  have  given.  I  am 
of  o))inion  tiiat  the  case  of  the  respondent  entirely  fails.  Th<' 
original  jirojmsition  is  not,  T  think,  well  founded.  If  it  were  sound 
the  conclusion  attempted  to  be  drawn  from  it  could  not.  as  it  seems 
to  me,  be  maintained. 

I  have,  therefore,  no  hesitation  in  concurring  in  the  motion 
which  has  been  proposed.' 

'"  It  is  npcos^nry  fn-t  in  ((tn^idcr  tlio  prin(ii>los  on  wliidi  an  a-*si)jnmpnt 
of  proporty  not  »'\i-tiiin  i»t  tin'  linio  is  niaih'  ofroctual.  Tlio  principlo  i-* 
that  such  an  assij^nnicnt.  as  rofrards  llio  non-pxistin^  propnty.  amounts  to 
»  rontract  for  value,  wliidi  a  Comt  of  Kipiity  will  spccitlrally  |>orform. 
Thut    was    laid    down    by    Lord    NNc-stbuiy    in    Uulrvyd    v.    Marnhull,    and 


106  CONVEYANCE.  [CIIAI-.  I^ 

Order  appealed  from  reversed;  order  of  the  Queen's  Benchi 
Division  restored;  the  respondent  to  pay  to  the  appellant  his  costsl 
in  the  Court  of  Appeal  and  the  costs  of  the  appeal  in  this  House; 
cause  remitted  to  the  Queen's  Bench  Division. 


FERGUSON  V.  WILSON. 
Supreme  Court  of  Michigan,  Dec,  1899. 

(80  N.  W.  Rep.  lOOfi.) 

Error  to  Circuit  Court.  Action  by  James  F.  Ferguson,  as 
administrator  of  the  estate  of  Charles  Ferguson,  against  Henry  W. 
Wilson.     Judgment  for  plaintiff  and  defendant  appeals.     Affirmed 

The  suit  was  brought  in  trover  to  recover  the  value  of  certain 
personal  property. 

2}  Plaintiff's  claim  to  the  property  in  controversy  arises:  (1) 
Under  a  certain  chattel  mortgage  given  by  one  George  Wiggins  to 
Charles  Ferguson,  plaintiff's  intestate,  on  November  1,  1893,  the 
consideration  mentioned  being  $150,  and  conveying  one  bay  horse, 
one  gray  horse,  one  binder,  one  mower,  five  yearlings,  and  one  calf, 
(2)  Under  a  chattel  mortgage  given  by  Wiggins  to  Charles  Fer 
guson,  October  27,  1893,  and  filed  in  the  town  clerk's  office,  Novem- 
ber 6,  1893,  covering  all  the  crops  and  stock  raised  on  the  farm  let 
by  Ferguson  to  Wiggins  on  that  day,  and  also  all  the  stock,  sheep, 
cattle,  hogs,  horses,  tools,  and  machinery  that  might  be  used  or  kep< 
on  said  farm.  This  chattel  mortgage  is  contained  in  a  lease  giver 
by  Ferguson  to  Wiggins  for  the  farm,  and    to    secure    the    reni 

I  should  not  have  gone  back  to  this  were  it  not  that  there  seems  to  b« 
a  misunderstanding  as  to  the  application  of  the  doctrine  of  specific  perform 
ance  in  these  cases.  The  ordinary  application  of  the  doctrine  of  specific 
performance  is  to  compel  a  vendor  or  purchaser  to  complete  a  contrac 
for  sale  or  purchase,  a  contract  which  is  wholly  executory.  Where  suci 
a  contract  relates  to  goods  the  Court  will  not  in  general  decree  specific 
performance.  Why  is  this?  Because  the  Court  considers  that  in  genera 
damages  are  a  suflicient  remedy,  and  the  proper  remedy  for  the  breach  o 
a  contract  to  sell  or  purchase  goods,  but  that  does  not  apply  to  a  bread 
of  a  contract  relating  to  land.  In  the  present  case  the  contract  is  no 
wholly  executory.  The  mortgagee  has  performed  his  part  of  it  by  advanc 
ing  his  money  on  the  faith  of  it,  and  the  principle  that  damages  are 
sufficient  remedy  does  not  apply." — Per  Cotton,  L.  J.,  in  In  re  Clarki 
Coomhe  v.  Carter,  36  Ch.  D.  348'  (1887). 

'  Only  so  much  of  the  opinion   is  given  as   relates  to  the  point  unde 
consideration. 


stc.  II.]  FEIUJl'SON'    c.    WILSON'.  107 

tlaTi'of.  (.?)  I'ndcr  a  hill  of  sale  of  all  llu-  properly  doscribcd  in 
the  two  niort^M^'es  above  nu'iilioiu'd,  given  by  Wifrgins  to  ('barbs 
Ferguson.  an<l  dated  .November  (i,  IH!).').  'jlie  defen(binl  elainied 
under  a  chattel  mortgage  given  by  Wiggin.-;  to  biin  on  I'eliruary  fl, 
1893,  to  secure  the  payment  of  $:?8(),  payable  $.")0  eaeli  year  for  si.\ 
years,  and  $80  .seven  years  from  date,  with  interest  at  7  per  cent. 
This  mortgage  covered  the  binder  claimed  by  plaintifT  to  be  covered 
by  his  mortgage  and  i)ill  of  sale,  and  certain  cattle,  sheep,  crops  on 
the  farm,  etc. ;  and  also  provided  that  it  should  cover  "  all  crops,  of 
whatsoever  najne  or  nature,  to  be  sown,  planted,  and  grown  on  said 
premises  during  the  years  1893  to  1899,  inclusive,  also  all  the  in- 
crease of  the  above-described  stock,  and  all  other  personal  pro|)erty 
which  I  may  own  or  acquire  during  said  years."  This  mortgagt; 
was  prior  in  time  of  filing  to  the  mortgage  given  by  Wiggins  to 
plaint ifT's  intestate,  and  was  duly  recorded  in  the  town  clerk's  ofTice, 
and  renewed  from  year  to  year.  The  real  controversy  between  the 
parties  arises  over  the  interpretation  of  the  clause  in  defentlant's 
mortgage,  "and  all  other  personal  projjcrty  wliicli  I  may  own  or 
acquire  during  said  years."  It  apjK'ared  that  Mr.  Wiggins  was 
the  owner  and  was  in  i)ossession  of  the  ])roj)erty  described  specifi- 
cally in  the  mortgage  given  by  him  to  the  defendant.  The  court 
instructed  the  jury  substantially  that,  as  to  the  articles  of  property 
specifically  mentioned  in  his  mortgage,  there  could  be  no  question 
as  to  defendant's  right  and  title,  but  that  defendant  could  not  claim 
a  lien  under  the  general  clause,  "and  all  other  personal  property 
which  I  may  own  or  accjuire  during  said  years"  upon  the  property 
afterwards  ac(|uired,  and  having  no  connection  with  the  i)roperty 
owned  by  him  at  the  time  of  the  giving  of  the  mortgage.  It  is  this 
last  part  of  the  charge  of  which  coun.sel  for  defendant  comi)lains, 
his  contention  bt'ing  that  defendant's  mortgage  was  a  lii'ti  uj^on  .ill 
of  the  after-acquired  j)roj)erty. 

It  is  conceded  by  counsel  for  i)laintitr  that  it  is  settled  in  this 
State  that  one  may  mortgage  after-ae(iuire(l  property,  and  the  mort- 
gage will  be  upheld;  but  it  is  conten<]ed  that  this  rule  does  not 
apply  to  goods  and  chattels  subsequently  accpiircd,  which  have  no 
connection  with  property  actually  in  existence  at  tiu*  date  of  the 
mortgage.  This  was  undoubtedly  the  view  taken  l)y  the  court 
l)clow.  The  geiu-ral  rule  in  many  of  the  States  is  that  at  comm'Ui 
law  a  mortgage  can  operate  <»nly  on  property  actually  in  existence 
at  the  time  of  giving  the  mortgage,  and  then  actually  In-longing  to 
Uie  mortgagor,  or  potentially  belonging  to  him,  as  an  incident  of 
other  property  then  in  existence  and  belonging  to  him  ;  that  a  mort- 
gage  on  goods  which  the  mortgagor  does  not  own  at  the  time  of 
making  the  mortgage,  though  he  may  afterwards  accpiire  them,  is 
void  in  respect  to  such  goods  as  against  subsequent  purchasers  or 


108  COXVEYAXCE.  [CHAP.  I. 

attaching  creditors;  and  the  rule  in  Massachusetts  and  Missouri 
and  some  other  States  is  that,  if  a  mortgage  he  made  of  a  stock  in 
trade,  it  will  not  at  law  cover  additions  afterwards  made  to  the 
stock,  though  it  be  expressly  framed  to  cover  additions  to  the  stock 
intended  to  be  made  to  replace  such  as  should  be  sold  {Barnard  v. 
Eaton,  2  Cush.  294;  Gregory  v.  Tavenner,  38  Mo.  App.  G27). 
Cases  from  other  States  might  be  cited  where  the  same  rule  is  laid 
down.  In  this  State,  however,  it  has  many  times  been  held  that  a 
mortgage  on  a  dealer's  stock  may  be  made  to  cover  after-acquired 
goods ;  but  it  is  held  that  they  must  be  brought  within  its  descrip- 
tive words,  and  a  mortgage  drawn  to  cover  goods  to  be  "  added  to" 
the  stock  or  gotten  "for  use"  in  the  business  will  not  include  goods 
bargained  for,  but  never  received  at  the  place  of  business,  or  which, 
on  being  received,  are  devoted  to  some  other  purpose  {Curtis  v. 
^Vilcox,  49  Mich.  429,  13  X.  W.  803).  In  Eddy  v.  McCaJl  71 
Mich.  497,  39  N.  W.  734,  the  property  in  question  covered  by  the 
chattel  mortgage  was  certain  horses,  wagons,  etc.,  and  certain  mill 
machinery,  lumber,  shingles,  posts,  and  other  materials  in  and 
about  the  planing  mill  of  the  mortgagor.  The  mortgage  contained 
the  following  clause :  ''  And  also  all  such  other  lumber,  stock,  or 
material  of  every  kind  which  they  may  hereafter  add  to  said  busi- 
ness, and  all  other  property  which  they  may  hereafter  purchase  and 
use  in  connection  with  said  business."  The  property  was  attached 
by  a  creditor,  and  the  mortgagee  brought  trover.  It  was  held  that' 
the  clause  in  the  mortgage  was  valid,  even  as  against  third  parties;' 
citing  Gay  v.  Bidivell,  7  Mich.  525 ;  People  v.  Bristol,  35  Mich.  29 ; 
Cadivell  v.  Fray,  41  Mich.  307,  2  N.  W.  52 ;  Cigar  Co.  v.  Foster,  38 
Mich.  368;  Curtis  v.  Wilcox,  49  Mich.  425,  13  N".  W.  ^0^;Lelnnd  v. 
Collver,  34  Mich.  418.  In  no  case,  however,  has  this  court  held 
that  a  clause  in  a  chattel  mortgage  like  the  one  in  the  present  case, 
to  wit,  "  and  all  other  personal  property  which  I  may  own  or  ac- 
quire during  said  years,"  creates  a  valid  lien  upon  after-acquired 
property  not  connected  with  the  business  in  which  the  mortgagor 
was  engaged,  as  against  subsequent  good-faith  purchasers  or  attach- 
ing creditors,  whatever  may  be  the  rule  as  between  the  parties  them- 
selves. The  property  in  controversy  here  had  no  relation  to  that 
in  possession  of  the  mortgagor  at  the  time  of  giving  the  mortgage. 
He  did  not  then  own  the  property,  Init  afterwards  acquired  it,  out- 
side of  the  business  in  wliich  he  was  then  engaged.  The  case  is  not 
like  the  case  of  Eddy  v.  McCall,  supra,  nor  like  the  case  of  Dunn  v. 
Mirhigan  Club,  115  Mich.  409,  73  N.  W.  380.  In  the  last  case  it 
appeared  that  the  mortgage  covered  all  the  mortgagor's  stock  in 
trade,  all  book  accounts,  notes,  etc.,  owned  by  hinl  or  appearing  on 
the  books  of  said  business  then  being  conducted  by  him,  "  and  all 
future  book  accounts  representing  tlie  proceeds  of  sales  of  goods 


t.KC.  II. J  FEHOUSON    r.    WILSON.  109 

in  mortgagor's  stoi-k,  and  all  additions  to  the  same."  It  was  held 
that  this  covered  all  future  hook  accounts,  though  not  entered 
on  the  books.  The  court  helow  was  not  in  error  in  the  charge 
as  given.  The  judgment  must  be  ullirmed.  The  other  justices 
concurred. 


110  Ca^fVEYANCE.  [chap.  I. 


CHAPTER    I.     {Continued.) 
Section  III.     I x formal  Mortgages. 

RUSSEL  V.  RUSSEL. 

Court  of  Chancery,  1T83. 

(1  Brown  Ch.  269.) 

A  lease  having  been  pledged  by  a  person  (who  afterwards  became 
a  bankrupt)  to  the  plaintitT,  as  a  security  for  a  sum  of  money  lent 
to  the  bankrupt,  the  pledgee  brought  this  bill  for  a  sale  of  the  lease- 
hold estate. 

Mr.  Lloyd,  for  the  plaintiff,  merely  stated  the  case,  and  that  the 
plaintiff  had  a  lion  upon  the  estate. 

Mr.  Kenyan,  for  tlie  defendants,  the  assignees,  insisted  the  plain- 
tiff's claim  was  against  the  law  of  the  land;  for  that  it  would  be 
charging  land  without  writing,  which  is  against  the  4th  clause  of 
the  Statute  of  Frauds. 

Lord  Loughborough.  In  this  case  it  is  a  delivery  of  the  title  to 
the  plaintiff  for  a  valuable  consideration.  The  court  has  nothing 
to  do  but  to  supply  the  legal  formalities.  In  all  these  cases  the 
contract  is  not  to  be  performed,  but  is  executed. 

Lord  Ashurst.  Where  the  contract  is  for  a  sale,  and  is  ad- 
mitted so  to  be,  it  is  an  equivocal  act  to  be  explained,  whether  the 
party  was  admitted  as  tenant  or  as  purchaser.  So  here  it  is  open 
to  explanation,  upon  what  terms  the  lanse  was  delivered. 

A  question  arose  as  to  reading  the  bankrupt's  evidence,  he  having 
had  his  allowance  and  certificate,  but  the  Court  suffered  it  to  be 
read,  thinking  him  not  bound  to  refund. 

An  issue  was  directed  to  try  whether  the  lease  was  deposited  as 
a  security  for  the  sum  advanced  by  the  plaintiff  to  the  bankrupt. 
Upon  tlie  trial  the  jury  found  it  was  deposited  as  a  security.^ 

'  "  The  case  of  Russcl  v.  Ru.iscl  is  a  decision  much  to  be  lamented ;  that 
a  mere  deposit  of  deeds  shall  be  considered  as  evidence  of  an  agreement 
to  make  a  mortgage.  That  decision  has  led  to  discussion  upon  the  truth 
and  probability  of  evidence  whicli  the  very  object  of  the  Statute  of  Frauds 
was  entirely  to  exclude." — Eldon,  L.  Ch.,  in  Ex  jmrtc  Uaiph,  14  Ves.  402 
Compare  Ex  parte  Hooper,  1   Meriv.  7. 

Noekuell  v.  Ilohhy,  2  Sandf.  Ch.  (N.  Y.)  9  (1844)  ;  Hackett  v.  Reynolds, 


,1,.]  Ex  ixirlf    Ki;NslNGI'(tN, 


111 


i:.\  1' AirrM  Kiixsixcroy. 

Coriir    (»i     ( 'ii  \\(  i;m  .    lsi:5. 
Ct  V.  a-  //.  :!'.) 

Duncan  Ilunior,  on  tlic  liUli  of  Manli,  l^U."),  deposited  with  the 
prtitioners,  liis  hankers,  several  deeds;  and  sifined  tlie  foMowing 
ujenioranduni,  addressed  to  Messrs.  MofTatt,  Kciisin;,'ton  &  Styan, 
hankers,  London.  **  L(»ndon,  liUh  Mareh,  ISd.').  (ientk-nien,  here- 
with I  heg  leave  to  deposit  in  your  house  the  deeds  and  policy  of 
assurance  ui)on  the  following  leasehold  property;"  (describing  it) 
*'  to  remain  with  you  as  a  collateral  security  for  the  balance  of  any 
sum  or  sums  of  moni'y  which  you  may  at  any  time  advance  for  my 
acx'ouul,  and  which  1  hereby  oblige  myself,  heirs,  or  e.Kccutors.  to 
assign  in  a  legal  manner  whenever  required  so  to  do." 

On  the  25111  of  September.  1805,  Hunter  executi-d  a  bond  to  the 
same  i)ersons,  in  the  penalty  of  £40,000,  with  condition  for  pay- 
iiient  to  them,  and  in  case  of  any  alteration  taking  place  in  their 
lirm,  then  to  the  persons  composing  a  new  firm,  if  comprising  two 
of  the  original  members,  of  all  sums  thereafter  in  any  manner  lent 
unto  or  advanced  on  acconiit  of  said  Duncan  Hunter  by  the  i)eti- 
tioners. 

In  December  following,  MofTatt  retired  from  the  partnership. 
On  the  Oth  of  August,  1807,  Hunter,  requiring  additional  ad- 
vances, deposited  with  the  petitioners  the  title  deeds  of  an  estate, 
called  Cromwell  Park  :  and  on  the  7th  of  August  signed  the  fol- 
lowing memorandum.  "  Messrs.  Kensington  &  Co.  (Jentlemen.  I 
hereby  deposit  in  your  hands  the  title  deeds  which  I  hold  of  Crom- 
well Park,  as  a  collateral  security  for  any  cash  transactions  which  I 
have  had  or  may  have  with  your  house,  and  which  I  agree  to  assign 
wlienever  I  am  re(|uired  so  to  do.     liondon,  7  Aug.,  1807." 

In  March,  180!),  Hunter,  wanting  furtluT  advances,  proposed  a 
dt  l)osit  of  other  deeds,  of  ])remi.ses  held  ur.der  the  Drapers'  Com- 
|)any.  by  lease,  at  a  rent  of  £  100  a  year,  and  agreed  to  assign  to  th»? 
petitioners   his   interest    in   £:U100   :?   per  cent.    Consolidated    Bank 

I  I{.  I.  r.12  (lS.-,7);  driOin  v.  (Iri/Jiti.  IK  N.  .1.  K.i.  KM  (J.Ktifi);  (lal,-  v. 
Morris,  2!»  X.  .F.  Kq.  2"22  (1878).  accord.  Cotitra  ure  Shitz  v.  I)icffcuhach, 
.1  Pa.  St.  2:V.\  (1841!):  Uratior  v.  Mrador.  .1  lli-isk.  (Tonn.)  M'Z  (187H. 
'Ilio  (USPS  in  the  liiitcil  Slates  are  few  ami  it  may  Im-  (iovililfd  if  ttio  dix'trinn 
will  liav<  imxh  fitlluwiiij;  horv.  In  sovoial  Wcstt-rn  ."States  t\\o  doposit  of 
Si')uM)l  Lnn<l  ( Vrtiti<at«'x,  wliicli  pass  titlr  !>>•  nssij;nnu>nt.  ha.**  Inrn  lirld 
to  <rpat(«  an  rquitaltio  lirn.  Soo  Maury  v.  Wood,  12  Win.  41.1  (18G0); 
./<irti,s-  V.   Hutchcr,   Id  Wi^.   307    (1802). 


112  CONVEYANCE.  [CHAP.  iJ 

Annuities,  invested  in  the  names  of  the  Drapers'  Company  and  him,.] 
the  said  D.  Hunter,  for  securing  the  due  payment  of  the  said  rent  of] 
£400  and  performance  of  the  covenants  of  the  lease ;  and  he  signed 
the  following  memorandum:  "  London,  30th  March,  1809.  Messrs. 
Kensington,  Styan  &  Adams.  I  have  lodged  in  your  hands  the 
lease  and  other  deeds  belonging  to  the  Old  Stock  Exchange,  which 
are  to  lay  as  a  collateral  security  for  any  advances  which  you  may 
make  for  my  account,  and  which  I  hereby  engage  and  promise  to- 
assign  over  to  you,  in  the  regular  way,  when  required,  as  also  £3000' 
3  per  cent.  Consols,  which  are  deposited  in  my  name,  with  that  of 
the  Drapers'  Company,  as  a  security  for  the  ground  rent,  and  which 
I  hereby  acknowledge  are  also  to  be  transferred  or  assigned  over  to- 
you  when  required." 

No  further  assignments  or  transfers  were  made.  In  July,  1811. 
Hunter  was  declared  a  bankrupt;  when,  a  considerable  balance  be- 
ing, due  to  the  petitioners,  and  their  application,  as  mortgagees, 
for  a  sale  under  the  general  order  being  rejected  by  the  commis- 
sioners, the  petition  was  presented,  praying  a  declaration  that  the 
petitioners  are  to  be  considered  as  mortgagees  of  the  estates  and  the 
£3000  3  per  Cents. ;  that  the  commissioners  may  take  an  account  of 
the  principal  and  interest  due  to  the  petitioners  and  appoint  a 
sale  of  the  mortgaged  premises  and  the  bankrupt's  interest  in  the 
£3000  stock,  and  that  the  moneys  to  arise  from  the  sales  may  be 
applied  in  reduction  of  the  petitioners'  debt,  with  liberty  to  prove 
for  the  remainder. 

Sir  Samuel  Romilly  and  Mr.  Wilson,  in  support  of  the  Petition. 
The  questions  are,  whether  this  deposit  of  title  deeds,  with  a  writtei 
agreement,  can  be  held  by  the  petitioners  as  a  security  for  advances 
after  Moffatt  retired :  secondly,  as  to  the  bank  annuities.  Youi 
Lordship  has  gone  much  further  in  decision  than  these  circum- 
stances, having  held  a  mutual  understanding,  with  reference  te 
securities  in  the  hands  of  the  creditor,  sufficient  without  any  express 
agreement:  Ex  parte  Langston,  17  Ves.  22T;  1  Rose,  26,  which  has 
been  followed  in  many  instances. 

The  stock  cannot  be  brought  within  the  statute  of  James  I.^  It 
is  not  like  a  personal  chattel,  passing  by  delivery:  being  in  truth 
chose  in  action.  The  bank  would  not  take  notice  of  any  trust. 
To  whom  was  notice  to  be  given  ?  The  bank  are  not  the  debtors  foi 
bank  annuities;  if,  therefore,  notice  was  necessary,  it  must  be  given 
1o  Government.  Is  stock,  standing  in  several  names,  to  be  consid- 
ered as  the  stock  of  one  becoming  bankrupt?  The  effect  as  to 
Iransfers  in  marriage  settlements  must  be  considered.  If,  how- 
ever, it  could  be  considered  within  the  statute,  that  cannot  be  under 
these  circumstances. 

•Stat.  21  Jam.  1,  c.  19,  s.  U.—Rep. 


SIX.  III.]  Ex  parte  Ki:Nsi.\(iT().\.  \\.\ 

Mr.  Lracli  and  Mr.  MniiUtijuc.  for  tlu'  Assignees.  Here  is  iio 
ugreoniont  that  this  tloposit,  in  March,  1805,  sliould  be  a  security  to 
the  new  house,  formed  afterward  by  a  change  of  the  firm.  At  least 
there  must  be  a  clear  verbal  contract.  Here  is  no  written  agree- 
ment and  no  vcrl)al  contract  of  any  ilcscription. 

The  stock  is  within  the  statute  of  James  I.  The  books  are  the 
best  evidence  of  the  apparent  ownership. 

Thk  Lohi)  C'hantkli.ok  [Kldox].  It  has  been  so  long  settled 
that  a  mere  deposit  of  deeds,  without  a  single  word  passing,  ojkt- 
ates  as  an  ecpiitable  mortgage,  that,  whatever  I  might  have  tlutught 
originally,  1  must  act  upon  that  as  settled  law.  I  have  often  ex- 
pressed my  surprise  how  it  came  to  be  so  settled;  as  judicial  deci- 
sions are  to  be  found,  that  a  lien  upon  deeds  may  exist,  without 
giving  any  right  at  law  to  the  estate ;  and  there  is  a  renuirkal)le 
case  in  Peere  Williams,  where  a  prior  encumbrancer  was  held  to 
have  the  interest  in  the  estate:  but  the  Court  would  not  take  away 
the  deeds  from  a  subsequent  encumbrancer;  allowing  all  the  Ixmefil 
he  could  have  from  those  deeds,  but  giving  him  no  interest  in  thr 
estate.  That  decision,  however,  of  Iiiif<sel  v.  Riussel,  by  Lord 
Thurlow,  has  been  followed  ever  since  (1  Bro.  C.  C.  2G9). 

This  is  the  case,  not  of  a  mere  dejwsit,  but  a  deposit  with  a 
written  agreement;  which  must  prima  facie  determine  the  purpose 
of  the  deposit ;  and  it  would  be  stretching  the  e.xj)rcssion  much  to 
construe  that  as  an  engagement  that  would  affect  the  deeds,  not 
only  with  regard  to  the  money  advanced  by  the  old  house,  but  the 
advances  afterward  to  be  made  by  the  house,  whenever  the  j)artners 
should  be  changed.  It  must  therefore  be  considered  as  having 
been  originally  only  a  collateral  security  for  any  money  that  might 
become  due  from  the  house,  while  the  partners  remained  tlu» 
same. 

In  the  cases  alluded  to,  I  went  the  length  of  stating  that 
where  the  deposit  originally  was  for  a  j)articular  purpose-,  that  pur- 
pose may  be  enlarged  by  a  subse(pient  parol  agreement ;  and  this 
distinction  aj)j)eared  to  me  to  he  too  thin,  that  you  should  not  have 
the  benefit  of  such  an  agreement,  unless  you  added  to  the  terms  of 
that  agreement  the  fact,  that  the  deeds  were  jmt  back  into  the 
hands  of  the  owner,  and  a  re-delivery  of  them  re«|uired;  on  whieli 
fact  there  is  no  doubt  that  the  deposit  would  amount  to  an  equi- 
table lien  within  the  principle  of  these  cases. 

In  this  case  a  bond  was  given,  dated  the  I'Sth  of  September.  180.") ; 
at  which  time  they  stood  with  a  written  contract.  alTceting  these 
deeds  and  the  estate  only  to  the  extent  in  which  MotTatt  &  Co. 
should  make  advances,  but  with  a  written  contract,  arising  from  the 
bond,  for  a  personal  obligation  for  the  advances,  not  only  of  that 
partnership,  but  of  any  other,  of  which  two  of  the  original  mem- 


114  CONVEYANCE.  [CUAP.  I. 

bers  constituted  part.  Moffatt  retired  from  the  partnership  in 
December  following;  and  this  considerable  difficulty  occurs  in  the 
case.  Understanding  alone,  unless  in  a  fair  sense  amounting  to 
agreement,  would  not  do;  and  in  this  case  no  two  of  their  agree- 
ments would  admit  the  same  construction.  My  opinion,  however, 
is,  that,  if  upon  the  affidavit  and  examination,  taken  together,  aided 
by  the  extreme  probability  of  their  intention,  I  can  collect  that 
what  was  originally  deposited  for  one  purpose  should  be  held  as 
deposited  also  for  the  other,  with  reference  to  the  demand  of  the 
subsequent  partners,  that,  though  by  parol,  would  be  sufficient 
within  these  cases. 

Upon  the  other  question,  with  regard  to  the  stock,  my  opinion 
is  extremely  clear.  When  that  stock  was  placed  in  the  hands  of 
Hunter  &  Co.  it  was  upon  a  trust,  which  must  exist  as  long  as  the 
lease,  to  which  the  agreement  refers.  The  equitable  interest  was 
in  different  persons;  one  being  both  trustee  and  cestui  que  trust. 
I  do  not  apprehend  that  the  bank  would  take  notice  of  an  agree- 
ment to  transfer.  The  bankrupt  therefore  having  only  an  equit- 
able interest,  and  no  power  to  make  an  actual  transfer,  his  equit- 
able interest  passed  by  the  agreement,  without  the  legal  interest^ 
which  he  could  not  part  with. 


EX  PAETE  HOOPER. 

Court   of    Chancery,    1815. 

(1  Meriv.  7.) 

Assignment  by  the  bankrupts,  of  leasehold  premises,  by  way  of 
mortgage,  for  securing  the  sum  of  £400  and  interest. 

The  bankrupts  subsequently  becoming  indebted  to  the  mort- 
gagee in  further  sums  received  by  them  for  his  use,  an  account  was 
stated  and  settled  between  the  parties,  on  which  a  balance  of  £400 
was  ascertained,  and  the  following  memorandum  delivered: 

"  Hewett  and  Hopkins,  debtors,  to  Mr.  J.  Ford,  £400  on  balance 
of  account  due  the  12th  day  of  June,  1813." 

The  bankrupts  farther  entered  into  a  parol  engagement  that  the 
last  mentioned  £400  should  be  tacked  to  the  original  mortgage; 
and  that  as  soon  as  a  new  lease  of  the  premises  could  be  obtained, 
a  mortgage  security  for  the  same  should  be  executed  by  the  bank- 
rupts; but  which,  owing  to  the  renewal  not  having  been  obtained, 
was  never  done.     Interest  was  paid  on  both  sums  to  the  12th  of 


.sM.  III.]  AV   /"/'•/'■    llooi'Klt.  11"> 

.liinr.  IM  1  ;  iiihl  oil  llif  Sih  of  iK-ccmlHT  follow  in;,'  llic  coiniiiirfsion 

i"Ur(l. 

riu'  iK'lilion  jtraved  a  sale  of  t\w  in<)rtga<,a'(.l  pivmisi'S,  ami  thai, 
after  ajiitlyiii^'  tHOO  in  li(iuidation  of  llic  ck'bt,  the  ri'sidiii'  might 
Ik'  j)rovetl ;  with  tlii'  iisnal  dirt'ctions.  Tlu-  single  jmint  heforc  the 
rourt  was,  whetiu-r  or  not  the  petitioners  were  entitled  to  tack  on 
the  second  £400  debt  to  their  mortgage  security. 

The  ju'tition  came  on  to  be  heard  before  tlie  long  vacation,  when 
the  Chaiuvllor,  having  expressed  himself  adverse  to  the  prayer,  it 
was  requested  that  it  might  stand  over,  and  was  this  day  re- 
:'rgued. 

FoiibhuKiur.  in  support  of  the  ])etition.  coiiiparcd  this  to  the 
cases  of  part  performance  of  agreement  to  ])ur(hase;  and,  contend- 
ing that  the  advance  of  the  £100.  in  this  instance,  was  such  an  act 
of  part  performance  by  the  testator,  referred  to  Clinan  v.  Cooke, 
1  Sell.  &  I.ef.  2'^,  before  Lord  Kedesdale,  and  the  case  cited  in 
note,  p.  40,  to  the  report  of  that  case,  for  the  rule  that,  where  the 
whole  sum  contracted  for  is  paid,  that  is  such  a  part  jierfonnance 
by  the  vendee  as  to  take  the  case  out  of  the  statute ;  hut  not,  where 
"uly  a  part.  That,  in  the  case  of  an  equitable  mortgage,  the  deposit 
oj)erates  as  a  lien  by  reason  of  the  implied  agreement. 

Moiitaiju,  on  the  same  side,  referred  to  the  case  Ex  parte  Laiujs- 
lun,  17  Ves.  227;  1  Rose,  2{\,  as  deciding  the  present,  on  the 
ground  that  an  equitable  mortgage  by  deposit  of  title-deeds  must 
lie  held  to  cover  subsequent  advances,  on  evidence  that  they  were 
nuule  upon  that  security.  If  the  deed  had  been  delivered  up.  and 
returned  at  the  time  of  making  the  subsequent  advance,  this  would 
ave  been  clearly  an  equitable  mortgage. 

Hart  for  the  assignees. 

The  Loku  Ciiaxcellou  [Eldox].  There  is  an  evident  distini- 
tion  between  the  cases  of  loan  and  jnirchase  :  and  withmit  expressing 
any  opinion  on  the  (luestion,  whether  in  the  former  ease,  jiaymenl 
f  the  whole,  or  of  part  of  the  purchase  money,  is,  or  is  not,  a  part 
performance  to  take  it  out  of  the  statute,  it  is  enough  to  say  that 
the  advaiue  of  money  uj)on  a  contract  for  loan  affords,  of  mressity, 
:o  evidence  of  any  intention  hut  that  of  creating  the  relation  of 
"iebtor  and  cr alitor. 

The  doctrine  of  equitable  mortgage  by  dei)osit  of  title-deeds  has 
'cen  too  long  established  to  be  now  disj)uted  ;  but  it  may  be  said 
hat  it  ought  never  to  have  been  estal»Iished.  I  am  still  more  dis- 
^atisfled  with  the  ])rinciple  upon  which  I  have  acted  of  extending 
the  original  doctrine  so  as  to  make  the  deposit  a  security  for  sub- 
M>q\ient  advances.  At  all  events,  that  doctrine  is  not  to  bo  further 
<  idarged.  Tn  the  present  case,  the  legal  estate  has  l)0<^n  assigned 
by  way  of  mortgage.     The  mortgagee  is  not  entitled  to  say,  '*  I 


116  CONVEYANCE.  [CHAP,  I. 

hold  this  conveyance  as  a  deposit,"  because  the  contract  under 
which  he  holds  it  is  a  contract  for  conveyance  only,  and  not  for 
deposit.  The  subsequent  memorandum  in  writing  creates  nothing 
more  than  a  debt  by  simple  contract,  and  cannot  be  added  to  by 
parol. 

The  cases  on  this  subject  have  gone  too  far  already ;  and  I  would 
be  understood  as  saying  that  I  will  not  add  to  their  authority, 
wherever  the  circumstances  are  such  as  to  warrant  me  in  making 
a  distinction.^ 

The  iietition  dismissed  ivith  liberty  to  file  a  hill. 


STODDARD  v.  HAET. 

Court  of  Appeals  of  New  York,  1861. 

(23  N.  Y.  556.) 

Appeal  from  Supreme  Court.  The  action  was  to  restrain  the 
foreclosure  by  advertisement,  and  to  compel  the  cancellation  of  a 
mortgage  held  by  the  appellant  against  one  Spicer.  The  trial  was 
before  a  referee,  who  found  these  facts:  On  the  4th  of  March, 
1852,  Spicer  procured  from  the  defendant,  on  the  security  of  the 
bond  and  mortgage  in  question,  an  advance  of  $200  on  lumber  to 
be  thereafter  furnished.  The  mortgage  was  recorded  on  the  8th 
of  March,  1852. 

The  original  condition  of  the  bond  and  mortgage  was  for  the 
payment  of  $200  and  interest  on  the  15th  of  June,  1852.  At  the 
time  the  $200  was  advanced,  it  was  agreed  between  the  parties  that 
if  Spicer  should  want  more  money,  the  defendant  would  advance  it, 
and  for  the  purpose  of  securing  it,  the  amount  of  such  further 
advance  should  be  inserted  in  the  bond,  with  the  parol  agreement 
that  the  mortgage  should  be  considered  as  security  for  what  was 
thus  inserted.  Accordingly,  within  ten  days  after  the  mortgage 
was  given,  Spicer  applied  for  and  obtained  from  the  defendant  a 
further  advance  of  $180,  inserting  at  the  same  time  in  the  bond  a 
further  condition  for  the  payment  of  that  amount,  with  interest, 
on  the  1st  of  June,  1852.  The  mortgage,  which  had  been  in  the 
meantime  recorded,  was  conditioned  for  the  payment  of  $200  and 
interest,  with  the  additional  clause:  "  According  to  the  condition  of 
a  certain  bond  obligatory  bearing  even  date  herewith." 

On  the  12th  of  July  following,  Spicer  was  indebted  to  the  je- 
spondent,  Stoddard,  in  the  sum  of  $500,  for  rent  due  and  to  be- 
come due,  and  with  full  and  specific  information  from  Spicer  of 


M,  .    111.]  STODDAItl)    C.     HART.  IK 

^W  till'  foro-^'oin^'  facts,  StoiUlanl  took  a  siil^siTjuent  mortgafre  on 
tlio  premises  for  the  amount  of  his  debt;  and  afterwards,  in  Janii- 
jirv,  1853,  lie  obtained  from  Sj)ieer  a  deed  of  the  property,  wliieh 
was  received  in  satisfaction  of  his  mortgage. 

On  the  '2')[\\.  of  Fel)ruarv,  IS'):?,  the  defendant  coiimieiieed  a 
fi'reelosnre  hy  advi-rtisement,  ehiiming  the  amount  due  to  he  $'.\H(), 

;ih  interest.  Tlie  plaintiff,  on  the  1st  of  ^Mardi,  tendered  as  the 
. I  mount  due,  the  sum  of  $"-300,  with  interest  and  costs,  and  de- 
iiiandi'd  a  satisfaction  piece,  whicli  the  defendant  refused.  The 
referee  decith'd  that  the  dt'Tendaiit  had  no  lien  on  the  premises 
e\eept  for  the  $".'»)0  and  interest,  and  that  the  mortgage  should  he 

luelled  on  payment  of  that  amount,  with  costs. 

The  judgment  entered  uj)on  the  referee's  report  was  aflirnied  on 
a|)peal  at  general  term  in  the  Eighth  District,  and  the  defendant 
appealed  to  this  court. 

John  K.  Porter  for  the  appellant. 

I'J.  Prshinc  SmUh  for  the  respondent. 

CoMsTOCK^  Ch.  J.    In  a  loose  and  general  sen>e  the  equity  of  this 

-e  is  on  the  side  of  the  defendant,  because  he  made  tiie  subsequent 

Ivance  of  $180,  it  being  agreed  that  this,  as  well  as  the  original 
Mini  of  ^200,  should  be  considered  as  secured  by  the  mortgage. 
The  question,  however,  is,  whether  the  rules  of  hiw  will  give  that 
•^'Ct  to  the  transaction. 

It  will  be  convenient  first  to  determine  tlu-  legal  construction 
and  effect  of  the  mortgage,  \inaidcd  by  the  parol  facts,  but  read  in 
tonnection  with  the  bond  to  which  it  is  collateral.  On  the  part  of 
llu'  defendant  it  is  contended  that  the  two  instruments,  consti- 
tuting, as  they  do,  a  single  security,  are  to  be  read  as  one;  and, 
therefore,  that  the  new  advance,  lieing  written  in  the  condition  of 
the  bond,  is  it  to  be  deemed  actually  incorporated  in  the  condi- 
tion of  the  mortgage  also,  so  as  to  render  the  latter  a  legal  security 
for  both  the  sums  in  question.  This  ])roposition  does  not  require, 
nor  does  it  admit,  any  aid  from  the  understanding  of  the  parties 
derived  from  the  extrinsic  evidence.  If  it  be  a  sound  one,  it  is 
universally  sound;  so  that,  if  a  bond  be  given  for  $2000  actually 
loaned,  and  a  mortgage  collateral  thereto  be  given  for  $1000,  the 
latter  is  always  to  be  read  and  const rue(l  as  a  security  for  the 
larger  sum.  The  instrument  being  legally  perfect,  there  is  no  occa- 
>ion  to  reform  it.  or  to  involv<'  the  doctrine  of  equitable  lien,  of 
sju'cific  jierformance.  or  any  kindred  doctrine  of  equity. 

I  think  this  jiroposition  cannot  be  maintained.  A  bond  and 
tiiortgage  are  two  instruments,  although  one  may  be  collateral  to 
the  other.  The  one  is  a  personal  obligation  for  the  debt ;  the 
other  creates  a  lien  upon  land  for  the  security  of  that  debt,  and  it 
may  well  be  for  a  portion  of  the  debt  instead  of  the  whole.     If  the 


118  CONVEYANCE.  [CIIAI'.  I. 

personal  obligation  expresses  two  sums,  and  the  collateral  instru- 
ment expresses  only  one  of  them,  I  see  no  reason  why  each  should 
not  be  construed  according  to  its  own  terms.  So,  if  the  condition 
of  a  bond  be  for  a  larger,  and  that  of  the  mortgage  be  for  a  smaller 
sum,  the  obvious  effect  of  both  the  instruments  is  that  the  maker 
binds  himself  generally  for  the  whole  debt,  while  he  specially 
pledges  the  mortgaged  land  for  only  a  given  part  of  it.  In  this 
case  the  written  condition  of  the  bond  is  to  pay  the  $200,  and  the 
further  sum  of  $180;  while  that  of  the  mortgage  is  only  to  pay 
the  $200.  Each  instrument  is  perfect,  and  each  admits  of  a  plain 
construction  and  effect  according  to  its  owm  language.  If  we  do 
not  look  outside  of  them,  there  is  no  ambiguity.  A  debt  was  cre- 
ated, consisting  of  two  sums.  The  land  was  mortgaged  for  one 
of  those  sums  only. 

In  the  next  place,  if  the  doctrine  were  admitted  that  a  mortgage 
passes  the  freehold  or  legal  estate  in  lands,  it  would  probably  fol- 
low that  a  parol  agreement  that  the  security  should  stand  for  a 
new  advance  would  be  good  against  the  mortgagor  or  any  one 
claiming  under  him  not  having  the  rights  of  bona  fide  purchasers. 
The  title  being  conveyed  by  the  instrument,  the  equities  of  the 
parties  might  be  adjusted  or  modified  by  any  new  agreement  with- 
out a  writing.  But  it  is  entirely  settled  with  us  that  such  is  not 
the  nature  or  effect  of  a  mortgage.  With  us  a  mortgage  is  a  lien 
or  security  only,  and  not  in  any  sense  a  title  (Kortright  v.  Cady, 
21  N.  Y.  3-43,  and  cases  cited).  This  ground  of  sustaining  the 
defendant's  lien  for  the  additional  advance,  therefore,  cannot  be 
maintained.  The  defendant  has  no  title  to  the  land  in  question; 
and  we  have  already  seen  that  he  has  no  legal  mortgage  for  a 
greater  sum  than  $200. 

At  the  commencement  of  this  suit  the  defendant  was  proceed- 
ing to  foreclose  his  mortgage,  by  advertising  to  sell  the  premises 
under  the  power  of  sale  contained  in  the  instrument;  and  he 
claimed  in  his  notice  both  the  sums  of  money  in  question.  The 
plaintiff,  before  instituting  the  suit,  tendered  the  sum  of  $200  se- 
cured by  the  mortgage,  according  to  its  terms,  with  the  interest,, 
and  the  costs  which  had  accrued.  From  what  has  been  said,  it 
follows  that  this  tender  extinguished  the  lien  and  the  power  of 
sale,  and  that  a  sale  afterwards  made  under  the  power  would  be  a 
nullity  {Kortright  v.  Cady,  supra).  Of  course,  we  now  speak  of 
the  lien  as  a  legal  one,  expressed  in  the  mortgage,  and  having  no 
other  existence. 

It  is  claimed,  however,  that  the  defendant  acquired  some  equi- 
table lien  or  right  to  charge  the  new  advance  upon  the  land,  and 
that,  although  such  a  lien  or  right  cannot  be  enforced  in  the  man- 
ner attempted,  because  tliere  is  no  legal  power  of  sale  to  enforce  it. 


SKC.  III.]  ST(M>l)Aia)    r.    IIAKT.  11^ 

yi't,  as  the  plaintiiT  asks  the  intfrfiTciKc  of  a  court  of  oquity.  h.- 
must  do  all  that  (•quity  n'(|uires  as  the  condition  of  relief;  in  olh.r 
words,  he  must  oiler  to  i)ay  the  whole  debt  in  specie  to  the  plain- 
tiff. The  ar<;unient  may  be  sound  if  the  defendant  did  aecjuire 
any  such  equitable  title  or  rij^ht ;  and  this  is  the  ne.\t  subject  of 
in(|uiry. 

In  En^'land  it  has  lonj,'  been  held  that  a  deposit  of  title  deeds 
by  a  debtor  with  his  creditor  is  evidence  of  a  valid  agreement  to 
give  a  mortgage,  which  agreement  is  enforced  by  treating  the 
transaction  as  an  e(|uitable  mortgage.  It  has  always  been  admit- 
ted by  English  jurists  that  this  doctrine  contravenes  the  statute  (»f 
frauds,  although  it  has  become  well  .settled  in  the  jurisprudence  of 
that  country  (1  Kent.  Com.  151).  It  is  confined  there  to  the 
precise  case  of  a  deposit  of  title  deeds.  A  mere  parol  agreement 
to  make  a  mortgage,  or  to  deposit  deeds,  does  not  create  an  etjuila- 
ble  lien.  In  this  State  the  doctrine  is  almost  unknown,  because  we 
have  no  practice  of  creating  liens  in  this  manner.  Equity,  how- 
ever, here  as  well  as  there,  does  sometimes  specifically  enforce 
parol  agreements  wliich  are  within  the  statute  of  frauds;  and  I 
see  no  reason  to  doubt  that  such  an  agreement  to  make  a  mortgag.- 
may  be  enforced  when  money  or  value  has  been  parted  with  on  tin- 
faith  of  it,  and  the  circumstances  are  such  as  to  render  it  inequita- 
ble to  refuse  the  relief.  But,  in  the  present  case,  the  precise  dilli- 
culty  is  in  the  absence  of  any  such  agreenu'ut.  The  defendant  had 
loaned  $v^00,  and  held  a  mortgage  for  that  amount.  He  then  ad- 
vanced another  sum :  but  there  was  no  agreement  to  make  another 
mortgage,  or  to  change,  in  any  respect,  the  terms  of  the  one  already 
made.  The  additional  sum  was  inserted  in  the  bond,  with  an 
understanding  thereby  that  the  mortgage  should  be  '"considered  ' 
as  a  security  for  that  sum  also.  The  instrument,  as  it  was  ma<le. 
was  a  plain  security  for  $'i()0 ;  and  no  change  in  its  terms  was 
contemplated.  Xor  is  there  the  least  pretence  that  any  writing 
was  to  be  executed  creating  a  special  security  for  the  new  advance. 
Now,  a  loan  of  money,  with  a  mere  understanding  that  the  land  of 
the  borrower  is  a  security  for  the  debt,  does  not  create  a  mortgage, 
legal  or  equitable.  If  it  be  specifically  agreinl  to  execute  a  legal 
mortgage,  a  very  different  question  arises.  The  dej)osit  of  title 
deeds  is  evidence  of  such  an  agreement.  But  here  there  was  no 
agrw'ment  to  do  anything  which  was  not  actually  done.  C'onse- 
•piently,  if  enough  was  not  done  to  create  a  mortgage,  then  none 
was  created.  There  is  no  room  for  the  doctrine  of  specific  perforin 
ance,  JH'eause  there  is  nothing  unperformed.  The  parties  ma\ 
have  misunderstood  the  elTect  of  what  they  did:  but  nothing  in  the 
transaction  was  left  unfinished  of  whieh  cfpiity  can  now  dei-ree  the 
complete  «'xeeution.     The  question,  then,  is  up<»n  the  legal  inter- 


120  COXVEYANCE.  [CHAP.  I. 

pretation  and  effect  of  the  acts  done,  which,  as  we  have  seen,  failed 
to  create  a  lien.  The  understanding  and  belief  of  the  parties  do 
not  change  the  law. 

For  analogous  reasons  I  do  not  see  that  the  defendant  can  de- 
rive any  aid  from  the  doctrine  of  reforming  contracts  in  equity. 
If  a  writing  does  not  truly  express  the  agreement  of  the  parties; 
if  anything  was  omitted  which  was  agreed  to  be  inserted;  or  if 
anything  be  inserted  contrary  to  their  intention,  equity  will  re- 
lieve against  the  mistake  by  reforming  the  contract.  But  in  this 
t-ase  no  mistake  is  alleged  or  proved.  Everything  agreed  upon 
Avas  done.  The  subsequent  advance  of  money  was  to  be  inserted 
in  the  condition  of  the  bond,  and  it  was  insertecl  accordingly. 
There  was  no  agreement  to  make  a  new  mortgage,  or  to  change 
the  terms  of  the  existing.  It  is  said  the  understanding  of  the  par- 
ties was  that  the  mortgage  should  secure  this  advance  also;  but 
it  is  not  pretended  that  this  understanding  was  to  be  expressed 
in  any  form  of  writing.  If  A.  should  loan  money  to  B.,  and  take 
a  l)ond  with  the  understanding  that  the  farm  of  the  latter  should 
be  considered  a  security,  but  with  no  intention  or  agreement  to 
make  a  mortgage  or  writing  of  any  sort,  as  the  law  requires,  in 
order  to  create  a  lien,  none  would  be  created  at  law  or  in  equity. 
The  transaction,  in  judgment  of  law,  would  amount  simply  to  a 
loan  upon  the  bond  of  the  borrower.  Such,  I  think,  in  substance, 
was  the  transaction  in  question.  There  was  no  mistake,  unless  it 
be  in  misunderstanding  the  legal  effect  of  what  was  said  and  done. 
But  even  this  is  not  alleged.  It  is  not  stated  or  proved  that  the 
parties  believed  or  understood  that  the  insertion  of  the  new  loan 
in  the  bond  had  the  effect  in  law  of  enlarging  the  mortgage  also. 

Will  a  court  of  equity,  then,  make  a  new  contract  for  parties  in 
order  to  effectuate  a  mere  understanding  where  no  agreement  is 
])retended  different  from  the  one  which  -the  writing  already  ex- 
presses, and  where  there  are  no  circumstances  of  surprise,  imposi- 
tion, fraud  or  misplaced  confidence?  To  do  so,  I  think,  would  be 
taking  a  step  in  advance  of  the  settled  rule  on  the  subject,  es- 
pecially if  the  relief  sought  bo  in  direct  opposition  to  the  statute 
of  frauds.  In  the  case  of  Hunt  v.  Rousmaniere's  Executors,  1 
Peters,  1,  the  general  intention  of  the  parties  was  to  effect  a  se- 
curity upon  a  ship  at  sea  equivalent  to  a  mortgage  or  bill  of  sale. 
With  that  design,  a  power  of  attorney  to  sell  was  executed,  which, 
as  they  understood  and  were  advised,  accomplished  the  object  in 
view.  As  a  power  merely,  the  instrument  was  revoked  by  the 
death  of  the  party  who  signed  it,  and  a  bill  was  filed  to  reform  the 
writing  so  that  it  might  stand  as  a  security  according  to  the  in- 
tention. It  was  adjudged,  in  the  Supreme  Court  of  the  United 
States,  upon  the  fullest  consideration,  that  the  bill  could  not  be 


8KC.    111. J 


H(k;i;i;i    r.   miss.  121 


iiiainlaiiuul — llit-  •,'rouiul  of  tk-ii.-ioii  lu-iii;,'  tlial  lli«'  court  roiiM  ii<»t 
iiiaki'  an  agrLviiU'iU  of  a  diUViTiit  tt'iior  and  clk't't  from  the  on<- 
which  the  parties  themselves  had  intentionally  entered  into.  The 
«ase  hefore  us  seems  to  me  still  weaker  in  its  eireumstanccs,  be- 
cause not  (Mily  was  there  no  a^M-eement  for  a  hetter  security  than 
(he  defendant  actually  received,  hut  it  does  not  even  appear  that 
he  aeted  under  any  mistake  as  to  the  le-,'al  elfect  of  the  transaction. 
The  new  advance  of  money  was  inserted  in  the  hond  ;  hut  there  is 
no  pretence  of  a  belief  that  this  in  any  resjject  alfeeted  the  mort- 
gage. There  was  a  jiarol  agreement  that  the  mortgage  should  be 
considered  as  a  security  also  for  the  sum  thus  insertecl.  The  otlier 
party  might  give  cfTect  to  this  agreement  in  any  suit  or  proceed- 
ing against  liim  to  foreclose,  if  he  voluntarily  cho.se  to  do  so. 
r>ut  it  is  not  alleged  that,  under  a  mistake  even  of  the  law, 
this  agreement  was  sujjposed  to  be  of  any  binding  force  or 
effect.  On  the  whole,  I  am  of  opinion  that  the  defendant's  lien, 
whether  viewed  at  law  or  equity,  was  only  for  the  original  sum  of 
.$".'<>n,  and.  consecpiently.  that  the  judgment  of  the  court  below  is 
rijiht. 

Davies  and  Mason,  J  J.,  dissented;  Iloyi.  .T.,  did  not  sit  in  the 
ise. 

Judgment  affirmed.^ 


BOGERT  V.  BLISS   AND    KOHl'.RT. 

Court  of  Appeals  of  Xew  York,  IS'JC. 

(MS  A',  r.  10  1.) 

Appeal  from  order  of  the  General  Term  of  the  Court  of  Common 
Pleas  for  the  city  and  county  of  Xew  York,  made  June  3,  180.5, 
which  reversed  an  order  of  Special  Term  contirming  the  rej)ort 
"f  a  referee  in  proceedings  for  the  distribution  of  surplus  moneys 

rising  from  the  sale  of  mortgaged  premises  in  an  action  of  forc- 
« losure,  modified  and  confirmecl  as  modified  said  report,  by  finding 
that  the  e(piities  of  the  claimant  Bliss  were  superior  to  tho.se  of 
the  claimant  Robert;  that  the  lim  of  the  deed  or  mortgage  to  the 
'  laimant  Bliss  was  superior  to  any  claim  of  the  claimant  Koljort, 

lid  that  the  defendant  Bliss  was  entitled  to  payment  out  of  the 
-ur|ilus  moneys,  the  balance,  if  any,  to  be  paid  to  the  defendant 
I»iilM'rt. 

'Where  llic  rxlen^ion  of  tlir  inort^'it^'r  st-turitv  i-*  in  writing',  sco  Butts 
\.  Hinughton.  72  Ala.  204    (1882). 


123  CONVEYANCE.  [CHAP,  I. 

The  factg,  so  far  as  material,  are  stated  in  tlie  opinion.    .    .    . 
Andrews,  Ch.  J.     The  controversy  relates  to  the  disposition  of 
surplus  moneys  arising  on  a   foreclosure    of    a    mortgage.     One 
Robert  claims  a  prior  lien  thereon  as  assignee  of  a  mortgage  made 
by  the  defendant  Striker  to  one  Weil,  dated  May  15,  1891,  payable 
June  18,  1891,  for  $1000,  recorded  May  18,  1891.     The  mortgage; 
was  paid  at  maturity  by  Striker,  the  mortgagor  and  owner  of  the 
equity  of  redemption,  to  Weil,  the  mortgagee,  who  on  the  same  day 
executed  and  delivered  to  Striker  a  satisfaction  of  the  mortgage, 
together  with  the  bond,  but  the  mortgage  was  then  in  the  register's, 
office  and  for  that  reason  was  not  delivered  to  Striker.     The  mort- 
gage was  paid  in  usual  course,  and  at  the  time  of  the  payment  there 
was,  so  far  as  appears,  no  intention  on  the  part  of  Striker,  and  no 
understanding  between  him  and  the  mortgagee,  that  the  mortgage 
should  be  kept  alive.     Subsequently,  on  July  2d,   1891,  Striker 
applied  to  Robert  (a  partner  of  Weil)  for  a  loan  of  $1000,  on  the 
security  of  this  extinguished  mortgage,  and  the  loan  was  made. 
Striker  deliverii^  fe  Robert  at  the  time  the  bond  and  the  satisfac- 
tion, and  stating  that  Weil  would  assign  the  mortgage  to  him. 
The  assignment  was  subsequently  made,  but  not  as  we  infer  until 
after  the  mortgage  executed  to  Bliss,  the  other  claimant  of  the  sur- 
plus.    The  Bliss  mortgage  was  executed  by  Striker  to  Bliss  x\ugust 
28th,  1891,  and  covered  the  same  premises  embraced  in  the  Weil 
mortgage,  and  was  given  to  secure  a  loan  of  $1500  made  by  Bliss 
to  Striker,  but  in  form  was  an  absolute  deed,  and  was  recorded 
Xovember  11th,  1891.     Bliss  when  he  took  his  mortgage  made  no 
search  of  the  title  and  had  constructive  notice  only  of  the  Weil 
mortgage.     The  question  is  whether  Robert  or  Bliss  is  entitled  tO' 
the  surplus  moneys.     We  think  the  conclusion  of  the  General  Terra 
that  Bliss  is  entitled  to  them  is  correct. 

The  Weil  mortgage  was  extinguished  by  payment  before  Striker 
applied  to  Robert  for  a  loan,  and  Robert  had  notice  that  the  mort- 
gage had  been  paid  by  Striker.  Striker  delivered  to  him  the  satis- 
faction executed  by  Weil,  and  there  is  no  pretence  that  it  did  not 
represent  the  actual  fact  that  Striker  had  paid  the  mortgage. 
What  Striker  undertook  to  do  was  to  re-issue  the  mortgage  and  the 
])ond  to  secure  another  loan  equal  to  the  amount  of  the  mortgage. 
Robert  assented  to  this  proposition  and  made  the  loan  on  the  faith 
of  tlie  proposed  security.  But  there  was  no  Avriting  and  no  actual 
assignment  of  the  mortgage  until  after  Bliss  had  taken  his  mort- 
gage. All  that  Robert  had  until  the  assignment  was  made  was  the 
possession  of  the  bond  and  the  satisfaction  of  the  mortgage  and 
the  verbal  agreement  of  Striker  that  the  mortgage  should  be  as- 
signed. 

In  this  State  a  mortgage  is  a  lien  simply,  and  the  general  prin- 


6KC.  HI.]  nocKHT    r.    HLISS.  123 

t'iplo  is  well  settk'd  that  (»ii  jiaymeiit  the  lien  is  ipso  facto  di.->- 
iharged  and  the  mortgage  extinguished.  There  are  many  cases 
where,  for  purj)oses  connected  with  the  protection  of  the  title  or  the 
enforcement  of  equities,  what  is  in  form  a  payment  of  a  mortgage, 
will  he  treated  as  a  ]»urchase,  so  as  to  ])reserve  rights  which  might 
be  jeoparded  if  the  transaction  was  treated  as  a  payment.  But 
we  know  of  no  princijde  which  permits  a  mortgagor  who  has  paid 
his  mortgage  and  taken  a  satisfaction,  there  being  at  the  time  no 
equitable  reason  for  keejjing  it  afoot,  subsequently  to  resuscitate 
and  re-issue  it  as  security  for  a  new  loan  or  transaction  and  es- 
pecially where  the  rights  of  third  parties  are  in  question.  It  would 
make  no  difference  in  our  view  whether  the  re-issue  of  the  mort- 
gage was  before  or  after  new  rights  and  interests  had  intervened. 
Wc  do  not  speak  of  the  position  of  a  subsequent  grantee  or  mort- 
gagee having  actual  notice  of  the  re-issue  of  a  satislied  mortgage 
before  he  takes  his  mortgage  or  deed.  It  is  possible  that  the  cir- 
cumstances of  the  re-issue  may  be  such  as  to  furnish  ground  for  a 
court  of  equity  to  intervene  and  compel  the  execution  of  a  now 
mortgage,  to  accomplish  the  real  jiurpose  of  the  parties,  and  notice 
«>f  such  circumstances  to  the  subsequent  grantee  or  mortgagee 
might,  perhaps,  under  special  conditions,  subject  his  right  to  the. 
prior  equity.  But  the  contention  that  a  person  having  at  the 
time  notice  that  a  mortgage  had  been  paid  by  the  mortgagor  in 
usual  cour.<e,  can.  by  a  verl)al  arrangement  between  himself  and 
the  mortgagor,  give  the  extinct  mortgage  vitality  again  as  se- 
curity for  a  new  loan,  so  as  to  give  it  priority  over  a  subsequent 
conveyance  or  mortgage  is  not  justified  bv  the  authorities  in  this 
state. 

The  Statute  of  Frauds  does  not  i)ermit  mortgages  on  land  to  be 
created  without  writing.  The  re-issue  of  a  dead  mortgage,  if 
effect  is  given  to  the  transaction,  is  in  substance  the  creation  of  a 
new  mortgage.  If  this  was  jH-rmitted  it  would  furni.<h  an  easv  way 
to  evade  the  statute.  The  law  wi.<ely  requires  that  instruments 
by  which  land  is  conveyed  or  mortgaged  should  be  executed  witli 
polemn  forms,  and  that  their  existence  should  be  made  known 
through  a  system  of  registry  so  as  to  protect  those  sulxequently 
dealing  with  the  jtremises.  Public  policy  requires  that  dialings 
with  land  should  be  certain,  and  that  transactions  afTecfing  the  title 
phould  be  open,  and  that  .secret  agreements  should  not  be  j)ermitted 
by  which  third  persons  may  he  misled  or  deceived.  It  would  be  a 
convenient  cloak  for  fraud  if  a  mortgagor,  having  paid  a  mort- 
gage, could  retain  it  in  his  po.ssession  uncancelled  <if  record  and  re- 
jssue  it  at  pleasure.  .\  party  taking  from  a  mortgagor  a  re-issued 
mortgage  has  notice  which  shoidd  put  hi?n  upon  infpiirv.  and  he 
takes  at  the  peril  that  it  has  in  fact  been  paid. 


1  -3-1  COXVEYAXCE.  [cilAi>.  I. 

Tn  llio  present  case,  not  only  had  the  mortgage  been  paid  before 
Eobert  made  his  loan,  but  he  knew  the  fact  from  incontestable 
evidence.  If  he  had  received  an  actnal  assignment  before  Bliss 
liad  taken  his  mortgage,  he  would  not,  we  think,  have  been  entitled 
to  preference.  Upon  the  facts  actually  existing  he  had  merely  an 
agreement  for  an  assignment,  which  at  most  created  an  equity  en- 
forceable by  equitable  action,  and  meanwhile  Bliss  had  obtained  a 
•legal  mortgage,  having  no  notice  of  the  agreement.  Bliss  had  con- 
structive notice  of  the  mortgage  to  Weil.  His  mortgage  was  sub- 
ject to  that  incuml)rance  unlc-s  the  mortgage  had  been  paid.  But 
he  did  not  take  subject  to  an  arrangement  between  Striker  and 
Eobert  to  revive  the  mortgage,  the  lien  of  which  had  been  extin- 
guished by  payment.  The  case  of  Mead  v.  Yorl-,  6  N.  Y.  449,  is 
a  direct  authority  upon  the  question  here  presented.  It  was  there 
held  that  a  mortgage  after  being  once  ]iaid  by  the  mortgagor  can- 
not be  kept  alive  by  a  parol  agreement  as  security  for  a  new  liability 
incurred  for  the  mortgagor  as  against  the  latter's  subsequent  judg- 
ment creditors.  (See,  also,  Cameron  v.  Irwin,  5  Hill,  272;  Jones 
on  Mortgages,  §  943  and  cases  cited.)    ... 

We  find  no  case  wliicli  sustains  the  claim  that  a  mortgage  paid 
by  the  mortgagor,  not  intended  to  be  kept  alive  at  the  time  of  the 
payment,  can  be  thereafter  re-issued  by  him  to  secure  another  loan, 
made  by  a  party  cognizant  of  the  fact,  so  as  to  give  it  validity  as 
against  a  subsequent  purchaser  or  mortgagee.^ 

The  order  of  the  General  Term  should  be  affirmed. 

All  concur,  except  A^ann,  J.,  not  sitting. 

Order  affirmed. 


CHASE  v.  PECK. 

Court  of  Appeals  of  New  York,  18G0. 

(21  N.  Y.  581.) 

Appeal  from  the  Supreme  Court.  Ejectment  for  one  hundred 
acres  of  land  in  Otsego  County.  The  plaintiff  made  title  under  a 
sheriff's  sale,  made  June  12th.  1849,  upon  execution  on  a  judgment 
against  Alonzo  Aylesworth,  which  became  a  lien  on  the  land  in 
question  on  the  31st  of  May,  1848.  On  the  trial  it  was  proved  that 
Alonzo  Ayleswortli  acquired  title  to  the  land  by  deed,  from  Isaac 
ITowland  and  Sarah  his  wife,  dated  August  11,  i843.     On  that  day 

'  On  revival  of  extinct  mortgage  bv  writing,  see  Peckham  v.  Haddock, 
3(1  ]1I.  .30   (1804). 


.i.( .  III.)  ciiAsi:  r.   I'Kt'K.  I'i'i 

iIkv,  Ix'ing  vi'iy  a^'itl  pcixtiis,  t  onvcyrtl  tlic  land  ('•  A\l«'-\vurili 
(who  was  their  graiulsini)  fm-  tin-  nominal  consideration  of  one 
dnlhir.  Notliin;;  was  j)aitl  in  la«t,  l»iit  contemporaneously  with  the 
exeeution  of  the  deed.  Aylesworth  ^Mve  l)aek  a  writin;,'  not  under 
seal,  hy  whieh  he  eertided  lliat  "  the  said  Ah)n/.o  hereby  pled^res  the 
entire  use  of  the  faiin.  lhi<  (hiy  conveyed  to  him.  for  ihi-  sii|i|»ort 
of  said  Isaac  and  Saraii.  ami  a;4rees  to  furnish  all  necessary  sup- 
j)()rt — such  as  victuals,  clotliin;;,  medical  aid.  and  all  other  neees- 
sary  comforts  of  life — for  both  the  said  I.-aac  and  Sarah;  and 
a^'rees  aiul  hinds  himself  to  treat  them  kindly  and  wait  ii|»on  ihrm 
attentively  and  in  a  careful  numner,  during  their  natural  lives  an<l 
during  the  life  of  tiie  longest  liver  of  them,  and  should  the  produce 
of  the  farm  he  insulVicient  for  that  purpose,  then  tlw  entire  fee  shall 
he  appropriated  for  that  i)urj)ose."' 

Aylesworth  had  been  brought  uj)  by  the  llowlands.  and  was  in 
his  minority  at  the  date  of  the  above  conveyance  and  agreement. 
Tiiey  lived  together  upon  the  farm,  Aylesworth  managing  it  and 
providing  for  the  sujiport  of  his  grand])arents  until  after  the  death 
of  Isaac  llowland,  in  184G.  lie  then  In-came  involved  in  <lebt.  and 
on  the  29th  of  May,  1848,  being  insolvent,  and  several  suits  against 
liim  ])roceeding  to  judgment,  he  reeonveyed  the  premi-ses  to  Sarah 
llowland.  Xo  other  consiileration  for  the  reconveyance  was  shown 
than  that  to  be  imi)lied  from  the  agreement  of  .Vylesworth  to  >uji- 
port  Mrs.  llowland  and  his  inability  to  ju-rform  it.  The  plainlilt 
claimed  that  the  roconvcyanee  was  in  fraud  of  creditors,  and  there 
was  evidence  warranting  the  jury  in  finding  that  an  actual  fraudu- 
lent intention  to  keep  the  i)roperly  from  the  reach  of  creditors  was 
a  leading  motive  for  the  rec-onveyance.  Mrs.  llowland  lived  upon 
the  proceeds  of  the  farm,  a  fair  rent  for  which  was  shown  to  be 
some  $G0  per  annum,  until  she  sold  it  in  1S1!»  M  a  grantor  of  the 
defendant  ;  neither  Aylesworth,  nor  any  person  in  his  behalf  pay- 
ing anything,  or  rendering  any  service  toward  her  maintenance. 
She  died  after  the  commencement  of  this  suit  and  before  the  trial. 
I'he  jury  found  a  verdict  for  the  plaintilT,  and  the  judgment  there- 

!i  was  atlirmed  at  general  term  in  the  si.xtli  district.  The  de- 
lendanl  appealed  to  this  court,  where  the  ca<e  wa-;  submitted  on 
printed  argumenls. 

Denio,  ,I.     The  determination  of  this  ca.se  will  depend  upon  the 

luiractcr  of,  and  the  etfect   to  be  attributed   to.   tlie   instrument 

\ecuted  by  .Vlonzo  Aylesworth  to  Isaac  and  Sarah  llowland.  at 
the  same  time  that  the  latter  conveyed  to  him  the  premises  in  con- 
troversy.    From  the  two  jiapers,  taken  together,  it  is  apparent  th.it 

I  was  parcel  of  the  considorati(»n,  u|)on  which  the  eonvoyancc  was 
■  vec-uted,  that  .\ylesworth,  the  grantee,  should  stipjiort  tlu'  grantor^ 
during  their  joint  and  several  lives.     The  paper  signed  by  him  pr  >- 


126  CONVEYAN^CE.  [CHAn    i. 

fesses,  in  the  first  place,  to  pledge  the  entire  use  of  the  farm  Jor 
tliat  purpose;  and  it  is  added  that,  if  its  produce  shall  he  insufficient 
for  the  object,  the  entire  fee  shall  be  appropriated  to  accomplish  it. 
It  was,  probably,  intended  that  the  transaction  should  operate,  to 
a  certain  extent,  as  a  gift ;  but  this  was  only  so  far  as  the  value  of 
the  property  conveyed  should  exceed  the  value  of  the  return  which 
was  to  be  made  for  it.  As  respected  the  latter,  the  arrangement 
■was  a  contract,  which  imposed  a  certain  duty  upon  the  grantee,  to 
be  performed  for  the  benefit  of  the  grantors,  and  which,  moreover, 
attempted  to  create  a  lien  upon  the  subject  of  the  conveyance,  to 
secure  the  performance  of  the  duty  undertaken  by  the  grantee. 
The  intention  of  the  parties  is  plain ;  but  the  question  to  be  con- 
sidered is,  in  what  legal  or  equitable  light  the  arrangement  is  to 
be  regarded  by  the  court.  In  our  opinion,  the  instrument  signed 
by  Aylesworth  is  to  be  considered  as  creating  an  equitable  incum- 
brance in  the  nature  of  a  mortgage. 

By  the  law  of  England,  as  administered  in  the  Court  of  Chan- 
cery, an  equitable  mortgage  may  be  created  by  any  writing  from 
which  the  intention  to  create  it  may  be  shown ;  or  it  may  be  effected 
by  a  simple  deposit  of  title  deeds  without  writing.  It  will  also  bo 
allowed  in  favor  of  a  vendor,  for  unpaid  purchase  money,  or  of  a 
purchaser  who  has  advanced  his  money  on  the  faith  of  a  contract 
for  a  conveyance  (Miller  on  Equitable  Mortgages,  pp.  1,  3,  218, 
and  cases  cited). 

The  courts  of  equity  in  this  State  have  adopted  the  general  doc- 
trines of  the  English  Chancery  upon  this  subject,  as  upon  many 
others.  The  cases  of  a  mortgage  created  by  a  writing  not  sufficient 
to  convey  the  premises,  or  by  a  deposit  of  title  deeds,  have  not  been 
frequent  with  us;  but  the  doctrine  has  been  applied  in  a  few  in- 
stances, and  I  do  n'ot  find  any  judgment  or  dictum  by  which  it  has 
ever  been  questioned.  In  Jacl-son  v.  Dunlap,  1  John.  Ca.  114,  a 
vendor  of  land  had  executed  and  acknowledged  a  conveyance  to  the 
vendee,  but  a  part  of  the  purchase  money  had  not  been  paid,  and 
it  was  then  agreed  that  the  grantor  should  retain  the  deed  until 
the  balance  should  be  actually  paid.  It  was  equivocal  upon  the 
testimony  whether  the  deed  had  been  delivered  so  as  to  pass  the 
title  or  not.  If  it  had  not  been,  the  question  wo  are  considering 
Avould  not  arise;  but  Kent,  Ch.  J.,  considered  the  delivery  com- 
plete, and  that  the  deed  was  then  retained  by  the  grantor  by  way 
of  security,  till  payment.  This,  he  said,  was  the  creation  of  an 
equitable  lien  in  the  grantee.  The  other  judges  seem  to  have  been 
of  opinion  that  the  title  did  not  pass.  In  Jacl-son  v.  Parl-hnrsf,  4 
Wend.  300,  it  was  held  l)y  the  court.  Judge  Sutherland  giving  the 
opinion,  that  the  pledge  or  deposit  of  a  deed  with  the  grantor,  by 
■way  of  security,  would  give  him  a  lien  in  the  nature  of  a  mortgage; 


KKO.    III.) 


CIIASK    r.    PECK.  127 


liut  tho  case  bcin^'  at  law,  it  was  liekl  that  sucli  a  title  could  not  Ix; 
K't  up  against  tiio  legal  estate.  In  The  matter  of  Ilowe  and  wife, 
I  Paige,  12^),  the  English  doctrine,  that  an  agreement  for  a  mort- 
gage is  in  e(iuity  a  sju'cifii-  lien  on  the  land,  was  asserted  and  ap- 
jilicd  by  Chancellor  Walworth. 

The  cases  in  which  a  lien  for  the  jjurchase  money  has  been  estab- 
lished, where  the  title  had  passed  to  the  purchaser,  are  more  numer- 
ous {Garson  v.  Grear,  1  J.  C.  H.  308;  Warner  v.  Van  Ahtyne,  3 
Paige,  5i;};  Arnold  v.  J'airick.  G  Paige,  310;  Ilallock  v.  i<mith,  3 
Harb.'s.  C.  K.  207).  These  cases  proceed  upon  the  same  principle 
which  the  defendant  seeks  to  establish.  The  dilTerence  in  circum- 
stance which  exists  in  the  present  case  is  against  the  plaintiff;  for 
Mr.  and  Mrs.  1  lowland  received  back  from  Aylesworth  a  written 
instrument,  in  which  the  lien  reserved  was  explicitly  stated,  while, 
in  the  cases  referred  to,  the  lien  was  predicated  on  the  implied 
intention  of  the  parties  without  a  writing  or  even  a  verbal  agree- 
ment for  that  ])uri(osc.  Another  example  of  the  same  doctrine  is 
furnished  where  there  is  an  executory  contract  for  the  purchase  of 
land.s,  the  title  remaining  in  the  vendor;  and  subscfpiently  to  the 
<t)ntract  he  suffers  liens  upon  the  premises  to  be  created.  It  is 
well  settled  that  the  interest  of  the  vendee  will  be  protected  against 
every  one  but  a  bona  fide  purcha.^er  or  incumbrancer  who  has  ad- 
vanced money  or  property  without  notice  of  the  vendee's  e([uity 
(Lane  v.  Ludlow,  (J  Paige.  31(5,  note;  Parks  v.  Jackson,  11  Wend. 
442).  In  such  cases,  the  vendee  is  considered  in  equity  as  the 
owner,  and  the  vendor  as  his  trustee. 

Assuming  that  it  has  been  shown  that  Sarah  Ilowland  occupied 
the  position  of  a  mortgagee  of  the  land  to  secure  the  agreement  of 
.\ylesworth  to  suj>port  lier  during  her  life,  the  next  inquiry  i.'*, 
whether  the  jilaintilT,  by  recovering  a  judgment  against  him  and 
imnhasing  the  i)remises  on  the  execution,  is  in  a  better  situation 
than  he  would  have  been  were  .she,  or  her  representatives,  now  as- 
serting a  claim  against  him  to  subject  the  premi.ses  to  the  payment 
of  a  compensation  for  the  jjrovision  which  he  had  failed  to  make. 
I'jton  this  point,  the  cases  already  referred  to  for  another  purpose, 
and  many  others,  are  entirely  decisive.  It  will  be  stilVieient  to  men- 
tion the  ease  ///  llir  mailer  of  Hone,  and  that  of  Arnold  v.  Pal  rick. 
whieh  are  full  to  this  purpose.  In  the  last  case,  the  (Hpiitable  lien 
f"»r  the  balance  of  the  purchase  money  was  establislu'd  against  a 
judgment  creditor  who  had  sold  the  laiul  on  execution,  antl  had 
himself  becctme  the  punba-^er.  The  chancellor  said  the  plaintiff 
in  the  juilgmenl  w:i>;  not  mlitli'd  In  claim  j)r<»tection  as  a  bona  fidf 
urchaser.  even  if  lie  hml  no  notice  of  the  facts  establishing  the 
<  <|uital)le  lien  ;  '*  for,"  be  jidded.  *'  be  bid  in  the  property  on  his  own 
judgnu-nt    for  an   antecedent   deiit.   paying   no   new   consideration. 


128  COXVEYAXCE  [CHAP.  I. 

He,  therefore,  took  the  legal  title  under  the  sheriff's  sale,  subject  to 
the  equitable  lien  for  the    unpaid  purchase  mono3^" 

Considering  the  rights  of  the  parties  to  be  such  as  have  been 
mentioned,  and  the  fact  being  that  the  defendant  is  in  possession 
under  Sarah  Rowland,  the  remaining  c|uestion  is,  whether  the 
plaintiff  can  maintain  ejectment  on  his  legal  title  against  a  party 
clothed  with  her  equitable  interest.  It  is  well  settled,  that  a  mort- 
gagee in  possession,  the  mortgage  being  forfeited  by  non-payment, 
can  defend  himself  in  a  possessory  action  brought  by  the  mort- 
gagor, though,  if  he,  were  out  of  possession,  he  could  not  now  main- 
tain ejectment  against  the  latter  {Phyfe  v.  Eilej/.  15  Wend.  848). 
But  this,  I  think,  is  not  so,  except  in  the  case  of  a  technical  mort- 
gage, convoying,  subject  to  the  condition,  a  legal  title  to  the  prem- 
ises {Marks  v.  Pell,  Jackson  v.  Parkhurst,  supra).  If  the  present 
were,  therefore,  an  action  of  ejectment,  prosecuted  under  the  for- 
mer -practice,  in  which  nothing  but  legal  principles  could  be  taken 
into  consideration,  then,  as  the  deed  from  Aylesworth  to  Mrs.  How- 
land  has  been  found  to  be  fraudulent,  I  think  the  defendant  could 
not  resist  the  plaintiff's  title.  But,  since  the  blending  of  legal  and 
equitable  remedies,  a  different  rule  must  be  applied.  The  defen- 
dant can  defeat  the  action  upon  equitable  principles ;  and  if,  uj)on 
the  application  of  these  principles,  the  plaintiff  ought  not  to  l)e  put 
into  possession  of  the  premises,  he  cannot  recover  in  the  action.  ^It 
has  beeen  shown  that  the  premises  were,  in  effect,  mortgaged  to 
Howland  and  his  wife  to  secure  the  performance  of  Aylesworth \s 
agreement  to  support  them  and  the  survivor  of  them  during  life, 
and  that  the  plaintiff  has  taken  the  place  of  Aylesworth.  When 
he  obtained  title  by  the  execution  of  the  sheriff's  deed,  Aylesworth 
had  been  in  default  in  the  performance  of  his  agreement  for  nearly 
three  years.  Mrs.  Howland  and  her  grantees,  it  is  true,  had  been 
in  possession,  and  had  enjoyed  the  use  of  the  premises,  but  no 
account  has  been  taken  to  show  how  far  the  income  derived  from 
that  source  would  go  in  fulfilment  of  the  agreement.  This  action 
is  not  brought  for  a  redemption,  and  is  not  adapted  to  that  kind 
of  relief.  It  would  be  manifestly  inequitable  to  let  the  plaintiff 
into  possession  until  he  shall  procure  an  account  to  be  taken, 
and  shall  pay  or  tender  the  amount  which  shall  be  found  in 
arrear  upon  the  above  mentioned  agreement,  executed  by  Ayles- 
worth, for  the  support  of  Mrs.  Howland  up  to  the  time  of  her 
death. 

The  judgment  of  the  Supreme  Court  must  be  reversed;  and,  as 
we  cannot  certainly  say  what  case  the  plaintiff  may  make,  now 
that  the  legal  princij)les  which  govern  the  action  have  been  deter- 
mined, tliere  must  be  a  new  trial,  with  costs  to  abide  the  event.  If 
the  main  features  of  the  case  cannot  be  clian'i-ed,  \ho  onlv  rome<lv 


SKC.    111.1  lU  l!I)I(  K     C.    JACKSON'.  130 

for  the  jdaintilV  is  to   institiih'  a   >iiit    for  redemption,  upon  tin.' 
j)rineiples  which  have  been  mentioned.' 
All  the  judges  eoneurrin<r. 

■J uihjmciit    reversal,   and   lU'ir    trinl   onlrrnl. 


lilKDlCK  V.  .lACKSO.V. 

Supreme  Couht  of  Xi;\v  Vokk,  (.iKSKKAi.  Ti:km,  1870. 

(r  Jlun,   ISH.) 

Appeal  from  a  judgment  entered  on  the  report  cf  a  rffcnt-  di-- 
missing  the  complaint. 

The  action  was  brought  by  the  plaintiff  as  assignee  m  ba;K.- 
ruptcy,  to  set  aside  a  mortgage  given  by  the  bankrupt  to  his  nieces, 
the  defendants.  Ida  J.  Jackson  and  Carrie  A.  Jackson,  on  the 
ground  that  it  was  a  fraudulent  preference  under  the  bankruj)t 
act.  The  mortgage  was  executed  eighteen  days  before  the  filing  of 
the  petition  in  bankrui)tcy,  but  was  given  in  juirsuance  of  a  parol 
agreement  l)ctween  the  l)ankruj)t  and  the  guardian  of  the  infants 
more  than  lift(>en  months  before. 

This  appeal  was  argued  at  the  January  term,  1875,  and  a  n- 
argument  ordered  at  the  October  term  following. 

(JiLHERT.  J.  We  concur  fully  with  the  referee  in  his  conclusions 
of  fact  and  of  law.  One  of  the  first  ])rinciples  of  ecpiity  is  that  it 
looks  upon  things  agreed  to  be  done,  as  actually  perfornu'd.  .\ct- 
ing  upon  this  principle,  courts  of  equity  in  England  and  in  this 
country  have  held  that  an  agreement  based  upon  a  valuable  con- 
sideration to  give  a  mortgage,  will  be  treated  in  equity  as  a  mort- 
gage. That  doctrine  has  been  acted  upon  so  fretjuently  and  for 
80  long  a  period  of  time  that  it  may  justly  be  regarded  as  forming 
a  part  of  the  law  of  the  land  (Story  E(|.  Jur.,  §  T).");^ ;  fiussel  v.  Ifiis- 
spI,  1  Hro.  C.  C.  '2i\9,  and  notes  to  that  case  in  1  Lead.  Cases  Kq. 
.'ill  ;  Head  v.  Simons,  2  Desauss.  r)5t? ;  ]r<7.s7/  v.  Cshrr.  2  Hill  Kq. 
KIT;  Dow  V.  Ker,  1  Spen.  K(|.  Ill;  Bank  v.  Carpenter,  7  Ohio,  ?1  : 
hi  re  Howe,  1  Paige.  12.5;  Chase  v.  Peel-,  21  N.  Y.  581  ;  Willard 
K<|.,  Potter's  ed.  Ill,  rt  sr(j).  If,  then'fore.  the  agre<>ment  of  ])•- 
cember,  1871,  had  l)ccn  made  directly  with  the  defendants,  Ida  and 
Carrie,  there  can  be  no  question  that  it  would  have  given  them  a 
specific  equitable  lien  upon  the  land  in  controversy,  which  woubl 
have  been  ]>rior  and  paramount  lo  the  title  of  the  jilaintitT  and  t«> 

'Hall  V.  //.///.  :.()  Conn.   104    (1S82). 


130  CONVEYANCE.  Lt : 


the  general  liens  of  the  judgment  creditors  whom  he  represents. 
Having  been  made  ivith  their  guardian  while  they  were  infants, 
it  inured  to  their  benefit  and  was  well  executed  by  the  mortgage  to 
them.  Conceding  that  while  the  agreement  remained  executory 
it  was  within  the  statute  of  frauds,  and  so  not  enforcible  for  the 
reason  that  it  was  not  in  writing,  yet,  when  the  promisor  actually 
executed  the  agreement  by  the  delivery  of  a  formal  mortgage,  all 
objection  to  its  validity,  on  that  ground,  was  removed,  and  the 
agreement  became  as  effectual  for  all  purposes  as  if  it  had  been 
reduced  to  writing  originally  {Siemon  v.  Schurk,  29  N.  Y.  598; 
Dodge  v.  Wellman,  1  Abb.,  Ct.  App.  Dec.  512;  In  re  Howe,  supra; 
White  V.  Carpenter,  2  Paige,  217;  Arnold  v.  Patrick,  G  id.  310). 
Under  our  statute  a  parol  agreement  in  respect  to  lands  cannot 
be  avoided  in  equity  because  it  is  not  in  writing,  where  there  has 
been  a  part  performance  of  it  (Freeman  v.  Freeman,  43  N.  Y.  34). 
A  fortiori,  it  cannot  where  it  has  been  fully  executed.  The  plain- 
tiff is  not  a  bona  fide  purchaser,  but  stands  in  the  shoes  of  the 
bankrupt.  He  cannot,  therefore,  assert  any  better  right  than  the 
bankrupt  himself.  The  execution  of  the  mortgage  gave  the  de- 
fendants a  lien,  which  took  effect,  by  relation,  as  against  the  bank- 
rupt and  purchasers  from  him  with  notice,  at  the  time  the  agree- 
ment to  give  it  was  made.  The  plaintiff,  not  being  a  bona  fide 
purchaser,  took  the  transfer  to  him  subject  to 'that  lien.  That 
iK'ing  so,  no  question  of  fraud  or  of  a  preference  in  violation  of 
the  provisions  of  the  bankrupt  act  has  arisen,  and  the  evidence 
precludes  any  inference  of  other  kinds  of  fraud.  It  is  unnecessary 
to  review  the  cases  cited  on  behalf  of  the  appellants,  for  none  of 
them  seem  to  us  to  conflict  with  the  foregoing  views. 

The  plaintiff  is  not  in  a  position  to  raise  the  objection  that  the 
agreement  to  discharge  the  old  mortgage  and  to  receive  the  new 
owe  in  lieu  of  it  was  invalid  because  the  guardian  violated  his  duty 
and  transcended  his  power  in  making  such  an  agreement.  Such  a 
transaction  is  not  absolutely  void,  but  is  voidable  only,  at  the  elec- 
tion of  the  infants  on  coming  of  age.  It  being  obviously  for  the 
benefit  of  the  infants  that  the  lien  shall  be  established  and  upheld, 
we  will  give  effect  to  the  intendment  that  their  ratification  will  be 
forthcoming  at  the  proper  time  and  to  the  rule  that  no  one  but 
Ihomselvcs  can  disavow  the  authority  of  their  guardian  to  make 
the  agreement  (Co.  Lit.,  2  b:  2  Kent  Com.  23G;  Keane  v.  Boycott, 
2  H.  Bl.  511;  U.  S.  v.  Bainbridge,  1  Mason,  82).  The  plaintiff 
lias  no  claim  to  be  tlie  eliampion  or  protector  of  the  infants  and 
( an  acquire  no  rights  by  assuming  that  character. 

i'lomc  objections  to  the  admission  of  evidence  were  taken  by  the 
plaintiff.     We  think  thoy  were  properly  overruled. 

The  judgment  should  be  affirmed,  with  costs,  to  be  paid  out  of 


fcl.,  .    111. J  AIIHIIM)    /.    ODIOUNK.  131 

llu-  i'>tiitt'  nf  tilt-  l)iml\niiit,   il'   lliat    is  sullieii'iit  ;  othiTwisc  by   tin; 
jiliiintitr  iKTsoniilly. 

Smith,  J.,  concurrt'd. 

Miillin,  1'.  .J.,  roiicuiTcd  sok'ly  on  tlie-  gi»)Uii<l  tluit  il  \va>  shown 
4111  I  he  trial  tiwit  the  defeiuhmts  were  not  at  tlie  time  of  receiving 
the  mortpige  aware  of  the  insolveney  of  tlie  mortgagor,  and  that 
(he  mortgage,  as  to  tliem,  was  in  fraud  nf  tlie  hankrupt  law. 

J iidijni'iit  affirmed,  irifh  costs. 


AiiREXD  V.  Odioune,  118  Mass.  2G1  (1875).  Gray,  C.  J.  Tlu* 
phiintitr  principally  relies  upon  the  doctrine  of  tiie  Englisii  courts 
of  chancery  that  the  vendor  of  real  estate  by  an  absolute  deed  has 
a  lien  thereon  for  tlie  unj>aid  jturclia.'^e  money,  without  j)roof  of 
any  agreement  of  the  parties  to  tliat  effect. 

The  earliest  case  wiiich  contains  a  full  discussion  of  the  doctrine, 
I  IK-  source  from  which  it  is  derived,  and  the  reasons  and  authorities 
by  which  it  is  supjjorted,  is  MackrefJi  v.  ^>i/mniuns,  15  Ves.  329, 
ilecidcd  by  Lord  Kldon  in  ISOS.  If,  as  the  learned  chancellor 
thought,  *'  the  doctrine  is  i)robably  derived  from  the  civil  law  as  to 
goods,"  it  is  somewhat  remarkable  that  it  was  never  applied  in 
England  except  to  real  estate  (Adams  on  Va{.  127).  The  only 
grounds  u|K)n  which  it  has  been  rested  are  natural  equity;  a  sup- 
posed intention  of  the  ])artics;  and  a  trust  arising  out  of  the  un- 
conscientiousness  of  the  vendee's  holding  the  land  without  paying 
the  price. 

It  was  forcibly  argued  by  counsel  in  Blnckbunie  v.  Grajsun,  1 
Co.\  Ch.  f)(),  100;  cs-.  r.  1  Bro.  Ch.  420,  and  not  answered  by  the 
<'0urt,  "  As  to  the  general  question  of  the  lien,  it  is  called  a  natural 
lien;  but  it  certainly  is  not  so  with  respect  to  personalty,  which,  if 
once  delivered,  it  is  conr-lusive,  though  concealed  from  all  nuin- 
kind  ;  and  there  seems  as  much  imtural  ('(piity  in  the  i-ase  of  j)er- 
>onalty  as  realty." 

The  presumption  of  an  inti-ntion  nf  the  parties  1ms  been  well  dis- 
pnM'd  of  by  Chief  Justice  (Jii)son:  "The  implication  that  there  is 
an  intention  to  reserve  a  lien  for  the  jiurehase  money,  in  all  cases 
in  which  the  parties  do  not  by  express  acts  eviiuc  a  contrary  inten- 
tion, is  in  almost  every  case  inconsistent  with  the  truth  of  the  fait, 
and  in  all  instances,  without  exception,  in  contradiction  of  the 
vxpress  terms  of  the  contract,  which  purport  to  Ik'  a  conveyance 
of  evervthing  that  can  pass"  (Kniiffrlt  v.  Jinwer,  7  S.  &  \\.  «W, 
76.  77)". 

The  theorv  that  a  trust  arises  out  of  the  unconseientiousness  of 


132  COXVEYAXCE.  [cilAP.  I. 

the  purchaser  would  construe  the  nou-perfornianee  of  every  prom-- 
ise,  made  in  consideration  of  a  conveyance  of  property  to  the  prom- 
isor, into  a  breach  of  trust ;  and  would  attach  the  trust,  not  merely 
to  the  purchase  money  which  he  agreed  to  pay,  but  to  the  land 
Avhich  he  never  agreed  to  hold  for  the  benefit  of  the  supposed 
cestui  que  trust. 

The  earliest  cases  upon  this  subject  in  England  were  decided  long 
since  the  settlement  of  Massachusetts;  and  in  all  those  decided 
before  our  Eevolution  (except  Bond  v.  Kent,  2  Vern.  281,  in  which 
the  purchaser  secured  part  of  the  purchase  money  by  mortgage  and 
gave  a  note  payable  on  demand  for  the  rest,  and  it  was  held  that 
the  amount  of  the  note  was  not  a  charge  upon  the  land;  and  Gib- 
bons V.  Baddall  2  Eq.  Cas.  Ab.  683,  note,  which  is  very  briefly 
stated,  without  indicating  when  or  by  whom  it  was  decided,  in  a 
volume  called  by  Lord  Eldon  a  "  book  of  no  very  high  character ;'" 
Dufficld  v.  Ehves,  1  Bligh.  X.  R.  497,  539),  either  the  conveyance- 
was  retained  in  the  custody  of  the  vendor  as  security  for  the  pay- 
ment of  the  purchase  money,  as  in  Chapman  v.  Tanner,  1  Vern. 
267 ;  Pollexfen  v.  Moore,  3  Atk.  272 ;  Fawell  v.  Ileelis,  Ambl.  724, 
726;  Coppin  v.  Coppin,  Sel.  Cas.  in  Ch.  28;  S.  C.  2  P.  Wms.  291;. 
or  the  statements  of  the  general  doctrine  were  oh  iter  dicta,  as  in 
Harrison  v.  Southcote,  2  Ves.  Sen.  389,  393 ;  WaR-er  v.  Presivicl; 
ib.  622;  Burgess  v.  Wheate,  1  W.  Bl.  123,  150;  S.  C.  1  Eden,  177, 
211. 

Lord  Eldon  himself,  in  Machreth  v.  Si/mmons,  said:  "It  has 
always  struck  me,  considering  this  subject,  that  it  would  have  been 
better  at  once  to  have  held  that  the  lien  should  exist  in  no  case,  and 
the  seller  should  suffer  for  the  consequences  of  his  want  of  caution  ;. 
or  to  have  laid  down  the  rule  the  other  way  so  distinctly  that  a 
purchaser  might  be  able  to  know,  without  the  judgment  of  a  court, 
in  what  cases  it  would,  and  in  what  it  would  not,  exist"  (15  Tes. 
340).  But  he  felt  himself  obliged  to  declare,  as  the  result  of  all 
the  authorities,  that  it  was  clear  that  different  judges  would  have- 
determined  the  same  case  differently;  that  if  some  of  the  cases, 
that  had  been  determined,  had  come  before  himself,  he  should  not 
have  been  satisfied  that  the  conclusion  was  right ;  and  that  it  was 
"''  obvious  that  a  vendor  taking  a  security,  unless  by  evidence,  mani- 
fest intention  or  declaration  plain  he  shows  his  purpose,  cannot 
know  the  situation  in  which  he  stands,  without  the  judgment  of  a 
court  how  far  that  security  does  contain  the  evidence,  manifest 
intention  or  declaration  plain  upon  that  point  "  (15  Ves.  342). 

So  Mr.  Justice  Story,  in  Oilman  v.  Brown,  1  Mason,  191,  221,, 
222,  upon  a  review  of  the  English  cases,  concluded  that  the  right 
of  the  vendor  was  not  "  an  equitable  estate  in  the  land  itself,  al- 
though sometimes  that  appellation  is  loosely  applied  to  it ;"  but  "  a 


stc.  III.]  aiii(i;m»  /.  <iI)I(>i;m:.  133 

ri^lit  wliiili  lia>  no  rxisli-iuf,  imlil  it  is  cstaljlishod  Ity  llic  (Icorc-c  «if 
ai  court  in  tlu'  particular  casi",  and  is  then  made  subservient  to  all 
•'.■  other  equities   between   the  parties,  aiul  enforced    in   its  own 

.  uliar  manner  and  ujmn  its  own  peculiar  principles." 

Tlie  most   plausible   foundation  of  the    I']n<,dish  doctrin*'  wouM 

Ml  to  be  that  justice  reijuired  that  the  vendor  should  be  enabled, 

some  form  of  judicial  j)rocess,  to  charge  the  land  in  the  hands 
<  1  the  vendee  as  security  for  the  unpaid  purchase  money.  And 
the  restriction  of  the  doctrine  to  real  estate  su<,'<^ests  the  inference 
that  the  Court  of  Chancery  was  induced  to  interpose  by  the  con- 
sideration that  by  the  law  of  England  real  i-state  could  neither  be 

ached  on  mesne  process,  nor,  i'.\cej)t  in  certain  cases  or  to  a 
limited  extent,  taken  in  execution  for  debt  {'I  VA.  Com.  U'.o.  \i\]  ; 
■J  Kent.  Com.  l-.Mli  ed..  1-.\S,  1-J!»). 

But  by  an  act  of  Parliament,  passed  in  173'2,  lands  and  other  real 
•    late  within  the  I^nglish  colonies  were  made  char<jeable  with  debts 

1  subject  to  like  process  of  execution  as  personal  property  (St-  5 
Uco.  II.,  c.  7,  ^  4).  And  in  Massachusetts  lands  had  been  made 
-ubject  to  attachment,  as  well  as  execution,  by  successive  statutes 

the  Colony  and  Province,  reaching  back  alimtst  to  the  time  of 
,:.e  first  settlement  (Col.  Sts.  ir.l4,  KUT:  '^  Mass.  Col.  Kec.  SO. 
•21)1;  Mass.  Col.  Laws,  cd.  1072,  7.  104;  Prov.  St.  109(5,  8  \V.  111.. 

HI;  1  Mass.  Prov.  Law.s  State  ed.,  •.^*)  I  ;  Ane.  Chart.  49,  1')!.  ir,.j. 

'.';  .")   Dane  Ab.  "23).     There  is  much  less  reason  therefore  for 

adopting  tlie  doctrine  in  this   Commonwealth   than    in     England 

[Womblc  V.  Baffle,  3  Ircd.  Eq.  18-?;  Wragrj  v.  Compfrolirr  General. 

*.*  Desaus.  500). 

In  (iilman  v.  Brown,  1  Mason,  191,  "^U),  Mr.  Justice  Story  said: 

-Nothing  can  be  clearer  than  that  by  the  law  of  Massachusetts  no 
lien  in  any  case  whatever  exists  njion  land  for  the  purchase  money." 
In  the  argument  of  the  same  case  on  ap|)eal.  this  was  admitti'd  on 
I'oih  sides  (Broun  v.  (iilman.  4  Wheat,  l^5.'),  IMVl,  273)  and  the 
Supreme  Court,  in  the  oj)inion  delivered  by  Chief  Justice  Marshall, 
'  \pres.<ed  no  doubt  upon  that  j)oint.     Mr.  Dane  also  says  that  no 

I  h  lien  exists  in  Massadiusetts  (9  Dane  Ab.  l.'»9). 

It  is  true  that  in  their  time  this  court  had  a  very  limiteil  juris- 
diction in  chancery.  Hut  ever  since  ls;5(»  it  has  bi-en  vested  with 
full  equity  jurisdiction  over  all  trusts,  express  or  implied  (Rev. 
Sts.,  c.  81,  §  8,  Si  commissioners'  notes;  Wriijhf  v.  Dame.  '2.i  Pick. 
55;  Gen.  Sts.,  c.  113,  Jj  l*).  During  this  peritid  of  almost  forty 
years,  oidy  tw(»  attempts  have  been  made  to  invoke  the  exercise  of 
this  jurisdiction  in  cases  at  all  analogous  to  the  present.  In  ]Vri(fhl 
v.  Dame.  ,")  Met.  485,  503,  the  general  (juestion  of  vendor's  lien  was 
arguivl ;  but  a-  the  facts  of  the  case  showed  an  express  trust,  it  was 
not  decided.     But  the  opinion  of  the  court  in  Hunt  v.  Moore,  0 


134  CONVEYANCE.  [CUAI-.  I. 

Cush.  1,  3,  strongly  tends  to  the  conclusion  that  the  failure  of  a 
purchaser  of  land  to  pay  the  consideration  agreed  could  not  create 
an  implied  or  resulting  trust.  The  suggestion,  at  the  close  of  thati 
opinion,  that  a  court  of  full  equity  powers  might  perhaps  afford 
the  plaintiff  relief,  did  not  relate  to  the  trust  relied  on,  but  to  an 
allegation  of  fraud,  of  which,  as  a  distinct  head  of  equity  juris- 
diction, this  court  had  no  cognizance  until  the  passage  of  the  St. 
of  1855,  c.  194. 

The  English  doctrine  of  vendors  lien  has  been  adjudged  not  to 
exist  in  Maine  (Philhrook  v.  Delano,  29  Maine,  410,  415).  And 
it  does  not  appear  to  have  been  ever  adopted  in  any  of  the  New 
England  States,  except  Vermont,  in  which,  after  being  affirmed  by 
the  court,  it  has  been  abolished  by  the  Legislature  (Arlln  v.  Brown, 
44  N".  H.  103 ;  Perry  v.  Grant,  10  R.  I.  334 ;  Dean  v.  Dean,  G  Conn. 
285;  Atwood  v.  Vincent,  17  Conn.  575;  Manly  v.  Slason,  21  Vt. 
271 ;  St.  of  Vt.  of  1851,  c.  47 ;  Gen.  Sts.  of  Vt.  of  1862,  c.  65,  §  33), 

In  Brown  v.  Gilman,  4  Wheat.  255,  290,  Chief  Justice  Marshall 
treated  the  question  as  governed  by  the  consideration  whether  the 
doctrine  had  been  adopted  by  the  law  of  the  particular  State.  And 
the  doctrine  has  never  been  affirmed  by  the  Supremo  Court  of  the 
United  States,  except  where  established  by  the  local  law,  as,  for 
instance,  in  Ohio  {Bayley  v.  Greenleaf,  7  Wheat.  46;  Tiernan  v. 
Beam,  2  Ohio,  383),  in  Georgia  {M'Lean  v.  M'Lellan,  10  Pet.  625, 
640  ;  Harden  v.  Miller,  Dudley,  120),  and  in  the  District  of  Colum- 
bia {Chilton  V.  Brand,  2  Black,  458)  ;  the  doctrine  having  been  pre- 
viously affirmed  in  the  States  of  Maryland  and  Virginia,  out  of 
which  the  district  had  been  formed  {Moreton  v.  Harrison,  1  Bland, 
491;  Bedford  v.  Gibson,  12  Leigh,  332);  although  it  has  since 
been  abolished  in  Virginia  by  statute  {Yancey  v.  Mauck,  15  Grat. 
300). 

The  decisions  in  the  courts  of  those  and  many  other  States  in 
favor  of  the  doctrine,  which  are  collected  in  the  notes  to  2  Sugden 
on  Vendors,  8th  Am.  ed.,  c.  19,  suggest  no  reasons  and  afford  no 
grounds  why  we  should  now  for  the  first  time  adopt  in  this  Com- 
monwealth a  doctrine  which  has  never  been  supposed  by  the  pro- 
fession to  be  in  force  here;  which  would  introduce  a  new  excep- 
tion to  the  statute  of  frauds;  which,  as  experience  elsewhere  ha^ 
shown,  tends  to  promote  uncertainty  and  litigation;  and  which 
appears  to  us  to  be  unfounded  in  principle,  unsuitable  to  our 
condition  and  usages,  and  unnecessary  to  secure  the  just  rights 
of  the  parties.  If  no  third  person  has  acquired  any  rights  in 
the  land  by  bona  fide  attachment  or  conveyance,  the  original 
vendor  may  secure  payment  of  the  debt  due  him  for  the  purchase 
money  by  the  usual  attachment  on  mesne  process.  If  any  thirf 
])erson  has  acquired  rights  in  the  property,  there  is  no  reason  wfiy 


sKc.   MI.]  J'lIUKV     /•.     H<iAI!l»    n|      MISSION'S.  l-i"> 

(■(|uity.  anv  iiKHf  lliaii  lln-  cniiuiinii  law,  should  intcrpurie  lo  di-riMi 
tliein. 

It  inav  bo  doubtoJ  whrllRT,  uj)()n  llu'  easi-  stated  in  the  bill,  the 
jdaintilT  would  In-  held  entitled  to  the  lii-n  which  he  asserts  in 
those  courts  whieli  reeo^niize  the  existence  of  a  vendor's  lien  for 
unpaid  i)urchase  7noney  ( 1  Perry  on  Trusts,  i;  235 ).  But  as  we  are 
clearly  of  opinion  that  no  such  lien  exists  in  this  Commonwealth 
in  any  case  without  agreement  in  writing:,  we  do  not  propose  to 
entangle  ourselves  in  the  reliivnieiits  and  embarrassments  which 
arc  inseparable  from  its  judicial  consideration  and  allirnuince. 


PERKY  V.  BOARD  OF  MISSIONS. 

Court  of  Aitkals  of  New  Yohk,  188G. 

(102  iV.  y.  dO.) 

Appeal  from  judgment  of  the  General  Term  of  tlie  Supreme 
Court,  in  the  third  judicial  department,  entered  upon  an  order 
made  February  4,  1884,  which  atlirmed  a  judgment  in  favor  of 
plaintiff,  entered  npon  the  report  of  a  referee. 

This  action  was  brought  to  liave  a  lien  declared  in  the  nalun" 
of  a  mortgage  upon  certain  premises,  the  title  to  which  is  in  the 
defendant,  for  moneys  advanced  by  plaintiff  to  pay  for  rej»airs  ami 
improvements  u])on  said  premises. 

The  material  facts  are  stated  in  the  opinion. 

E.  Countrijinan  for  appellant. 

Hamilton  Harris  for  respondent. 

D.w'FORTii.  J.  F^pon  trial  ])efore  a  referee  the  plaintilT  has  l)een 
•Icclared  entitled  to  a  lien  in  the  nature  of  a  mortgage  upon  ci-r- 
tain  premises  on  Elk  Street,  in  the  city  of  Ali)any,  for  a  Imlancc 
due  lum  for  advances  made  for  improvements  and  repairs  thereon 
and  for  interest  on  an  existing  mortgage,  amounting  to  the  sum 
of  $K!77.:^s,  besides  costs,  and  in  case  the  same  is  not  pai<l  within 
a  certain  tinn-.  that  said  real  estate  l)e  sold  in  the  same  nianner  as 
sdes  are  made  upon  mortgage  foreclosure,  and,  of  the  proi-eeds  of 
such  sale,  the  plaintiff  be  paid  the  amount  of  said  lien,  with  inter- 
est as  aforesaid,  together  with  his  costs  and  <lisburseMients,  rpoii 
appeal  to  the  (oinral  Ti-rm  llie  judgment  upon  this  report  wa- 
allirmed. 

Some  objections  were  made  by  the  defendant  to  the  a<linis>ion 
of  certain  testimony,  but  it  is  not  now  contende<l  that  the  fact- 
found  bv  the  referee  are  not   warrant<'d  bv  the  evidence,  or  that 


136 


CONVEYANCE. 


[chap.  I. 


they  were  not  within  the  issues  raised  by  the  pleadings.  The  con- 
tention is  against  the  referee's  conclusion  of  law.  It  appears  by 
his  report  that  in  September,  18G9,  the  Eight  Eeverend  William 
Croswell  Doane  was  bishop  of  Albany,  and  at  that  time  by  the  ac- 
tion of  the  convention  of  the  Protestant  Episcopal  Church  in  that 
diocese  a  committee  was  appointed  to  take  such  steps  as  they  might 
deem  expedient  for  procuring  a  residence  for  the  bishop ;  that  in 
February,  1870,  the  vestry  of  St.  Peter's  church,  in  that  city,  ap- 
pointed a  committee,  of  which  the  plaintiff  was  chairman,  to  solicit 
subscriptions  for  the  above  purpose,  and  in  that  character  he  re- 
ceived moneys  from  various  persons,  in  all  to  the  amount  of  $12,- 
825,  and  in  June,  1870,  under  the  advice  of  the  bishop,  and  with 
the  consent  of  the  diocesan  committee,  he  bought  the  premises 
above  referred  to  at  the  price  of  $18,000  (of  which  $5000  was  in  a 
then  existing  mortgage).  He  paid  the  residue,  and  upon  like  con- 
sent caused  the  property  to  be  conveyed,  subject  to  the  mortgage, 
to  a  corporation  called  "  The  Trustees  of  the  Episcopal  Fund  of  the 
Diocese  of  Albany ;"  that  thereupon  "  plaintiff,  at  the  request  of 
the  bishop,  commenced  making  various  improvements,  alterations 
and  repairs  in  the  dwelling  upon  the  premises  so  purchased,  all  of 
Avhich  were  necessar}-  and  proper  to  make  it  a  suitable  and  con- 
venient residence  for  him,  and  the  plaintiff  advanced  the  moneys 
required  to  pay  the  bills  for  such  improvements  and  repairs ;  that 
at  the  annual  meeting  of  the  diocesan  convention,  in  September, 
1870,  the  diocesan  committee  made  a  report  which  stated  the  man- 
ner in  which  the  title  was  taken,  described  the  property  and  re- 
ferred to  the  repairs  and  improvements.  This  report  was,  on 
motion,  accepted."  And  at  the  same  time  the  convention,  with  the 
consent  of  the  trustees  of  the  Episcopal  fund,  directed  them  to 
transfer  the  title  to  said  property  to  the  defendant  herein,  "  to  be 
held  and  used  for  the  support  of  the  Episcopate,  and  be  a  place  of 
residence  for  the  bishop  of  the  diocese,  and  that  the  said  board  of 
missions  be  authorized  and  directed  to  make  a  bond  and  mortgage 
on  the  premises  to  secure  the  payment  of  the  incumbrance  thereon, 
of  $5000,  and  also  the  payment  of  the  sum  advanced  for  the  repairs 
and  fitting  up  of  the  same  for  the  Episcopal  residence,"  intending 
thereby  to  provide  for  and  cover  all  the  expenditures  incurred  by 
plaintiff  for  the  improvements  and  repairs  then  in  progress,  and 
contemplated  and  included,  as  well  the  sums  thereafter  advanced 
as  those  which  had  then  been  actually  paid. 

The  defendant  is  a  corporation  having  power,  among  other 
things,  to  take  and  hold  property  used  or  intended  to  be  used  for 
"diocesan  institutions  or  purposes  in  the  said  diocese,"  and  is 
subject  to  the  directions  and  instructions  which  shall  be  given  to  it 
by  the  said  convention  (Laws  of  1870,  c.  13). 


st.c.  iii.J  rKKUY  1.   itDviii)  or  MISSION'S.  nr 

At  (his  time  tlu'  repairs  and  improvements  were  in  progress, 
ami  oTlly  tlie  sum  of  '$1T."{.!)'.3  hail  then  Ijeen  advaneed  \>\  plaintilF 
in  payment  therefor.  On  the  2()[\\  of  Oetoher,  1870,  in  aeeordance 
with  the  above  direetions,  the  trustees  of  the  Episcopal  fund  of  tho 
ilioeese  of  Albany  eonvi-yed  the  premises  to  defendant  in  trust  as 
a  residence  for  the  bishop  of  All)any,  and  on  the  same  day,  at 
a  re;,nilar  meetinj,'  of  the  board,  the  following  resolution  was 
jtassed : 

"  licsohed.  That  this  board  do,  in  accordance  with  the  direc- 
tion <»f  the  convention,  hereby  accept  the  conveyance  of  the  said 
])remises,  to  l)e  held  in  trust  for  the  uses  and  purposes  above  men- 
tioni'd,  and  further  that  the  president  of  this  board,  the  Kt.  Kev. 
William  Croswell  Doanc,  S.T.D.,  Bishop  of  Albany,  be  and  is  luTcby 
authorized  in  its  name  and  behalf  to  execute  and  alfix  the  corporate 
seal  of  this  board  to  a  bond  and  mortgage  upon  the  said  premises 
for  a  loan  not  to  exceed  $s:)00,  with  interest,  the  proceeds  of  whicli 
shall  be  ajiplied  to  the  ])ayment  of  the  said  existing  mortgage  of 
$5000  thereon,  and  the  said  expenses  of  the  said  repairs  and  im- 
jirovements,"  and  in  pursuance  of  said  resolution  on  December  3U. 
1870,  defendant,  by  its  president  aforesaid,  executed  and  delivered 
to  one  Earl  L.  Stimson  a  bond  with  a  mortgage  upon  the  premises 
aforesaid  for  the  sum  of  $8500,  which  sum  was  loaned  and  ad- 
vanced to  it  by  said  Stimson,  and  was  by  it  paid  over  to  plaintiff, 
who  i)aid  out  of  the  same  the  mortgage  of  $5(100,  and  the  interest 
thereon,  then  unj)aid,  amounting  in  all  to  the  sum  of  $5t.^",.'0.47, 
and  the  same  was  cancelled  of  record,  and  the  balance  of  said  sum 
was  credited  and  applied  hy  plaintilT  in  his  account  for  the  ad- 
vances made  by  him  as  aforesaid  toward  the  purchase  j)rice  of  said 
l)remises.  the  expenses  incident  to  the  same,  and  for  said  improve- 
ments and  repairs. 

Other  facts  are  found  which  re(|uire  no  si)ecial  mention,  but 
which  show  that  the  amount  for  which  a  lien  was  declared  was 
justly  due  for  advanci-s  made  under  the  circumstances  above 
stated. 

It  is  objected  by  the  a|>|)ellant  that  the  plaintilT  is  not,  by  reason 
of  any  of  these  facts,  entitled  to  an  e(piitab!e  lien  upon  the  prem- 
ises for  the  benefit  of  which  they  were  made.  W'v  are  of  a  diilerent 
opinion. 

The  principle  ujmn  which  a  court  holds  that  a  vendor  whi>  \\n< 
not  been  paid  is  entitled  to  a  lien  on  the  land  sold  is  that  it  would 
be  contrary  to  natural  justice  to  allow  a  purcha.ser  to  retain  an 
estate  which  he  has  not  paid  for.  and  it  .seems  very  clear  that  there 
is  a  like  natural  npiity  in  f-.wnr  of  the  j)laintilT.  It  is  true  he  did 
not  sell  the  estate,  but  he  added  to  it,  and  by  his  expenditures  ujmn 
It  fitted  it  for  the  j)urpos,.  f,,r  which  it  was  int(Mul»>d.      .\  lien  for 


138  CONVEYANCE.  [CHAi-.  ^. 

the  price  of  an  estate  sold  exists  without  any  special  agreement  and 
by  virtue  of  a  doctrine  merely  of  a  court  of  equity.  Here  there 
is  a  special  agreement  and  also  a  case  to  which  the  doctrine  ap- 
plies : 

First.  The  special  agreement.  It  may  be  found  in  the  resolu- 
tion of  the  convention  of  1870,  by  which  the  defendant  was  re- 
quired in  substance  to  provide  by  bond  and  mortgage  "  for  the 
payment  of  the  sum  advanced  for  the  repairs  and  fitting  up  of  the 
Episcopal  residence" — the  one  in  question.  The  learned  counsel 
for  the  appellant  seeks  to  limit  this  expression  by  the  rules  of 
grammar,  and  confine  the  security  to  the  sum  then  or  already  ad- 
vanced, to  the  exclusion  of  all  advances  subsequent  thereto.  We 
do  not  think,  however,  that  the  framers  of  the  resolution  selected 
the  word  for  the  purpose  of  marking  either  present  or  future  time, 
but  to  denote  a  fact  which  might  include  various  transactions  re- 
quiring the  expenditure  of  money  by  some  person  other  than  them- 
selves, the  whole,  by  whomsoever  or  whenever  made,  constituting 
"  the  sum  advanced,"  in  rendering  the  place  fit  and  suitable  as  a 
residence  for  the  bishop  of  the  diocese.  The  resolution  in  question 
was  in  writing ;  it  was  entered  in  the  journal  of  the  convention,  and 
the  defendant  was  bound  to  conform  to  it  (C.  13,  Laws  of  1870, 
supra) . 

Second.  The  plaintiff's  case  is  within  the  general  doctrine  of 
equity,  which  gives  a  right  equivalent  to  a  lien,  when  in  no  other 
way  the  rights  of  parties  can  be  secured.  The  advances  were 
directly  for  the  benefit  of  the  real  estate;  they  were  approved  by 
the  convention  by  whose  directions  the  title  was  conveyed  to  the 
defendant,  but  neither  the  convention  nor  the  defendant  have  in- 
curred any  corporate  liability,  and  while  it  may  be  said  that  the 
advances  were  made  on  the  promise  of,  or  in  the  just  and  natural 
expectation  that,  a  mortgage  would  be  given,  it  is  also  true  that 
they  were  made  on  the  credit  of  the  property,  for  the  improvement 
of  which  they  were  expended.  The  repairs  and  improvements 
were  permanently  beneficial  to  it,  made  in  good  faith,  with  the 
knowledge  and  approbation  of  the  parties  interested,  and  accepted 
by  them,  not  as  a  gratuity,  but  as  services  for  which  compensation 
should  be  given.  The  plaintiff's  right  to  remuneration  is  clear, 
and  unless  the  remedy  sought  for  in  this  action  is  given,  there  will 
be  a  total  failure  of  justice. 

It  would  seem  to  follow  that  no  error  was  committed  by  the 
referee  in  directing  a  sale  of  the  property,  and  the  application  of 
the  proceeds  to  the  payment  of  the  plaintiff's  claim.  But  the 
learned  counsel  for  the  appellant  argues  that  as  the  defendant's 
relation  to  the  property  is  that  of  trustee,  such  enforcement  of  the 
lien  would  destroy  the  trust,  and  so  defeat  the  very  object  of  the 


nvx:  ill.]  T::rrT  /•.  mcnson'.  i:5!t 

coil vrya nee  tliiough  which  they  dtrivc  lilh'.  The  trii>l  was  f.>r  th'* 
habitation  and  use  of  the  bisliop  of  the  diocese;  it  was  accepted 
with  notice  that  tlie  improvements  were  necessary  to  fit  the  build- 
ings for  oicuj)atioii,  and  had  been  be^fiin  under  proper  authorilv. 
It  was  the  duty  of  the  defi-ndaiit  to  allow  tlieni  to  l)e  finished,  and 
it  will  be  no  viohition  of  the  coiiditit>ns  u])on  which  the  ])remi.--c.s 
arc  held,  to  subject  them  to  a  char|,'e  for  the  co>t  of  the  n-pairs 
through  which  alone  the  ])urposcs  of  the  trust  were  a(<omplished. 
If  the  Iniilding  should  now  be  buriieil,  it  might  with  the  same  force 
be  urged  that  the  meclianie  who  might  rej)air  or  reconstruct  it 
could  accpiire  no  lien,  because  enforcing  it  might  diminisli  or  even 
absorb  the  property.  A  statutory  lien  would  be  no  better  than  tho 
plaintiff's  lii-n  in  equity. 

The  usual  course  of  enforcing  an  ecpiitaldc  lien  is  by  a  sale  of 
the  property  to  which  it  is  attached,  and  we  find  nothing  in  this 
case  to  take  it  out  of  the  general  rule.  The  appellant's  remaining 
point  is  a  sweeping  one  relating  to  various  items  of  evidence  of  the 
bishop's  declarations,  letters  and  acts  in  connection  with  the  jmr- 
chase  and  rej)airs  of  the  house.  Under  the  circumstances  discloscil 
in  the  record,  they  were  properly  received,  eitlier  as  acts  of  agency, 
or  part  of  the  transaction. 

We  think  the  decision  of  tlie  referee  was  warranted  l)v  the  fact;> 
Infore  him.  and  that  the  judgment  appealed  from  should  be 
alTirmed.* 


All  concur. 


Jiidijinenf  affirmed. 


TKFFT  v.  MIXSOX. 

Court  of  Ai'pe.vls  of  Xew  Yokk.  1875. 

(57  .V.  }'.  i)7.) 

This  was  an  action  to  restrain  defendants,  loan  commissioners 
for  Washington  County,  from  foreclosing  a  mortgage  exccuteil  ii> 
them  by  Martin  B.  Perkins  and  wife. 

On  the  ISth  day  of  January,  ISIS.  Cainaliel  Perkins  purcha>ed 
of  Cortland  Ilowland  certain  lands  in  Washington  Count  v.  whi.li 
Were  conveyed  to  him  by  warranty  «! 1  recorded  March  7.  18  IS. 

'Compare  Iiri,,hl  v.  It>n/,l,  1  St.iry.  47S  (lS4n,  in  wlii.  h  im|.n.vom.'iili 
made  J)y  h  hmifi  fid,-  |)tii(linser  of  land  wliose  tide  uroved  ilefei-tive  with 
allowed  as  "  a  lien  and  rliurp'  on  the  estate." — I'rr  Storv.  .?..  2  Storv.  I'lOS. 


140  CONVEYANCE.  [CIIAP.  I. 

in  the  clerk's  office  in  said  county.  Gamaliel  Perkins,  immediately  i 
after  his  purchase,  let  his  son,  Martin  B.  Perkins,  into  possession 
of  the  premises,  who  forged  a  deed  of  the  land  from  his  father  to 
himself  and  placed  it  upon  record  in  the  clerk's  office  of  said  countjj 
May  27,  1850.  On  the  1st  day  of  Octoher,  1850,  Martin  B.  and 
his  wife  executed  a  mortgage  upon  said  land  to  the  loan  commis- 
sioners of  said  county,  to  secure  the  sum  of  $1000  loaned  to  him. 
This  mortgage  contained  covenants  that  Martin  B.  and  his  wife 
Avere  lawfully  seised  of  a  good,  sure,  perfect,  absolute  and  inde- 
feasible estate  of  inheritance  in  the  premises,  and  that  they  were 
free  and  clear  of  and  from  all  former  and  other  gifts,  grants,  bar- 
gains, sales,  liens,  etc.,  and  this  mortgage  was,  on  the  day  of  its 
(late,  duly  recorded  in  the  book  kept  by  the  loan  commissioners,  as 
required  by  law.  On  the  23d  of  January,  18G0,  a  deed  of  said 
lands,  bearing  date  April  1,  1853,  was  recorded  in  the  county 
clerk's  office,  which  purported  to  be  executed  by  Martin  B.  and 
wife  to  his  father.  On  the  16th  day  of  December,  1859,  Gamaliel 
Perkins  conveyed  said  land  to  Martin  B.,  by  deed  recorded  Janu- 
ary 14,  1860.  Until  this  conveyance  from  his  father  Martin  B. 
had  no  title  to  the  land,  although  he  remained  in  possession  of  the 
game  from  1848.  On  the  31st  of  Januar}-,  1867,  Martin  B.,  being 
still  in  possession  of  the  lands,  conveyed  them  to  the  plaintiff,  who 
paid  full  value  for  the  same  without  any  actual  notice  of  the  mort- 
gage to  the  loan  commissioners.  The  deed  to  tlie  plaintiff  was  re- 
corded February  9,  1867. 

The  court  below  decided  that  plaintiff  was  not  entitled  to  the  re- 
lief sought,  and  directed  a  dismissal  of  the  complaint.  Judgment 
was  perfected  accordingly. 

Earl,  C.  The  plaintiff  claims  that  the  mortgage  to  the  loai 
commissioners  has  no  validity  as  against  him,  and  that  his  deed  has 
])riority  over  it  under  the  laws  in  reference  to  the  registry  of  deeds 
and  mortgages.  It  is  a  principle  of  law,  not  now  open  to  doubt 
that  ordinarily,  if  one  who  has  no  title  to  lands,  nevertheless  makes 
a  deed  of  conveyance,  with  warranty,  and  afterward  himself  pur 
chases  and  receives  the  title,  the  same  will  vest  immediately  in  hi 
grantee  who  holds  his  deed  with  warranty  as  against  such  grantoi 
In-  estoppel.  In  such  case  the  estojipel  is  held  to  bind  the  land,  anc 
to  create  an  estate  and  interest  in  it.  The  grantor  in  such  case 
being  at  the  same  time  the  warrantor  of  the  title  which  he  has 
assumed  the  right  to  convey,  will  not,  in  a  court  of  justice,  b( 
heard  to  set  up  a  title  in  himself  against  his  own  prior  grant;  h< 
will  not  be  heard  to  say  that  he  had  not  the  title  at  the  date  of  th( 
conveyance,  or  that  it  did  not  pass  to  his  grantee  in  virtue  of  his 
deed  {Worl-  r.  Wellanjl.  13  X.  IT.  389;  Kimhall  v.  Bhisdi'll  5  H, 
533;  Somes  v.  Skinner,  3  Pick.  52;  The  Banl-  of  Utica  v.  ^fer 


BM-.   III.]  TEFIT    r.     MINSON'.  Ill 

t:irnill,  :\  r»;uli.  Cll.  .^-^S,  :<(i;  ;  Jinl,y„ii  \.  li\ilJ,  \  .T(.liii  ('as.  SI,  Uti; 
While  V.  Pattrn,  ".M  Pick.  :Vl\\  Pike  v.  (,V//r»».  I".*  Maiiu-,  l.«<;5). 
And  Ihe  dortriiio,  as  will  be  scru  l»y  llu'se  autiioritic-:,  is  ('(lually 
veil  sc'ttlt'J  lliat  the  csloppcl  hiiul.s  not  only  llu.'  parti<'s,  Imt  all 
])rivic'.s  in  estate,  ])rivies  in  blood  and  ])rivies  in  law,  and  in  sueli 
case  tbc  title  is  treated  as  bavin^  been  ])reviously  vested  in  tin- 
grantor,  and  us  baving  passed  immediately  upon  llu,'  execution  of 
his  deed,  by  way  of  csto])pel.  In  tbis  case  Martin  B.  Perkins  con- 
veyed tbe  lands  to  tbc  loan  commissioners,  by  mortgage  witb  war- 
ranty of  title,  and  tbereby  became  estopped  from  disj)uting  tbat, 
at  tbe  date  of  tbe  mortgage,  be  bad  tbe  title  and  conveyed  it, 
and  tbis  esto])pel  applied  cfjually  to  tbe  ])laintifT  to  wbom  In.' 
made  a  subsciiuent  conveyance,  by  deed,  after  be  obtained  tbe 
title  from  bis  fatber,  and  wbo  tbus  claimed  to  be  bis  privy  in 
estate,  'i'lie  i)I;;intifr  was  estop|)ed  from  denying  tbat  bis  grantor, 
Martin  B.  Perkins,  had  tbc  title  to  tbe  land  at  the  date  of  tbe 
mortgage,  and  he  must,  therefore,  for  every  i)urpose  as  against 
tbe  plaintiff,  be  treated  as  baving  tbe  title  to  tbe  land  at  tbat 
date. 

I,  therefore,  can  see  no  dilTiculty  in  this  casc,-growing  out  of  the 
law  us  to  the  registry  of  conveyances.  Martin  B.  Perkins,  having 
title,  made  the  mortgage  which  was  duly  recorded.  lie  then  con- 
veyed to  bis  fatber  and  tbe  deed  was  recorded.  His  fatber  tbcii 
conveyed  to  him  and  the  deed  was  recorded.  He  then  conveyed  to 
the  plaint ilF  and  bis  deed  was  recorded.  Thus  the  title  and  record 
of  the  mortgage  were  prior  to  the  title  and  record  of  the  deed  to 
plaintilT,  and  tbe  priority  claimed  by  ])laintifT  cannot  be  allowed. 
Assuming  it  to  be  the  rule  that  the  record  of  a  conveyance  mail'' 
by  one  having  no  title,  is,  ordinarily  a  nullity,  and  constructive  no- 
tice to  no  one,  the  plaintiff  cannot  avail  himself  of  this  rub-,  as 
he  is  cstoj)ped  from  denying  that  tbe  mortgagor  bad  tbe  title  at  tbe 
date  of  tbe  mortgage.  Tbe  case  of  117/ /7t'  v.  PdUrn,  supra,  is  en- 
tirely analogcms  to  tbis.  In  tbat  case  the  ])laintifF  derived  bis  title 
from  a  mortgage,  made  to  him  by  one  Thayer,  containing  cove- 
nants of  seisin,  warranty,  etc.,  and  recorded  February  1!»,  is:?  I. 
At  tbe  time  of  the  execution  of  tbis  mortgage  the  title  wjis  not  in 
Thayer,  but  in  one  Perry,  his  father-in-law.  Perry  afterward,  by 
deed  recorded  August  2,  IS.'M,  conveyed  tbe  land  in  fee  simpb-  to 
Thayer,  who  conveyed  tbe  land  by  mortgage  to  the  defendant,  n-- 
corded  the  same  day.  The  counsel  for  the  defendant  used  tbe 
fame  arguments  in  a  great  measur(>  wbidi  have  been  urged  upon 
our  attention  by  tbe  counsel  for  tbe  pbiintifT  in  tbis  case,  botii  as 
to  the  title  and  the  registry  of  tbe  mortgages,  and  yel  the  court 
held  in  a  very  able  opinion  tbat  the  j)laintiff  bad  tbe  prior  and  1-  (- 
tor  title. 


14:2  COXYFA'AXCE.  [CHAP.  I. 

I  am,  therefore,  of  opinion  that  the  judgment  should  be  affirmed, 
^vith  costs. 

For  affirmance.  Earl,  Gray  and  Johnson,  CC. 
For  reversal,  Lett,  Ch.  C,  and  Reynolds,  C.^ 

Judgment  affirmed. 


VANDIVEER  v.  STICKNEY. 

Supreme  Court  of  Alabama,  1883. 
(75  Ala.  225.) 

Appeal  from  Montgomery  Circuit  Court. 

Tried  before  Hon.  James  E.  Cobb.  This  was  a  statutory  real 
action  in  the  nature  of  ejectment  brought  by  William  P.  Vandi- 
veer  against  Henry  G.  Stickney  and  Mary  E.  Stickney ;  was  com- 
menced on  17th  May,  1880;  and,  as  to  that  portion  of  the  land 
actually  in  controversy,  to  which  a  disclaimer  filed  by  the  defend- 
ants did  not  apply,  the  cause  was  tried  on  issues  joined  on  the  pleas 
of  not  guilty  and  the  statute  of  limitations  of  ten  years,  the  trial 
resulting  in  a  verdict  and  judgment  for  the  defendants. 

The  evidence  introduced  on  behalf  of  the  plaintiff  tended  to 
show  that  "  the  property  sued  for  was  the  property  of  R.  B.  Owens 
at  his  death;  that  the  said  Owens  died  intestate,  in  the  year  1862, 
leaving  as  his  only  heirs-at-law  his  children,  William,  Edwin,  and 
Emma  Owens,  and  Mrs.  Stickney,  the  defendant ;  that  said  Emma 
died  in  March,  1869,  unmarried,  and  without  children;"  that  oi 
16th  June,  1870,  said  Edwin  and  William  Owens  executed  to  the 
plaintiff  a  mortgage  on  an  undivided  two-thirds  interest  in  the 
land  described  in  the  complaint,  to  secure  money  then  loaned  to 
them  by  the  plaintiff;  and  that  said  debt  had  not  been  fully 
paid. 

The  evidence  introduced  on  behalf  of  Mrs.  Stickney  tended  to 
show  that  her  sister  Emma,  at  the  time  of  her  death,  was  about 
sixteen  years  of  age ;  that  prior  to  her  death  she  expressed  a  desir< 
that  Mrs.  Stickney  should  have  her  interest  in  her  father's  estate 
on  account  of  her  care  of  her  and  on  account  of  the  money  she  hac 
spent  for  her;  that  within  a  few  days  after  the  death  of  the  sai( 
Emma,  Edwin  and  William  Owens  and  Mrs.  Stickney  "met  and 
discussed  the  matter  between  them,  and  it  was  agreed  between 
llicm  that  Mrs.  Stickney  should  have  said  Emma's  interest  in  sai( 
property;"  that  this  agreement  was  verbal;  that  from  the  time  oi 

*  The  dissenting  opinion  of  Reynolds,  C,  is  omitted. 


M.«-.    IM.J 


\ani>i\i;i;k  /•.  mu  km;v.  143 


,u<l  ii<:nTiiuiil,  Mr,-.  Stiiknry  cmU'IciI  into  the  pos.se:?sion  of  saiil 
l.rojicrtv"  l>y  luTsi'lf,  or  Iht  lni>I)iin(l,  as  truste*-,  or  li-nants,  cliiiiniii;,' 
tlio  I'ntire  jjioiktIv  as  lur  own  in  <;(>o(l  faith,  ((inlinnously,  openly, 
notoriously  and  advi  rsdy  ;"  that  she  has  continued  "  in  such  posscs- 
^;ion  of  the  same  hy  herself,  hushand  or  tenants,  and  was  in  such 
adverse  possession  at  the  time  of  the  execution  of  said  mortgage  to 
llif  plaintiff,  she,  at  that  time,  and  ever  afterward,  claiming  tlu; 
haid  property  as  her  own.  in  good  faith,  oj)enly.  notoriously  and 
adversely  to  her  hrothers  ami  all  the  world;"  that  on  21st  Fehru- 
ary,  18T0,  the  said  Kdwin  executed  a  deed,  conveying  to  Mrs. 
Stickney  his  undivided  interest  in  saiil  property,  which  deed  was 
duly  recorded  ;  that  the  said  William  "  had  conveyed  to  Mrs.  Stick- 
ney his  undivided  one-fourth  interest  in  his  father's  estate,  of  which 
he  was  pos.sessed,  hefore  his  sister  Emma's  death,  and  that  the  deed 
<-onveying  said  interest  was  duly  executed,  prior  to  the  death  of 
his  sister,  l*]nnna,  and  upon  a  valuahle  consitleration ;  that  the  only 
right  to  said  William's  one-tM'elfth  interest  in  said  real  estate, 
accpiired  through  his  said  sister,  Emma,  claimed  hy  ilrs.  Stickney, 
was  under  and  through  said  verhal  agreement,  and  the  adverse 
]K)ssession  thereof  as  aforesaid;"  and  that  after  said  v(>rl)al  agree- 
ment, neither  the  said  William  nor  the  said  Edwin  ever  asserted 
any  right,  title,  claim  or  interest  in  or  to  the  share  of  the  said 
Ijnnia  in  said  projicrty. 

I'laintilT  then  introduced  evidence  tending  to  show  that  Edwin 
and  William  Owen.s  were  in  possession  of  said  stahles  and  stable 
lot  (a  part  of  the  property  in  controversy)  in  the  spring  of  1870. 
and  at  the  time  of  the  execution  of  said  mortgage;  and  there  was 
also  evidence  introduced  hy  defendants,  tending  to  show  that  the 
t:aid  William  and  Edwin  Owens,  while  in  pos.session  as  aforesaid, 
at  the  time  of  the  execution  of  said  mortgage,  were  there  as  the 
tenants  and  employees  of  the  defendants,  Stickney  and  wife,  and 
in  no  other  capacity.  The  said  plaintiff  also  tcstifk'd  that  he  had 
no  knowledge  of  th(>  claim  or  title  of  >rrs.  Stickney  to  the  interest 
of  her  said  hrother  William  in  said  Emma's  one-fourth  of  said 
projx^rty  described  in  said  mortgage. 

The  foregoing  was  the  substance  of  the  evidence  introduced  on 
the  trial  bi'aring  on  tlu?  questions  decided  by  the  court.  The  plain- 
tiff reserved  numerous  exceptions  to  charges  given  and  refused, 
which  the  opinion  docs  not  render  necessary  to  set  out. 

Those  charges  arc  here  n.ssigned  as  err<ir. 

SoMFuviLi.i:,  J.  We  discover  no  error  in  the  ridings  of  the  Cir- 
cuit Court,  as  shown  in  the  present  record. 

Tn  ruJIins  V.  Julinson,  T)?  .Ma.  30  1.  it  was  decided  tl.at  an  un- 
int«Trupted,  continuous  pos,>;ession  of  lands  by  a  doneo,  under  a 
more  parol  gift,  accompanied  with  a  claim  of  right,  is  an  adverse 


144  COXVEYAXCE.  [CIIAP.  I. 

holding  as  against  the  donor,  and  will  he  protected  hy  the  statute 
of  limitations,  thus  maturing  into  a  good  title  hy  the  lapse  of  ten 
years.  The  fact  is  immaterial  that  such  a  parol  gift  of  lands  con- 
veys no  title,  and  only  operates  as  a  mere  tenancy  at  will,  capahle 
of  revocation  or  disaiiirmance  by  the  donor  at  any  time  before  the 
bar  of  the  statute  is  complete.  It  is  evidence  of- the  beginning  of 
an  adverse  possession  by  the  donee,  which  can  be  repelled  only  by 
showing  a  subsequent  recognition  of  the  superiority  of  the  title  of 
the  donor.  The  essence  of  adverse  possession  is  the  quo  animo 
or  intention  with  which  the  possession  is  taken  and  held  by  a  de- 
fendant. It  is  in  the  settled  language  of  the  l)ooks,  the  intention 
which  "guides  the  entry,  and  fixes  its  character"  (Angell  on  Lim., 
§  386;  Ewing  v.  Burnet,  11  Peters  [U.  S.]  41).  Even  where  the 
technical  relation  of  landlord  and  tenant  exists,  and  despite  the 
settled  rule  that  a  tenant  will  not  be  permitted  to  dispute  the  title 
of  his  landlord,  there  is  no  principle  of  law  or  of  public  })o]icy 
which  forbids  a  tenant  from  holding  adversely  to  the  landlord,  so. 
as  to  acquire  title  of  the  demised  premises  under  the  operation  of^ 
the  statute  of  limitations.  But  in  all  such  cases,  the  presumption 
in  the  first  instance  is,  that  the  tenant's  possession  is  permissive 
and  in  subordination  to  the  title  of  the  landlord,  and  there  must  be 
clear  and  positive  proof  of  a  disclaimer  or  renunciation  of  the  su- 
perior title,  brought  home  to  the  knowledge  of  the  landlord  with 
unquestionable  certainty  (Angell  on  Lim.,  §  444;  2  Brick.  Dig., 
p.  200,  §§  101,  102). 

The  evidence  tended  to  show  that  the  defendants  held  adverse 
possession  of  the  lands  in  suit  for  more  than  ten  years  prior  to  the 
commencement  of  the  action.  The  undivided  interest  of  Emma. 
Owen,  which  on  her  death  descended  in  part  to  her  two  brothers,, 
William  and  Edwin,  was  released  by  parol  to  their  other  sister, 
Mrs.  Stickney,  who  is  one  of  the  defendants.  Her  adverse  pos- 
session commenced  at  this  time,  which  was  about  the  middle  of 
March,  18G9,  and  is  shown  to  have  continued,  without  any  subse- 
quent recognition  of  the  title  of  her  donors,  until  the  commence- 
ment of  this  suit,  in  May,  1880.  The  mortgage  executed  by  the 
two  brothers  to  Yandiveer,  the  plaintiff,  in  June,  1870,  did  not 
change  the  adverse  nature  of  ]\rrs.  Stilrknoy's  possession,  nor  oper-. 
ate  in  an}^  manner  to  stop  the  running  of  the  statute. 

This  mortgage,  moreover,  is  shown  to  have  been  executed  by. 
the  mortgagors  during  the  period  of  Mrs.  Stickney's  occupancy 
and  adverse  holding,  the  hostile  character  of  which  was  not  only 
known  to  them,  but,  in  its  inception,  was  expressly  authorized  by^ 
their  parol  release  of  the  deceased  sister's  interest  in  the  mort- 
gaged lands.  The  mortgage  was  therefore  void. as  tending  to  pro- 
mote champerty  and  maintenance  by  traffic  in  litigated  titles.     The 


i^ti-.  HI.]  vani)i\i;i;k  r.  sik  knky.  145 

■  k-  of  law   iviuKrin;,'  luiivcvaiucs  of   himls   void,   ulu-ii   Iii'M   atl- 

isfly,  is,  in  part,  one  of  imhlie  policy,  (U-signi-d  to  "  throw  olj- 
:  lack's  in  the  way  of  asserting  doubtful  rij,dits  to  the  prejudice  of 
oceuj)ants  {Clai/  v.  Wifutt,  0  J.  J.  Marsh,  583;  Bernstein  v.  Humes, 
CO  Ala.  582).  "It  seems,"  says  ("hancellor  Kent,  "to  !»•  the  ;.,^.n- 
cral  sense  and  usa<,'e  of  mankiml,  that  the  transfer  of  real  property 
chould  not  be  valid,  unless  the  grantor  hath  the  capacity  as  well  as 
the  intention  to  deliver  possession  "  (  I  Kent.  448). 

To  avoid  a  conveyance  on  this  ground,  it  is  not  re(iuisite  that 
.vuch  adverse  possession  should  be  asserted  under  any  color  of  title, 
but  only  under  claim  of  right.  But  it  must  be  actual  as  distin- 
guished from  constructive  possession  (Bernstein  v.  /fumes,  Tl  Ala. 
200;  Eurehi  Co.  v.  Edwards,  ib.  248).  Xor  is  it  re(piired  that 
the  mortgagee,  or  other  jjurchaser  should  have  actual  notice  of 
such  adverse  holding,  in  order  to  vitiate  the  conveyance.  Tlie 
constructive  notice  implied  from  possession  is  sudicient  (Bernstein 
V.  Humes,  supra).  Xor,  yet  again,  does  a  knowledge  by  one  in  actual 
possession,  claiming  title,  that  his  title  is  defective,  avail  to  destroy 
its  adverse  character.  The  test  is  the  actual  claim,  and  not  the 
bona  fides  of  it,  in  all  cases,  at  least,  where  the  possession  is  actual 
and  not  merely  constructive  (Smith  v.  Roberts,  G2  Ala.  83;  Ates- 
undcr  V.  Wheeler,  G9  Ala.  332;  Gordon.  Rankin  £■  Co.  v.  Tueedi/. 
T4  Ala.  232).  These  principles  are  all  ])ertinent  to  the  present 
case,  and  were  recognized  in  the  rulings  of  the  court. 

The  doctrine  settled  in  this  State  is,  that  the  possession  of  ihe 
tenant  is  the  possession  of  the  landlord,  and  notice  of  the  former 
is  notice  of  the  latter.  The  reason  is,  as  observed  in  a  former 
decision,  that  an  in(|uiry  of  the  occupant  will  be  likely  to  lead  to 
a  knowledge  of  the  fact  that  he  is  a  mere  tenant,  holding,  not  in 
his  own  right,  but  in  the  right  of  another  who  is  his  landlord 
(Brunson  v.  Brooks,  G8  Ala.  248;  ri(jue  v.  Arvndale,  71  Ala.  !M  ; 
Wade  (m  Notice,  ^i<  284-28(; ;  Burt  v.  Casseti/,  12  Ala.  734). 

It  was  immaterial,  therefore,  that  the  mortgagors  were  in  llie 
temporary  occui>ancy  of  a  portion  of  the  property  sued  for  at  the 
time  of  the  execution  of  the  mortgage,  in  the  year  1870,  provided 
they  entered  after  the  commencement  of  ^^rs.  Stickney's  advcr.-e 
posses.«;ion,  and  as  mere  tenants,  fully  recognizing  the  superiority 
of  her  title  as  owner  and  landlord,  runhasers  from  tenants  are  «< 
fully  precluded  as  the  tenants  themselves  from  <lisj)uting  the  title 
of  their  landlord  (Taylor's  Land  &  Ten.,  §  01  ;  Bishop  v.  Lalnu- 
ette,  G7  Ala.  197).  The  principle  settled  in  }fr(\irthif  v.  Xicrosi. 
72  Ala.  332,  does  not  conllict  with  this  view.  There  the  possession 
of  the  vendor  and  purcha.ser  was  joint,  both  being  in  actual  po.-isos- 
sion  at  the  time  the  deed  was  executed.  It  was  lield  that,  inas- 
much as  there  was  no  visible  change  of  possession,  a  third  per-on 
10 


146  CONVEYANCE.  [CHAP.  I. 

purchasing  would  not  be  charged  with  constructive  notice  of  the 
unrecorded  deed  of  the  first  vendee.  If,  however,  the  vendor  had 
openly  and  visibly  yielded  exclusive  possession  to  the  vendee,,  and 
had  afterwards  gone  in  as  a  mere  tenant,  the  rule  would  have  been 
otherwise.     Such  is  this  case,  in  fact  as  well  as  in  principle  and 

legal  effect. 

Judgment  affirmed. 


New  York  Real  Prop.  Law,  §  225.  Effect  of  Grant  or  Mort- 
gage of  Real  Property  Adversely  Possessed. — A  grant  of  real  prop- 
erty is  absolutely  void  if  at  the  time  of  the  delivery  thereof  such 
property  is  in  the  actual  possession  of  a  person  claiming  under  a 
title  adverse  to  that  of  the  grantor;  but  such  possession  does  not 
prevent  the  mortgaging  of  such  property,  and  such  mortgage,  if 
duly  recorded,  binds  the  property  from  the  time  the  possession 
thereof  is  recovered  by  the  mortgagor  or  his  representatives,  and 
has  preference  over  any  judgment  or  other  instrument,  subsequent 
to  the  recording  thereof;  and  if  there  are  two  or  more  such  mort- 
gages, they  severally  have  preference  according  to  the  time  of 
recording  thereof,  respectively. 


CHAPTKR  TI. 

SECT  KIT  V. 

Section  I.    Moi{T(i.\(;i:  and  Conditionai.  Sale. 
ST.  JOHN   V.  WAK'i:  11A.M. 

COL'KT    (»l"    ('ll.VV<'i;iiV,    Iti.')."). 

(3  Sinnist.  (;;]].) 

The  dcfenJants,  for  3000/.,  conveyed  the  lands  to  Sir  Richard 
'Jrobhani  and  his  heirs;  Sir  Richard  made  a  lease  to  Wareiiani,  ren- 
dering to  him  and  his  heirs  230/.  per  annum,  and  tliis  h^aw  was 
lor  seven  years,  with  a  noininr  poriKT  distress  and  clause  of  rc-'Mitry, 
and  a  proviso,  that  if  W'areliam  and  his  heirs  should  witjiin  seven 
years  be  desirous  to  repurchase,  and  signify  tiie  same  to  Sir  Richard 
tJrobham,  his  heirs  and  assigns,  and  pay  them  3000/..  then  lie  and 
tln-y  to  assure  to  Warcham.  Lord  Curenfri/.  liiclninlson.  (Miirf 
.'list ice.  and  Crook-,  decreed  tlu'  money  to  the  heii'  of  Sir  Ricliard  (i.. 
md  not  to  the  i)laintiir,  Saint  John,  who  was  his  executor,  and 
.justly;  for  this  was  not  the  case  of  a  mortgage,  but  of  an  absolute 
purchase;  for  the  proviso  could  not  turn  it  to  a  mortgage,  but  was 
a  mere  collateral  agreement,  for  which  there  was  no  renu'dy  in 
•  tjuity  after  the  seven  years.  And  so  it  ^^ls  ruled  in  this  court.  I'i 
Tar.  2.,  Cage  v.  Sir  Ralph  liovi/:  and  again.  T.  '2A  Car.  '^..  in 
Ixoac  Cotlingtoii  v.  Lord  Conihurif,  where  the  covenant  was  to  rc- 
convey.  upon  tlie  repayment  of  the  purchase  money  within  seven 
vi-ars.  But  if  the  purchase  money  had  not  been  near  the  valui"  of 
I  lie  laml.  tiiat  and  such  like  circumstances  might  have  inhde  it  a 
mortgage. — Per  T^ord  Xottingham.  Ti.  Ch..  in  Thortibnronqh  \. 
linker,  3  Swanst.  G2S. 


148  SECURITY.  [CHAP.  II. 


MELLOE  V.  LEES. 

Court   of   Chancery,    1742. 

(2  Atk.  494.) 

This  case  came  before  the  Chancellor  upon  an  appeal  from  the 
Eolls. 

A  mortgage  was  made  of  an  estate  by  the  plaintiff's  grandfather, 
Thomas  Mellor,  in  1689,  to  John  and  James  Whitehead;  the  White- 
heads afterwards,  on  the  5th  of  June,  1G89,  mortgaged  the  same 
estate  to  Cartwright  and  John  Heywood,  and  their  heirs,  for  secur- 
ing 200L  to  which  Thomas  and  his  son  John  Mellor  were  parties; 
and  Cartwright  and  Heywood,  in  order  to  secure  to  themselves  the 
interest,  made  a  lease  to  the  plaintiff's  father,  John  Mellor,  dated 
the  12th  of  June,  1689,  and  to  his  assigns,  for  5000  years,  at  the 
rent  of  twelve  pounds  a  year,  for  the  three  first  years,  and  ten 
pounds  a  year  for  the  remainder  of  the  term ;  and  if  in  the  space 
of  three  years  the  200/.  was  paid,  and  the  interest,  then  the  prem- 
ises were  to  be  re-conveyed. 

Eeceipts  have  been  given  since,  sometimes  for  interest,  and  some- 
times for  a  rent-charge;  the  last  receipt  was  in  1730. 

The  200L  lent,  was  money  left  under  one  Sutton's  Avill  in  1687, 
and  directed  to  be  laid  out  in  the  purchase  of  lands  in  fee  in  Lan- 
cashire, or  Cheshire,  and  the  rents  of  it,  when  purchased,  to  be 
applied  towards  clothing  24  aged  and  needy  house-keepers. 

The  plaintiff,  the  20th  of  January,  1738,  gave  notice  that  he 
would  pay  in  the  money,  but  the  defendant,  a  new  trustee  of  the 
charity,  refused  to  take  it,  and  insisted  upon  it  as  an  absolute  pur- 
chase :  and  was  so  decreed  by  the  Master  of  the  Eolls,  William  For- 
tescue.  Esquire. 

The  estate,  at  the  time  of  the  mortgage,  was  worth  500/.  only, 
but  would  sell  now  for  900/. 

Lord  Chancellor  [Hardwicke].  To  be  sure,  the  rules  of  this 
court  relating  to  mortgages  ought  to  be  adhered  to,  that  borrowers 
cf  money  may  not  be  oppressed. 

There  are  two  general  questions  in  the  present  case. 

First,  As  to  the  contract,  Whether  it  is  a  transaction  that  is  in 
its  nature  a  mortgage,  or  a  defeasible  purchase,  and  sul)ject  to  a 
re-purchase  ? 

Secondly,  If  originally  intended  as  a  mortgage.  Whether  length 
of  time  will  not  be  a  bar  to  redeeming? 

As  to  the  first,  There  is  a  difference  between  such  an  agreement  as 
this,  which  relates  to  a  rent-charge  issuing  out  of  land,  and  an 


SK-.  I.]  MKi.i.ou  r.  i.r.KS.  1  ll» 

:i;.'ri'i'nu'iU  whith  ivlalt-s  to  tlu'  laiul  ilM-ll'.  So  likmvisc  the  case  of 
ivatinj;  a  rent-charge  out  of  hiiuls,  and  luortgaj^in*;;  a  rent-cl)arge, 
1-  of  (lillercnt  eonsitlerations.  Where  a  man  lakes  a  mortgage,  it 
i-  not  l)arely  adetjuate  to  the  payint'iil  of  the  interest,  or  even  to 
I  i)erj)etual  payment  of  the  interest,  hut  generally  the  estate 
I-  douhU'  the  value  of  the  principal  money  lent. 

If,  indeed,  any  fetters  iiad  heen  laid  upon  redeeming  the  mort- 
jaged  estate,  hy  some  original  agreenient,  either  in  the  mortgaged 
!eed,  or  a  separate  deed,  it  \v<Mild  not  avail,  where  it  is  done  with 
I  design  to  wrest  the  estate  fraudulently  out  of  the  hands  of  tlie 
mortgagor.  But  where  is  the  fraud,  or  the  inconvenience,  in  the 
present  case?  The  land  itself  is  not  parted  with,  l)ut  it  is  merely 
-lling  a  ri-nt-charge,  strictly  adequate  to  the  consideration  given, 
;he  200/.,  and  instead  of  liaving  a  chance  for  the  whole  estate,  the 
hnder  of  the  money  is  contented  to  huy  the  interest  for  ever,  by  way 
"f  rent-charge. 

I  have  said  thus  much  in  general ;  and  now  I  eome  to  the  particu- 
lar circumstances  in  this  case.  From  tlie  agreement,  and  from  the 
articles  themselves  in  ir)8n,  it  appears  plainly  to  he  the  intention 
<\'  the  parties  that  after  the  end  of  the  three  years  the  interest 
-liould  l)(^  changed  into  a  rent-charge,  and  he  irredeemahle.  Tiie 
■  Itjection  is,  that  the  court  will  not  permit  a  clau.se  in  the  same 
!''ed,  or  in  another,  which  shall  fetter  the  redemption;  and  the 
'hservation  is  very  right,  wlicn  npjdied  to  the  case  of  a  common 
iiortgage. 

But  what  has  been  said  by  the  defendant's  council  with  regard 

to  the  charity,  is  very  material  (not  that  I  will  lay  down  a  general 

rule  with  regard  to  all  charity  money  lent  on  mortgage),  for  here  a 

-iim  of  200/.  is  left  by  one  Sutton,  which  is  n(^t  to  ho  laid  out  at  in- 

'■rest,  but  to  be  invested  in  land  in  fee-simj)le,  so  that  the  trusti'c-; 

I'  this  charily,  Ix-ing  under  an  inability  of  treating  in  the  common 

wiy.  have  put  it  in  this  method,  and  it  is  the  will  it.self  that  has 

aid  a  foundation  for  transacting  it  in  this  manner,  and  has  deliv- 

ri'il  the  defendants  from  lh<'  suggestion  of  oppression  and  impo- 

■iiion. 

It  is  material  in  tlu-  present  ea.se  that  here  is  no  covenant  in  the 

i'fd  for  the  repayment  of  the  m()rtgage  money,  which  shews  a  plain 

Mtention  of  |)urchasing  a  rent-charge.     In  general,  indeed,  this  is 

no  rule  against  redemptions  in  common  and  ordinary  ca.ses.  though 

there  is  no  such  covenant  ;  but  here  it  is  explanatory  of  the  wlu>le 

-theme  an<l   intention  of  the  parties.     The  agretMnent   is  to  take 

I  rent-charge,  at  the  rate  only  of  '>  per  cent,  which  was  »'xtremelv 

fair,  considering  the  interest  of  nxuiey  kept  up  long  aftt-r  at  •'•  p.r 

<nt. 

Flvi/ir  \.  f.itritiiildti .    I    1'    Win-    ■.'('il,  i<  tin-  unlv  (  a-r  tliat  lome'; 


150  SECURITY.  [CIIAI'.  II, 

near  the  present.^     Bonhain  v.  Ncivcoinh,  2  Yent.  3G4,  went  upon 
a  different  reason,  and  is  an  exception  out  of  the  general  rule. 

I  do  not  singly  found  my  opinion  upon  the  nature  of  the 
contract  in  the  principal  case,  hut  on  the  great  length  of  time,  for 
this  bill  is  brought  at  the  distance  of  48  years. 

And  though  it  is  very  true,  that  the  court  will  not  suffer  a  com- 
mon and  plain  mortgage  to  be  redeemed,  where  the  mortgagee  ha* 
been  in  perception  of  the  rents  and  profits  for  a  considerable 
time,  because  it  would  be  making  the  mortgagee  a  bailiff  to  the 
mortgagor,  and  subject  to  an  account;  yet,  in  this  case  of  a  rent- 
charge,  there  would  be  no  such  inconvenience,  for  the  person 
might  easily  account.  But  consider  how  much  the  value  of  money 
is  altered  since  1689,  and  likewise  the  value  of  the  rent-charge. 
For  if  the  purchaser  was  to  reconvey  his  rent-charge  now  in  174"2, 
he  could  not  possibly  purchase  another  with  the  200?.  that  would 
produce  more  than  7/.  a  year;  therefore  if  the  person  who  had  a 
right  to  redeem  had  come  sooner,  something  more  might  have  been 
said. 

There  is  still  another  reason,  that  it  would  make  property  pre- 
carious; for  if  after  the  three  years  it  became  an  absolute  estate,, 
then  it  is  a  freehold,  and  would  be  conveyed  as  such ;  if  considered 
as  a  redeemable  interest,  then  it  is  only  personal  estate ;  this  would 
create  great  confusion,  and  render  it  very  difficult  for  persons  either 
to  dispose  of  their  property,  or  to  settle  what  kind  of  conveyance 
is  proper. 

Therefore,  this  bill  has  been  properly  dismissed  at  the  Rolls,  nd"*; 
so  much  upon  general  rules  as  upon  the  particular  circumstances  of 
the  case,  and  upon  the  likeness  there  is  between  this  and  the  case 
of  Floyer  v.  Lavington. 

His  I.ordship  affirmed  the  decree,  but  gave  no  costs  of  cither 
side.^ 

'  One  for  800/.  consideration  grants  a  rent-charge  of  48?.  a  year  in  iefi, 
upon  condition  that  if  the  grantor,  during  his  life,  shall  give  notice  and 
pay  in  the  800/.  by  instalments — viz.,  100/.  at  the  end  of  every  six 
months,  and  shall  do  this  during  his  own  lifetime,  then  the  grant  to  be 
void.  The  mortgage  was  made  about  sixty  years  since,  when  the  legal 
interest  of  money  was  eight  per  cent.  Lord  Chancellor  Cowper  was  of 
opinion  the  rent-charge  was  not  redeemable,  and  decreed  the  bill  for  a 
redemption  should  be  dismissed. — Floyer  v.  Lavington,  1  P.  Wms.  2G8. 

'"This  is  a  sale  for  an  annuity  absolutely,  and  not  redeemable:  but 
when  they  are  redeemable,  the  court  looks  upon  it  as  an  evasion  of  thfr 
statute  of  usury  and  only  a  loan  for  money." — Per  Lord  Hardwicke,  in 
Floyer  v.  iiherard,  Ambler,  18. 

"  There  is,  indeed,  a  distinction  in  the  nature  of  the  transaction,  between 
a  power  of  redeeming  and  of  repurchasing,  obtained  by  usage,  which 
governs  the  sense  of  words.  But  it  is  well  known  that  the  court  leans 
extremely  against  contracts  of  this  kind,  where  the  liberty  of  repurchasing 


HKC.  1.]  CONWAY     C.    ALKXANDKK.  l.")l 

COX  WAV    V.    ALKXANDEU. 

»5L'l'Ui:.ME    COLKT   OK    THK    UmTKI)   StATES,    1812. 

(7  Crunch,  '.MH.) 

This  was  an  appi^'al  from  the  Circuit  Court  for  thi-  district  of 
Coluiiihia,  sittin<^  in  Chancery,  at  Alexandria.' 

Makshall,  Ch.  J.,  delivered  the  opinion  of  the  Court  as  follows: 

This  suit  was  broufjht  by  Walter  S.  Alexander,  as  devisee  of 
liohert  Alexander,  to  redeem  certain  lands  lyinfj  in  the  neiphbor- 
liood  of  Alexandria,  which  were  conveyed  by  Kobcrt  Alexander,  in 
trust,  by  deed  dated  the  20tb  of  Marcb,  1788,  and  which  were 
afterwards  conveyed  to  William  Lvles,  and  by  him  to  the  testator  of 
the  ))laintiirs  in  error. 

The  deed  of  the  20th  of  March,  1788,  is  between  Kobcrt  Alexan- 
der of  the  first  part,  William  Lyles  of  the  second  part,  and  Kobcrt 
T.  Hooe,  Robert  Muire  and  John  Allison  of  the  third  part.  Robert 
.Mexander,  after  recitin<r  that  lie  was  seised  of  one  undivided 
moiety  of  400  acres  of  land,  except  40  acres  thereof  previously  sold 
io  Baldwin  Dade,  as  tenant  in  common  with  Charles  Alexander, 
in  consideration  of  eifjht  hundred  pounds  paid  by  William  Lyles, 
and  of  the  covenants  therein  mentioned,  grants,  barijains  and  sells 
twenty  acres,  part  of  the  said  undivided  moiety,  to  William  Lyles, 
iiis  heirs,  and  assigns  forever,  and  the  residue  thereof,  except  that 
which  had  been  previously  sold  to  Baldwin  Dade,  to  the  said  Robert 
T.  Hooe,  Robert  ^fuirc  and  John  Allison,  in  trust,  to  convey  the 
same  to  William  Tivles  at  any  reasonab](>  time  after  the  first  day  of 
July,  ]7!H),  \inl(ss  Robert  Alexander  sliall  pay  to  the  said  William 
Lyles,  on  or  Ix'fore  that  day,  the  sum  of  £700  with  interest  from  the 
said  20th  day  of  March,  1788.  And  if  the  said  Robert  Alexander 
shall  pay  the  said  William  Tiyles  on  or  before  that  day  the  said  sun 
of  £700  with  interest,  then  to  reconvey  the  same  to  the  said  Kolx-rt 
•Mexander.  Robert  Alexander  further  covenants  that,  in  the  event 
of  a  reconveyance  to  him,  the  said  twenty  acres  sold  absolutely  shall 
1k»  laid  off  adjoininji  the  tract  of  land  on  which  William  Lyles  then 


is  iiia«ip  nt  tlip  same  timr,  ronooniitnnt  witli  the  prant,  an  it  must  he  ixin- 
»<i(li'ntl  in  tliis  <as«';  hoiiip  part  of  tliP  samo  t  ransait  ion ;  the  court  poinj; 
very  tinwillinply  into  tliat  (list in<'l ion.  and  emleavorinp  if  possilile  to  hrinp 
them  to  lie  (Uses  of  riMlcnipl  ion.  .Mthfxipli  it  is  a  ditTcrent  thinp  when- 
the  eontrait  for  lil»erty  to  repurclianp  is  after  a  man  lias  tH»en  some  tim« 
in  jMissession  of  an  estate,  ami  actinp  as  owner  tintler  a  piirthasp." — /•»  r 
llardwicke.  T.d.  fh..  in  l.oiniwt  v.  Srnirrn.  1  Ves.  Sr.  -JOJ.  JO.')  (1740). 
'  The  statement   of  faets  is  omitted. 


153  SECURITY.  [CIIAP.  II. 

lived.  The  trustees  covenant  to  convey  to  William  Lyles,  on  the 
non-i)ayment  of  the  said  sum  of  £700;  and  to  reconvey  to  Robert 
Alexander  in  the  event  of  payment.  Eobert  Alexander  covenants 
for  further  assurances  as  to  the  1  tO  acres,  and  warrants  the  tvi'enty 
acres  to  William  Lyles  and  his  heirs. 

On  the  19tli  day  of  July,  1790,  the  trustees,  by  a  deed  in  which 
the  trust  is  recited,  and  that  Eobert  Alexander  has  failed  to  pay  the 
said  sum  of  £700,  convey  the  said  land  in  fee  to  William  Lyles.  On 
the  2M  of  August,  1790,  William  Lyles,  in  consideration  of  £900, 
<:-onveyed  the  said  twenty  acres  of  land  and  llO  acres  of  land  to 
Richard  Conway,  with  special  warranty  against  himself  and  his 
heirs.  On  the  9th  day  of  April,  in  the  year  1791,  a  deed  of  partial 
partition  was  made  between  Richard  Conway  and  Charles  Alex- 
ander. This  deed  shows  that  Charles  Alexander  asserted  an 
<'xclusive  title  in  himself  to  a  considerable  part  of  this  land. 
Soon  after  this  deed  of  partition  was  executed  Richard  Conway 
entered  upon  a  part  of  the  lands  assigned  to  him,  and  made  on 
them  permanent  improvements  of  great  value  and  at  considerable 
■expense. 

In  January  or  February,  1793,  Robert  Alexander  departed  this 
life,  having  first  made  his  last  will  in  writing,  in  which  he  devises 
the  land  sold  to  Baldwin  Dade;  but  does  not  mention  the  land  sold 
to  William  Lyles.  The  plaintiff,  who  was  then  an  infant,  and  who 
attained  his  age  of  twenty-one  years  in  Xovember,  1803,  brought 
jiis  bill  to  redeem  in  1807.  He  claims  under  the  residuary  clause 
of  Robert  Alexander's  will. 

The  question  to  be  decided  is  whether  Robert  Alexander,  by  his 
deed  of  March,  1788,  made  a  conditional  sale  of  the  property  con- 
veyed by  that  deed  to  trustees,  which  sale  became  absolute  by  the 
non-payment  of  £700,  with  interest,  on  the  1st  of  July,  1790,  and 
by  the  conveyance  of  the  19th  of  that  month,  or  is  to  be  considered 
as  having  only  mortgaged  the  property  so  conveyed. 

To  deny  the  power  of  two  individuals,  capable  of  acting  for 
themselves,  to  make  a  contract  for  the  purchase  and  sale  of  lands 
defeasible  by  the  payment  of  money  at  a  future  day,  or,  in  other 
words,  to  make  a  sale  with  a  reservation  to  the  vendor  of  a  right 
to  re})urchase  the  same  land  at  a  fixed  price  and  at  a  specified  time, 
would  be  to  transfer  to  the  Court  of  Chancery,  in  a  considerable, 
degree,  the  guardianship  of  adults  as  well  as  of  infants.  Such  con- 
tracts are  certainly  not  prohibited  either  by  the  letter  or  the  policy 
of  the  law.  But  the  policy  of  the  law  does  prohibit  the  conversion 
of  a  real  mortgage  into  a  sale.  And  as  lenders  of  money  are  less 
under  the  pressure  of  circumstances  which  control  the  perfect  andl 
free  exercise  of  the  judgment  than  borrowers,  the  effort  is  fre- 
<iuently  made  by  persons  of  this  description  to  avail  themselves 


MCI.]  L'owvAV   r.  Ai.i;.\  \\i)i:i!.  153 

:  iIk-  iulvaiitn;:*'  of  tlii.>  .-ii)icrit)rii  \ .  in  onlrr  t<i  ftbtaiii  iijci|iiiljjljli' 
inlv!iiita;;fs.  Fur  this  n'a>()n  ilic  li-aniii;,'  ol"  c(jurts  has  Ihtii  a;,'aiiisl 
tlic'in,  and  dnuljiful  nisi's  have  ;,'«'iicrally  ijecii  diridcil  to  he  mort- 
gages. But  as  a  conditional  sah*,  if  really  intended,  is  valid,  th  • 
inquiry  in  every  t-ase  must  )»••,  whether  the  eontraet  in  the  sj)eeini' 
cast'    is    a    seeuritv    for    the    n-pavment    of    monpy    or    an    aetual 

in  this  case  tlu'  form  of  the  (iced  is  not  in  itself  conclusive  eiiher 
\\;iy.  The  \v;iiit  of  a  covenant  to  rej)ay  the  nu)ney  is  not  comjjli-te 
evidence  that  a  conditional  saU*  was  intended,  but  is  a  circum- 
stance of  no  inconsidi'rahle  importance.  If  the  vendee  must  he 
restrained  to  his  principal'  and  interest,  that  princi|)al  and  interest 
ought  to  bo  secured.  It  is,  therefore,  a  necessary  ingredient  in  a 
mortgage  that  the  mortgagee  should  have  a  remedy  against  the 
person  of  the  debtor.  If  this  renu-dy  really  exists,  its  not  beijig 
reserved  in  terms  will  not  affect  the  ease.  But  it  must  exist  in 
order  to  justify  a  construction  which  overrules  the  express  wgrds 
of  the  instrument.  Its  existence,  in  this  ease,  is  certainly  not  to 
be  collected  from  the  deed.  There  is  no  acknowledgment  of  a  pre- 
existing debt,  nor  any  covenant  for  repayment.  An  action  at  law 
for  the  recovery  of  the  moiu'y  certainly  could  not  have  been  sus- 
tiiined;  and  if,  to  a  bill  in  chancery  praying  a  sale  of  the  premises, 
and  a  decree  for  so  miuh  money  as  might  remain  due,  I^obert 
Alexander  had  answered  that  this  was  a  sale  and  not  a  mortgage, 
<lear  j)roof  to  the  contrary  must  have  been  produced  to  justify  a 
<l«'eree  against  him. 

That  the  conveyance  is  made  to  trustees  is  not  a  circumstance  of 
much  weight.  It  manifests  an  intention  in  the  drawer  of  the  in- 
.«trument  to  avoid  the  usual  forms  of  a  mortgage,  and  introduce-? 
third  persons,  who  are  jn-rfect  strangers  to  the  transaction,  for  no 
"tiler  conceivable  purjio.-^e  than  to  entitle  William  Lyles  to  a  con- 
•  yance  subsecpient  to  the  non-i»ayment  of  the  .t'TOO  on  the  day 
\ed  for  its  j)ayment,  which  should  be  absolute  in  its  form.  This 
itention,  however,  would  have  no -influence  on  the  case,  if  th<- 
instnunent  wa-;  really  a  security  for  money  advanced  and  to  lie  re- 
paid. 

It  is  also  a  circumstanic  which,  though  light,  is  not  to  be  eiitiri'ly 
ilisn'garded,  that  the  twenty  acres,  which  were  admitted  to  be  j)ur- 
ihased  absolutely,  were  not  divided  and  conveyed  separately.  It 
would  seem  as  if  the  ])arties  eonsid(>red  it  at  lea<t  imssiblc  that  a 
division  might  be  useless. 

Having  nuide  these  observations  on  the  deed  itself  the  Court 
will  j>roceed  to  examine  tho.^e  extrinsic  cireiimstanees  whii'h  are  (o 
•letermine  whether  it  is  to  be  construed  a  sale  or  a  mortgage. 

It  is  certain  that  this  deed  was  not  given  to  secure  a  pre-existing 


154  SECURITY.  [chap.  II. 

debt.  The  connection  between  the  parties  commenced  with  this 
transaction.  The  proof  is  also  complete  that  there  was  no  nego- 
tiation between  the  parties  respecting  a  loan  of  money;  no  propo- 
sition ever  made  respecting  a  mortgage.  The  testimony  on  this 
siibject  is  from  Mr.  Lyles  himself  and  from  Mr.  Charles  Lee. 
There  is  some  contrariety  in  their  testimony,  but  they  concur  in 
this  material  point.  Mr.  Lyles  represents  Alexander  as  desirotis  of 
selling  the  whole  land  absolutely,  and  himself  as  wishing  to  decline 
an  absolute  purchase  of  more  than  twenty  acres.  Mr.  Lee  states 
Lyles  as  having  represented  to  him  that  Alexander  was  unwilling 
to  sell  more  than  twenty  acres  absolutely,  and  offered  to  sell  the 
residue  conditionally.  There  is  not,  however,  a  syllable  in  the 
cause,  intimating  a  proposition  to  borrow  money  or  to  mortgage 
property.  No  expression  is  proved  to  have  ever  fallen  from  Robert 
Alexander  before  or  after  the  transaction  respecting  a  loan  or  a 
mortgage.  He  does  not  appear  to  have  imagined  that  money  was 
to  be  so  obtained ;  and  when  it  became  absolutely  necessary  to  raise 
money,  he  seems  to  have  considered  the  sale  of  property  as  his 
only  resource.  To  this  circumstance  the  Court  attaches  much  im- 
portance. Had  there  been  any  treaty,  any  conversation  respecting 
a  loan  or  a  mortgage,  the  deed  might  have  been,  with  more  reason, 
considered  as  a  cover  intended  to  veil  a  transaction  differing  in 
reality  from  the  appearance  it  assumed.  But  there  was  no  such 
conversation.  The  parties  met  and  treated  upon  the  ground  of  sale 
and  not  of  mortgage. 

It  is  not  entirely  unworthy  of  notice  that  William  Lyles  was  noi 
a  lender  of  money,  nor  a  man  who  was  in  the  habit  of  placing  his 
funds  beyond  his  reach.  This,  however,  has  not  been  relied  upon, 
because  the  evidence  is  admitted  to  be  complete  that  Lyles  did  not 
intend  to  take  a  mortgage.  But  it  is  insisted  that  he  intended  to 
take  a  security  for  money,  and  to  avoid  the  equity  of  redemption; 
an  intention  which  a  Court  of  Chancery  will  invariably  defeat. 
His  not  being  in  the  practice  of  lending  money  is  certainly  an  ar- 
gument against  his  intending  this  transaction  as  a  loan,  and  the  evi- 
dence in  the  cause  furnishes  strong  reason  for  the  opinion  that 
Robert  Alexander  himself  did  not  so  understand  it.  In  this  view 
of  the  case  the  proposition  made  to  Lyles,  being  for  a  sale  and  not 
for  a  mortgage,  is  entitled  to  great  consideration.  There  are  other 
circumstances,  too,  which  bear  strongly  upon  this  point. 

The  case,  in  its  own  nature,  furnishes  intrinsic  evidence  of  the 
improl)ability  that  the  trustees  would  have  conveyed  to  William 
Lyles  without  some  communication  with  Robert  Alexander.  They 
certainly  ought  to  have  known  from  himself,  and  it  was  easy  to 
procure  the  information,  that  the  money  had  not  been  paid.  If  he 
had  considered  this  deed  as  a  mortgage  he  would  naturally  have 


M;c'.  I.]  CONWAY    l'.    ALKX ANDKU.  155 

nsisti'd  the  conveyance,  and  it  is  prohyblo  that  the  tnistcos  wouiil 
have  declined  making'  it.  This  jirobaltility  is  ver}'  much  strcn^th- 
ene<l  hy  the  facts  which  are  stated  hy  Mr.  Lee.  Tlie  dcch'iration 
made  to  him  \)\  LyU's,  after  havin;,'  carried  the  deed  drawn  l)y  Mr. 
Lee  to  Mr.  Hooc,  that  the  trustees  were  unwilling  to  execute  it 
until  the  assent  of  Alexander  could  be  obtained,  and  the  directions 
^Mven  to  api)ly  for  that  assent,  furnish  strong  reasons  for  tiie 
opinion  that  this  assent  was  given. 

It  is  also  a  very  material  circumstance  that,  after  a  public  sab- 
from  Lyles  to  Conway,  and  a  partition  between  Conway  and 
Charles  Alexander,  Conway  took  possession  of  the  premises,  ancl 
iu'gan  those  e\i)ensivi'  improvements  which  have  added  so  muih 
to  the  value  of  the  pro[)erty.  These  facts  must  be  presumed  to 
have  been  known  to  Tiobert  Alexander.  They  passed  within  his 
view.  Yet  his  most  intimate  friends  never  heard  him  suggest  that 
he  retained  any  interest  in  the  land.  Tn  this  aspect  of  the  case,  too, 
the  will  of  Robert  Alexander  is  far  from  !)eing  unimportant.  That 
he  mentions  forty  acres  sold  to  lialdwin  Dade,  and  does  not  men- 
tion one  hundred  and  forty  acres,  the  residue  of  the  same  tract, 
can  be  ascribed  only  to  the  opinion  that  the  residue  was  no 
longer  his. 

This,  then,  is  a  case  in  which  there  was  no  previous  debt,  no  loan 
in  contemplation,  no  stipulation  for  the  repayment  of  the  money 
advanced,  and  no  proposition  for  or  conversation  about  a  mort- 
gage. It  is  a  case  in  which  one  party  certainly  considered  himself 
as  making  a  purchase,  and  the  other  appears  to  have  considered 
himself  as  making  a  conditional  sale.  Yet  there  are  circumstances 
which  nearly  balance  these,  and  have  induced  much  doubt  and 
hesitation  in  the  mind  of  some  of  the  court. 

The  sale,  on  the  part  of  Alexander,  was  not  completely  volun- 
tary. He  was  in  jail  and  was  much  pressed  for  a  sum  of  money. 
Though  this  circumstance  does  not  deprive  a  man  of  the  right  to 
dispose  of  his  property,  it  gives  a  complexion  to  his  contracts,  and 
must  have  some  influence  in  a  doubtful  case.  The  very  fact  that 
the  sale  was  conditional  implies  an  ex})ectati<m  to  redeem.  .\  con- 
ditional sale  made  in  such  a  situation  at  a  price  bearing  no  pro- 
portion on  the  value  of  the  property  would  bring  suspicion  on  the 
whole  transaction.  The  excessive  inade(|uacy  of  |)rice  would  in 
itself,  in  the  opinion  of  some  of  the  judges,  furnish  irresistible 
proof  that  a  sale  could  not  have  be<'n  intended.  If  hinds  were  sold 
at  £r)  per  acre  conditionally,  which,  in  fact,  were  worth  £1.'),  or 
i""20,  or  £50  per  acre,  the  evidence  furnished  by  thi<  fact,  that  only 
a  security  for  money  could  be  intemled,  would  b»',  in  the  o|>inion 
•>f  three  judges,  so  strong  as  to  overrule  all  the  opposing  testimony 
in  the  cause. 


15G  SECURITY.  [CHAP.  II. 

But  ilic  testimony  on  this  point  is  too  uncertain  and  conflicting 
to  prevail  against  "the  strong  proof  of  intending  a  sale  and  pur- 
chase, which  was  stated.  The  sales  made  by  Mr.  Dick  and  Mr. 
Hajtshorne  of  lots  for  building,  although  of  land  more  remote 
from  the  town  of  Alexandria  than  that  sold  to  Lyles,  may  be  more 
valnable  as  building  lots,  and  may  consequently  sell  at  a  much 
higher  price  than  this  ground  would  have  commanded.  The  rela- 
tive value  of  property  in  the  neighborhood  of  a  town  depends  on 
so  many  other  circumstances  than  mere  distance,  and  is  so  different 
at  different  times,  that  these  sales  cannot  be  taken  as  a  sure  guide. 
That  twenty  acres,  part  of  the  tract,  were  sold  absolutely  for  £5  per 
acre;  that  Lyles  sold  to  Conway  at  a  very  small  advance;  that  he 
liad  previously  offered  the  property  to  others  unsuccessfully;  that 
it  was  valued  by  several  persons  at  a  price  not  much  above  what 
he  gave;  that  Robert -Alexander,  although  rich  in  other  property, 
made  no  effort  to  relieve  this,  are  facts  which  render  the  real  value, 
at  the  time  of  sale,  too  doubtful  to  make  the  inadequacy  of  price  a 
circumstance  of  sufficient  weight  to  convert  this  deed  into  a  mort- 

It  is,  therefore,  the  opinion  of  the  Court  that  the  decree  of  the 
Circuit  Court  is  erroneous  and  ought  to  be  reversed,  and  that  the 
cause  be  remanded  to  that  court  with  directions  to  dismiss  the  bill.^ 

Decree  reversed. 


COYLR  V.  Davis,  IIG  U.  S.  108  (1885).  "The  volume  of  proof 
taken  on  the  issue  thus  raised  is  large,  and  the  evidence  is  contra- 
dictory, as  is  common  in  such  cases  where,  admittedly,  a  loan  of 
some  kind  was  at  some  time  talked  about.  The  conveyance  to  Davis, 
of  the  undivided  one-third  interest  of  Coyle,  being  to  him,  his  heirs 
and  assigns  forever,  with  a  covenant  of  warranty,  and  without  a 
defeasance,  either  in  the  conveyance  or  in  a  collateral  paper — the 
parol  evidence  that  there  was  a  debt,  and  that  the  deed  was  in- 
tended to  secure  it  and  to  operate  only  as  a  mortgage,  must  be  clear, 
iin('(|ui\ocal  and  convincing,  or  the  presumption  that  the  instru- 
ment is  what  it  purports  to  be  must  prevail.  This  well-settled  rule 
of  equity  jurisprudence  was  applied  by  this  court  in  Howland  v. 
Blnl-p.  97  T).  S.  024,  02(5.  The  case  stated  in  the  bill  heroin  is  not 
supported  ])y  the  weight  of  evidence.  On  the  contrary,  it  sustains 
Ilic  allegations  of  the  answer.     Especially,  the  force  of  the  letter  of 

'  ]{obinfion  V.  C'ropscp.  2  Kdw.  Ch.  (N.  Y.)  138  ( 18.3.'V)  ;  Rich  v.  Donne, 
.T.  VI,.  125  (1S()2);  Cornell  v.  Hall,  22  Mich.  377  (1871);  Hanford  v. 
JUrs.'^iny,  80  111.  188   (187.^))  ;  RainhiJl  v.  Zanders,  87  N.  Y.  578   (1882). 


<K\  I.]  lU  SSKLI,    r.    SOITIIAIIU.  lo, 

Cuvlc  io  Davis,  of  .luiu'  1 1,  lS(i7,  is  not  broken  by  any  s;ni>taciory 
(•x|tlaiiati<>n.  It  woiilil  st-rvc  i\n  useful  puiposi-  to  discuss  the  Ifsti- 
iiiony  at  k'ii<,^tii.  There  is  but  oiu-  point  to  which  it  is  needful  to 
refer.  CJreat  stress  is  hiid,  in  eases  of  this  kind,  on  inade(jua<-y  of 
consideration  where  theie  is  a  i(»nsi(h'rabh'  dispro|)ortion  Ijetween 
the  priee  paid  and  the  real  value  of  the  properly  (Hiisscll  v.  Son- 
lliard,  VI  How.  i;i;),  MS).  There  is  testimony  on  both  sides,  on 
the  question  of  disjiroixtrtion,  in  this  ease.  Hut  the  pre|>otitleranei' 
is  v«'ry  lar;:e  on  the  part  of  Davis,  that  the  share  of  Coyh-  in  the 
property  was  sold  for  about  its  sale  value,  in  view  of  its  condition. 
There  was  a  jjoorly  built  and  poorly  arran^ied  buildinj,'  on  the  prem- 
i>es,  wliieh  was  ineapablc  of  actual  partition;  the  law  did  not  per- 
mit a  partition  by  a  sale  in  inritum.  and  Coyle's  interest  was  a 
minority  interest.  The.se  considerations  made  it  difKcuIt  of  sale 
at  a\l"— Per  Blatchford,  J. 


Rrs.sMLL  V.  .^orTII.VK'h. 

Si  riu:.ME  Court  of  the  United  States,  ISol. 

{\-2  Ifoir.  \:v.).) 

This  was  an  appeal  from  the  Circuit  Court  of  tlie  United  States 

I-  the  Distriet  of  Kentucky,  sitting  as  a  court  of  ecjuity. 

It  was  a  bill  filed  by  Russell,  the  appellant,  to  redeem  what  he 
culled  a  mortgage,  and  the  (piestion  in  the  ease  was  whether  it  was 
a  mortgage  or  conditional  sale.  Tin-  facts  are  set  forth  in  tlu'  opin- 
ion of  the  court.  U])on  the  trial  the  Circuit  Court  dismi^.-e(l  ih.' 
''•II,  and  Kussell  appealed  to  this  e(mrt. 

It  was  argued  by  Mr.  I'mlrrirood  and  Mr.  Mnrrhi-iul.  with  whom 
v.as  Mr.  Clni/.  for  the  appellant,  and  by  Mr.  Xicholas  for  the  ap- 
))ellee. 

Mil.  Justice  Curtis  delivered  tlu'  opinion  (d"  the  court." 

This  is  a  suit  in  e«piity  to  redeem  a  mortgage,  brought  lure  by 
'ippeal  from  the  Circuit  Court  of  the  I'nited  Siati-s  for  the  l>istri<-t 

Kentucky. 

On  the  "J  1th  day  of  Sepliinlter,   js-j;,  Hu.-.>ell,  the  eom|ilainani. 

tivcyed,  by  an  absolute  deed   in   fee-simple,  to  .lames  Southard. 

'  ea>ed,   whose   brother  and   deviser,    Daui"!    IJ     Siuihard.   is   tho 

rmtions  ti  tlic  opinion,  dcaliiij;  villi  fon'i;;n  iiiii'^lion',  Iium-  Immmi 
omitted. 


158  SECURITY.  [CHAP.    ,1. 

]>rincipal  party  defendant  in  this  bill,  a  farm,  containing  two  hun- 
dred and  sixteen  acres,  situated  about  two  miles  from  the  city  of 
Louisville.  At  the  time  the  deed  was  delivered,  and  as  part  of  the 
same  transaction,  Southard  gave  to  Russell  a  memorandum,  the 
terms  of  which  are  as  follows : 

"  Gilbert  C.  Russell  has  sold  and  this  day  absolutely  conveyed 
to  James  Southard,  said  Russell's  farm  near  Louisville,  and  the 
tract  of  land  belonging  to  said  farm,  containing  two  hundred  and 
sixteen  acres,  and  the  possession  thereof  actually  delivered  on  the 
following  terms,  for  the  sum  of  $4929. 8U  cents,  which  has  been 
paid  and  fully  discharged  by  the  said  Southard  as  follows,  viz., 
first  two  thousand  dollars,  money  of  the  United  States,  paid  in 
hand ;  secondly,  the  transfer  of  a  certain  claim  in  suit  in  the  Jeffer- 
son Circuit  Court,  Kentucky,  in  the  name  of  James  Southard 
against  Samuel  M.  Brown  and  others,  now  amounting  to  the  sum 
of  $1558.87^ ;  and  thirdly,  the  transfer  of  another  claim  in  the 
same  court,  in  the  name  of  Daniel  R.  Southard  against  James  C. 
Johnston  and  others,  now  amounting  to  the  sum  of  $1270.94,  as  by 
reference  to  the  records  for  the  more  precise  amounts  will  more 
fully  appear.  The  said  Gilbert  C.  Russell  has  taken,  and  doth 
hereby  agree  to  receive  from  said  Southard  aforesaid,  two  claims 
against  Brown,  &c.,  and  James  C.  Johnston,  &e.,  as  aforesaid, 
without  recourse  in  any  event  whatever  to  the  said  James  Southard, 
or  his  assignor,  Daniel  R.  Southard,  of  the  claim  of  said  Johnston, 
&c.,  or  either,  and  to  take  all  risk  of  collection  upon  himself,  and 
make  the  best  of  said  claim  he  can.  The  said  James  Southard 
agrees  to  resell  and  convey  to  the  said  Russell  the  said  farm  and 
two  hundred  and  sixteen  acres  of  land,  for  the  sum  of  forty-nine 
hundred  and  twenty-nine  [dollars]  81^  cents,  payable  four  months 
after  the  date  hereof,  with  lawful  interest  thereon  from  this  date. 
And  the  said  Russell  agrees,  and  binds  himself,  his  heirs,  &c.,  that 
if  the  said  sum  and  interest  be  not  paid  to  the  said  James  Southard, 
or  his  assigns,  at  the  expiration  of  four  months  from  this  date,  that 
then  this  agreement  shall  be  at  an  end,  and  null  and  void;  and  the 
wife  of  said  Russell  shall  relinquish  her  dower  within  a  reasonable 
time  as  per  agreement  of  this  date.  This  agreement  of  resale  by 
ihe  said  James  Southard  to  the  said  Russell,  is  conditional  and 
Avithout  a  valuable  consideration,  and  entirely  dependent  on  the 
payment,  on  or  before  the  expiration  of  four  months  from  and 
after  the  date  hereof,  of  tlie  said  sum  of  $4929. 8U,  and  interest 
thereon  from  this  date  as  aforesaid.  And  this  agreement  is  to  be 
valid  and  obligatory  only  upon  the  said  James  Southard,  upon  the 
punctual  payment  thereof  of  the  sum  and  interest  as  aforesaid,  by 
the  said  Gilbert  C.  Russell. 

''  In  witness  whereof  the  j)arties  aforesaid,  luive  hereunto  set  their 


sK  .  I.]  UUSSEI.l.    r.    SOLTIIAHD.  169 

liaiuls  ami  seals,  at  Louisville,  Kentucky,  on  this  *^lth  day  of  Sep- 
(cnibor,  1827. 

"GlLBKUT    C.    RlSSELL,       [SkaL.] 

"Jamks  SoiTiiAui),  [Seal.] 

"  Witness  present,  signed  in  duplicate — 
J.  V.  Johnston." 

The  first  (iiiestion  is  whether  this  transaction  was  a  mortgage, 
«rr  a  sale.    .    .    . 

The  deed  and  mcmoranduni  certainly  import  a  sale ;  the  ques- 
iion  is,  if  their  form  and  terms  were  not  adopted  to  veil  a  transac- 
tion diiTi'ring  in  reality  from  the  appearance  it  assumed? 

In  examining  this  (piestion  it  is  of  great  importance  to  inquire 
whether  the  consideration  was  adequate  to  induce  a  sale.  When 
no  fraud  is  practised,  and  no  inequitable  advantages  taken  of 
jiressing  wants,  owners  of  property  do  not  sell  it  for  a  considera- 
tion manifestly  inadecjuate,  and,  therefore,  in  the  cases  on  tiiis 
subject  great  stress  is  justly  laid  upon  the  fact  that  what  is  alleged 
to  have  been  the  price  bore  no  proportion  to  the  value  of  the  thing 
said  to  have  been  sold  {Conway  v.  Alexander,  7  Cranch,  241 ; 
]f„rris-  V.  Xbon.  1  How.  120;  Vernon  v.  BciheU.  2  Eden,  110; 
"Idhani   V.    Ilalley,   2   J.   J.    Marsh.    114;   Edrington    v.    Harper, 

^.  J.  Marsh.  354). 

Fpon  this  important  fact  the  evidence  leaves  the  court  in  no 
<loubt.  The  farm,  containing  216  acres,  was  about  two  miles  from 
Louisville,  and  abutted  on  one  of  the  j)rincipal  highways  leading 
to  that  city.  A  dwelling-house,  estimated  to  have  cost  from  $10.- 
000  to  $12,000,  was  on  the  land. 

In  May,  182(;,  about  10  months  before  this  alleged  sale,  Itussell 
purchased  the  farm  of  John  Floyd,  and  paid  for  it  the  sum  of 
*12.Im;o.  Some  attempt  is  made  to  show,  by  the  testimony  of  Mr. 
'I'hurston,  that  this  sum  was  not  paid  as  the  value  of  the  land ; 
l>ut  what  he  says  upon  this  point  is  mere  conjecture,  deduced  by 
him  from  hearsay  statements,  and  cannot  be  allowed  to  have  any 
weight  in  a  court  of  justice.  There  is  some  conflict  in  the  evi- 
<lence  respecting  the  state  of  the  fences  and  the  agricultural  con- 
dition of  the  lands  at  the  time  in  question,  but  we  do  not  find 
any  jiroof  that  the  lands  had  been  ])ermanently  run  di)wn.  or  ex- 
hauste<l :  and  considering  the  |)rice  paid  hv  Hussell.  and  the  amount 
<'xpended  l»y  Wing,  his  agent,  during  tlie  sixteen  months  he  man- 
aged the  fiirni.  we  tliinl<  the  evidence  shows  that,  though  the  fence-s 
and  ltuilding>  were  not  in  tlie  best  condition,  yet  their  state  wa-* 
not  such  as  to  detract  hirgely  from  the  value  of  tlie  property.  The 
consideration  for  the  alleged  sale  was  $2(><n»  in  ea<h.  and  the  as- 
signment of  two  elaim-i  then  in  suit,  ainoiint ijii;.  with  the  intercist 


160  SECURITY.  '  [chap.  II. 

computed  thereon,,  to  $28-?9.81.  not  finally  rcauced  to  money  by 
Russell,  till  October,  1830,  upward  of  three  years  after  the  assign- 
ment. j\Iaking  due  allowance  for  the  state  of  the  currency  in 
Kentucky  at  that  time,  the  worst  effects  of  which  seem  to  have 
been  then  passing  away,  and  which  must  be  supposed  to  have 
affected  somewhat  the  value  of  the  claims  he  received,  as  well  as  of 
the  property  he  conveyed,  we  cannot  avoid  the  conclusion  that  this 
consideration  was  grossly  inadequate ;  and  therefore  wc  must  take 
along  with  us,  in  our  investigations,  the  fact  that  there  was  no  real 
proportion  between  the  alleged  price  and  the  value  of  the  prop- 
erty said  to  have  been  sold.  We  have  not  adverted  particularly  to 
the  opinions  of  witnesses  respecting  the  value  of  the  property,:  be- 
cause they  have  not  great  weight  wdth  the  court,  compared  with  the 
facts  above  indicated ;  but  there  is  a  general  concurrence  of  opinion 
that  the  value  of  the  farm  largely  exceeded  the  alleged  price. 

It  appears  that  Russell  had  intrusted  the  care  of  this  farm  to  an 
agent  named  Wing,  who  had  contracted  debts  for  which  Russell 
had  been  sued,  on  coming  to  Louisville  from  Alabama,  where  he 
resided.  He  was  a  stranger,  without  friends  or  resources  there,  ex- 
cept this  farm,  and  in  immediate  and  pressing  want  of  about  $'300.0 
in  cash.  Southard,  though  not  proved  to  have  been  a  lender  of 
money  at  usurious  rates  of  interest,  is  shown  to  have  been  possessed 
of  active  capital,  and  not  engaged  in  any  business  except  its  man- 
agement. Russell  certainly  attempted  to  sell  the  farm.  Colonel 
Woolley  testifies, — *'  Russell  was  anxious  to  sell ;  indeed  he  was  im- 
portunate that  I  should  purchase."  And  a  letter  is  produced  by 
the  defendant,  D.  R.  Southard,  written  to  James  Southard,  hf 
Wing,  containing  a  proposal  for  a  sale.     The  letter  is  as  follows : 

"  Sunday,  Noon. 
"  Sir  :  Having  had  some  conversation  in  relation  to  Colonel  Rus- 
sell's plantation,  I  will  take  the  liberty  of  submitting  for  your  con- 
sideration, 1st,  how  much  will  you  give  for  the  place,  crops,  stock, 
utensils,  and  implements,  or  how  much  without  the  same,  to  be  paid 
as  follows:  in  one  sixth  cash  in  hand,  the  balance  in  one,  two,  three, 
four,  and  five  equal  annual  instalments,  wdiich  may  be  extinguished 
at  any  time  with  whiskey,  pork,  bacon,  flour,  hemp,  bale  rope,  cotton 
bagging,  at  the  New  Orleans  prices  current,  deducting  therefrom 
freight  accustomary.  Mules  and  fine  horses  will  now  be  taken  at 
appraised  valuation. 

"  Respectfully  yours,  J.  W.  Wing. 

"  Mr.  Southard. 

"  N.  B. — Please  leave  an  answer  for  me  at  Allan's,  say  this 
evening.  Yours,  &c.,  J.  W.  W. 


8KC.  I.J 


UrsSKLL    r.    SOLTIIAUI).  I'il 


It  does  not  apinar  that  any  price  was  spokc-n  of  Ix-lwocn  Uu^^oll 
and  Colonel  Woollcy,  wlio  pi'rcni|)torily  refused  to  purehase;  nor 
is  any  sum  of  money  mentidued  in  this  U-ttcr  of  Win;x;  I'ut,  liear- 
in^'  in  mind  liusselTs  necessity  to  liav-'  $-J0(M)  in  easli,  the  olfer  t<» 
take  one-sixth  casli,  and  the  l)ahinee  in  oni-,  two,  three,  four,  and 
live  annual  instalments,  indicates  that  Uiissei!  then  expected  ahout 
)j;r.',(it»(t  for  the  jjpoperty,  and  had  that  sum  in  view  as  the  i)ricc. 
when  these  terms  were  proi)oscd.  This  offer  to  sell  dilfers  so  v.idcly 
from  the  terms  of  the  written  memorandum,  tiiat  it  certainly  doe- 
not  aid  in  showin<;  that  the  actual  transaction  was  a  sale.  Peter 
Wood  testifies  that  he  heard  a  conversation  hetween  James  South- 
ard and  Colonel  Russell,  ahout  the  transfer  of  the  farm  from  Rus- 
sell to  Southard,  in  which  Mr.  Southard  proposed  to  advance  money 
to  Russell  upon  the  farm;  that  Russell  told  Southard  ahout  what 
he  had  i)aid  for  the  farm,  $13,000  or  $14,000,  and  that  he  should 
consider  it  a  sacrifice  at  $10,000;  but  no  proposal  was  made  to  jriv--. 
or  take,  any  price  for  the  farm.  That  some  time  after,  Southanl 
told  him  he  had  advanced  Russell  iMtwcen  $1000  and  $r)0o0  on 
the  place,  hut  that,  in  ca.se  he  owned  the  jdace.  it  would  cost  him 
$10,()(>i>.  The  <]jeneral  character  of  this  witness  for  truth  and  ver- 
acitv  is  attacked  by  the  defendants,  and  sujiported  by  the  plaintiff. 
His  credibility  finds  support  in  the  consistency  of  his  statements 
with  the  prominent  facts  jtroveil  in  the  case.  This  is  all  the  proof 
touching'  the  ne^^otiations  which  led  to  the  contract;  but  there  is 
somi!  evidence  bearinj;  directly  on  the  real  understandiufr  of  the 
parties.  Doctor  Johnston  was  the  subscribing;  witness  to  the  writ- 
ten memorandum.  lie  testifies  that  "James  Southard  and  (iilt)ert 
C.  Russell,  I  think  on  the  same  <lay,  presented  the  af!jreem<'nt,  and 
asked  me  to  witness  the  same,  which  T  did.  My  understandinii  of 
the  contract  was  both  from  Southard  and  Russell,  and  my  dis- 
tinct inijiression  is,  that  Russell  was  to  ]iay  the  money  in  four 
months,  and  take  back  the  farm."  The  intelli/^ence  and  accuracy. 
as  well  as  the  fairness  of  this  witness,  are  not  controverted;  ami 
if  he  is  believed,  the  transaction  was  a  loan  of  money,  upon  the 
security  of  his  farm.  It  is  the  o|)inion  of  the  court  that  such  was 
the  real  transaction.  The  amount  and  iialun^  of  what  was  ad- 
vanced, compared  with  the  vahie  <d'  the  farm,  the  testimony  of 
Wood  as  to  the  ofTer  of  Southard  to  make  an  advaiu^<>  of  money  on 
the  farm,  and  his  sid).<e(iuent  declaration  that  he  had  done  so,  and 
the  information  <;iven  bv  both  parties  to  Poetor  Johnston,  that 
Russell  was  to  pav  the  monev  at  the  end  of  four  mtmths,  j^resent 
a  case  of  a  loan  on  securitv,  an<l  are  not  overcome  by  the  an-;w«'r 
of  Southard  and  the  written  memoramlum. 

It  is  triie.  Paniel  R.  Southard,  answering:,  as  he  declares,  from 
j'ersonal  knowledge,  sets  out,  with  great  minuteness,  a  ca-^e  of 
11 


10-2  SECURITY.  [CHAP,  irj 

an  absolute  and  unconditional  sale;  the  written  contract  by  liisi 
brother  to  reconvey  being,,  as  he  says,  a  mere  gratuity  conferred  on 
Eussell  the  next  day,  or  the  next  but  one,  after  this  absolute  sabi 
and  conveyance  had  been  fully  completed.  But  this  account  of  the] 
transaction  is  so  completely  overthrown  by  the  proofs,  that  it  was 
properly  abandoned  by  the  defendants'  counsel,  as  not  maintain- 
able. We  entertain  grave  doubts  whether,  after  relying  on  an  abso- 
lute sale  in  his  answer,  it  is  open  to  him  to  set  up  in  defence  a  con- 
ditional sale ;  but  it  cannot  be  doubted,  that  the  least  effect  Justly 
attributable  to  such  a  departure  from  the  facts,  is  to  deprive  his 
answer  of  all  weight,  as  evidence,  on  this  part  of  the  case. 

In  respect  to  the  written  memorandum,  it  was  clearly  intended 
to  manifest  a  conditional  sale.  Very  uncommon  pains  are  taken 
to  do  this.  Indeed,  so  much  anxiety  is  manifested  on  this  point,  as 
to  make  it  apparent  that  the  draftsman  considered  he  had  a  some- 
what difficult  task  to  perform.  But  it  is  not  to  be  forgotten,  that 
the  same  language  which  truly  describes  a  real  sale,  may  also  be 
employed  to  cut  off  the  right  of  redemption,  in  case  of  a  loan  on 
security;  that  it  is  the  duty  of  the  court  to  watch  vigilantly  these 
exercises  of  skill,  lest  they  should  be  effectual  to  accomplish  what 
equity  forbids;  and  that,  in  doubtful  cases,  the  court  leans  to  the 
conclusion  that  the  reality  was  a  mortgage,  and  not  a  sale  (Conway, 
v.  Alexander,  7  Cranch,  218;  Flagg  v.  Blann,  2  Sumner,  533: 
Secrest  v.  Turner,  2  J.  J.  Marsh.  471 ;  Edrington  v.  Harper,  3  J.  J, 
:\rarsh.  354;  Crane  v.  BonneU,  1  Green,  Ch.  R.  264;  Eoherfson  v 
Caniphell,  2  Call,  421;  Poindexicr  v.  McCannon,  1  Dev.  Eq.  Cas. 
373). 

It  is  true,  Eussell  must  have  given  his  assent  to  this  form  oi 
the  memorandum ;  but  the  distress  for  money  under  which  he  then 
was,  places  him  in  the  same  condition  as  other  borrowers,  in  numer- 
ous cases  reported  in  the  books,  who  have  submitted  to  the  dicta- 
tion of  the  lender  under  the  pressure  of  their  wants ;  and  a  courl 
of  equity  does  not  eonsidc*r  a  consent,  thus  obtained,  to  be  sufficient 
to  fix  the  rights  of  the  parties.  ''  Xecessitous  men,"  says  the  Lord 
Chancellor,  in  Vernon  v.  Bethcll,  2  Eden,  113,  "  are  not,  truly 
speaking,  free  men ;  but,  to  answer  a  present  emergency,  will  sub 
mit  to  any  terms  that  the  crafty  may  impose  upon  them." 

Tlie  memorandum  does  not  contain  any  promise  by  Russell  to 
repay  the  money,  and  no  personal  security  was  taken;  but  it  is 
settled  that  this  circumstance  does  not  make  the  conveyance  les< 
effectual  as  a  mortgage  (Floj/er  v.  Lavington.  1  P.  Wms.  268 
Tmvley  v.  Hooper,  3  Atk.  278;  Scott  \.'  Fields,  7  Watts,  360 
Flagg  v.  Mann,  2  Sumner,  533 ;  Ancaster  v.  Mayer,  1  Bro.  C.  C 
454).  And  consequently  it  is  not  only  entirely  consistent  with  th( 
conclusion  that  a  mortffaffc  was  intended,  but  in  a  case  where  i| 


ml.]  KUSSELL    V.    SOUTHARD.  IG.'] 

w;i>  the  design  of  one  of  the  j)artie.s  to  elotlie  the  transaction  with 
tlu'  fi>rnis  of  a  sah',  in  order  to  cut  ofT  the  riglit  of  redemption,  it 
is  not  to  he  expected  that  the  party  wouhl,  hy  taking  jx-rsonal 
Kvurity,  etTectually  defeat  his  own  attenij)!  to  avoid  the  appearance 
<}{  a  loan. 

It  has  been  made  a  question,  indeed,  whether  the  absence  of  the 
iHTsonal  liability  of  the  grantor  to  rv\y.\y  the  money,  l)e  a  conclusive 
t»-st  to  determine  whether  the  conveyance  was  a  mortgage.  In 
Broun  v.  Deucy,  1  Sandf.  Ch.  11.  57,  the  cases  arc  reviewed  and  the 
result  arrived  at,  that  it  is  not  conclusive.  It  has  also  been  main- 
tained that  the  proviso,  or  condition,  if  not  restrained  by  word-; 
^howing  that  the  grantor  had  an  oj)tion  to  pay  or  not,  might  con- 
^ititute  the  grantee  a  creditor  {Ancastcr  v.  Maifcr,  1  Rro.  C.  C.  404  ; 
'2  tJri'enl.  Cruise,  82  n,  3).  But  we  do  not  think  it  necessary  to 
<letermine  either  of  these  questions ;  because  we  are  of  opinion  that 
in  this  case  there  is  sulTicient  evidence  that  the  relation  of  debtor 
and  creditor  was  actually  created,  and  tiiat  the  written  memo- 
randum ascertains  the  amount  of  the  debt,  though  it  contains  no 
promise  to  pay  it.  In  such  a  case  it  is  settled,  that  an  action  of 
a^^uml>sit  will'lie  (Tilson  v.  Warwick  Gas-Light  Co.,  4  B.  &  0.  9G8 ; 
Vatrs  V.  Asfon,  4  Ad.  &  El.  X.  S.  IS2;  Burnett  v.  Li/nrh,  .-,  B.  &  C. 
:)S«»;  Elder  V.  House,  15  Wend.  218).    ..    . 

The  conclusion  at  which  we  have  arrived  on  this  part  of  the  case 
ijs.  that  the  transaction  was,  in  substance,  a  loan  of  money  upon 
the  security  of  the  farm,  and  being  so.  a  court  of  equity  is  bound 
to  look  through  the  forms  in  which  the  contrivance  of  the  lender 
has  enveloped  it,  and  declare  the  conveyance  of  the  land  to  be  a 
mortgage.    .    .    . 

A  decree  is  to  be  entered,  reversing  the  decree  of  the  court  l)elow. 
with  costs,  declaring  that  the  conveyance  from  Kussell,  the  com- 
plainant, to  James  Southard,  was  a  mortgage,  and  that  Kussell  is 
«ntitled  to  redi'em  the  same,  and  remanding  the  cause  to  the  C'ir- 
euit  Court,  with  directions  to  proceed  therein  in  conformity  with 
the  opinion  of  this  court  and  as  the  principles  of  ecpiity  shall  re- 
tiuire.' 

MilUr    V.    Thomas,    14    III.    42.S     (IS.-).'});    Hearse    v.    Ford,    lUS    111.    In 
il«83)  ;  Voa  V.  Eller,  109  Ind.  200  (1880). 


164  SECURITY.  [CIIAI'.  ir;' 


MATTHEWS  v.  SHEEHAK 

Court  of  Appeals  of  New  York,  1877. 
(69  N.  Y.  585.) 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme 
Court  in  the  third  judicial  department,  affirming  a  judgment  in- 
favor  of  plaintiff  entered  upon  a  verdict. 

This  action  was  brought  by  plaintiff,  as  administratrix  with  the 
will  annexed,  of  Dennis  O'Keefe,  deceased,  to  recover  moneys 
alleged  to  have  been  collected  by  defendant  upon  a  policy  of  insur- 
ance issued  upon  the  life  of  said  O'Keefe,  and  assigned  by  him  to 
defendant  as  security  for  advances  made  by  the  latter. 

The  facts  appear  sufficiently  in  the  ojDinion. 

N.  C.  Moak  for  the  appellant. 

Esel^  Coioen  for  the  respondent. 

Earl,  J.  In  December,  18G9,  an  arrangement  was  made  between 
the  plaintiff's  testator,  O'Keefe,  and  the  defendant,  whereby 
O'Keefe  was  to  procure  a  policy  of  insurance  on  his  life  from  the 
Phoenix  Life  Insurance  Company,  and  assign  it  to  the  defendant, 
who  was  to  pay  the  premiums  and  have  the  benefit  of  the  policy, 
with  the  understanding  that  if  at  any  time  O'Keefe  desired  to 
redeem  the  policy,  he  could  do  so  by  paying  the  premiums  ad- 
vanced by  defendant,  with  the  interest  thereon.  In  pursuance  of 
this  arrangement,  O'Keefe  procured  the  company  to  issue  a  ])olicy 
on  his  life,  which  was  immediately  assigned  to  the  defendant  by  an' 
assignment  absolute  in  form,  and  he  paid  all  the  premiums  to  tlie- 
time  of  O'Keefe's  death  in  1874.  Before  that  time  O'Keefe.  for 
the  purpose  of  redeeming  the  policy,  offered  to  pay  the  defendant 
the  amount  advanced  by  him  for  the  premiums,  and  defendant  re- 
fused  to  take  the  money.  After  the  death  of  O'Keefe,  the  defend- 
ant received  from  the  insurance  company  the  amount  insured,  and 
retained  the  same,  refusing,  upon  plaintiff's  demand,  to  pay  any 
portion  thereof  to  her.  This  action  was  brought  to  recover  tlu 
sum  received  by  the  defendant,  less  the  amount  for  which  he  held 
the  policy  as  security.  Upon  the  trial,  the  facts  above  stated  a] 
pearing,  and  there  being  no  conflicting  evidence,  the  court  directed 
a  verdict  for  the  plaintiff. 

The  verdict  was  ])roperly  directed.  Upon  the  undisputed  evi- 
dence, O'Keefe  had  the  option  to  treat  the  policy  as  a  security  for 
the  premiums  paid  by  tlie  defendant,  and  to  redeem  the  sam(\ 
While  O'Keefe  was  not  bound  to  redeem,  or  personally  liable  for 
the  money  advanced  1)y  the  defendant,  there  was  sufficient  consid- 


.,■.1.]  M  A  iiiiKws  (.  siii;i:iiAN'.  165 

.i.ilioii    for  tlif  ill  ran^^'imiil    inatlc      O'Kccfr  siiliiiiilted   to  cxiiiii- 
iiialioii.  jtrocurcd  his  lilV  (o  he  iiisuri'd,  ami  as>i;,'iu'(l  the  )t<)licy  to 
I'lo  ik'feiulant  in  coiisicU-ration  that  the  (Icftiuhiiit  woiiM  pay  the 
ii'iniuin.s  and  ;,'ive  him  the  option  to  rfd«'ciM.     'I'hc  sul)-;tancc  and 
iral  ofTi'ct  of  tlu'  transaction  was  to  make  the  defendant  a  nmrl- 
iiri't-  f>f  thi'  |)oliiy  to  st'enre  him  f<»r  the  premiums  ])aid,  and  he 
-aid   not    claim   an   absolute   title   thiTcto,  except    upon    O'Keefc'.s 
.ilurc  to  cMici^c  his  option  to  redeem.     This  was  iut[  sim|)ly  an 
_reement   liv  the  defendant   to  sell  to  O'Keefe,  upon  j)aymcnt  hy 
liim  of   the  amount   of   the   premiums   advanced   with    interest,   a 
nolicy  absolutely  beIoni,Mn^i,f  t(t  the  defendant,  an  affreement   void 
iidcr  the  statute  of  frauds,  because  there  was  no  writin;;  or  part 
lyment.     It   was   an   afjreement   that   the  defendant   mi.uht   take 
!:d  hold  the  jKtliey  as  si'curity  and  the  ri<,dit  to  redei-m  attended 
the  policy  int(»  the  defendant's  hands,  and  at  all  tinu-s  airectecl  his 
title.     Such  an  a^nwuienl   may  be  shown  by  jiarol.  althou;,di  the 
-signmcnt  be  absolute  in   fmiii    (Ihnhjcs  v.  Tiir  T.  M.  and  Fire 
'/.v.  f'o..  S  X.  Y.  410;  DfsjninI  v.  W(ilhrid;/r.  ]r,   S.  V.  .'i:  1  ;  //o/vi 
.  KofoUds.   l.i  X.  V.  CO.");  Ilojir  v.  Bdlcil.  .")S  \.  Y.  :5S(l ) . 
It   matters  not  that  O'Keefe  did  not   absolutely  jiromise  to  ]»ay 
the  amount   which   defendant   should   advance   for  the   premiums, 
'i'o  constitute  a  valid  mort<ja^e  it   is  not  essential  that  the  mort- 
ga^'ee  should  have  any  other  remedy  l)Ut  that  upon  his  mort<ra«:e. 
This  is  reeo<j::nized  by  the   Revised   Statutes  in   references  to  real 
-tate  mortgajres   (1   R.  S.   TiJD),  which  jjrovide  that   when  there 
lall  be  no  express  covenant  in  the  mortgage  for  the  payment  ot 
e  money  received,  and  no  bond  or  other  separate  instrument  to 
•  rure  such  payment,  the  renu'dies  of  the  mortgagee  shall  be  con- 
ned to  the  lands  mentioned   in  the  mortgage.     Tn  all   cases   the 
niedy  of  the  mortgagee  may  by  the  agreeinent  (d'  the  parties  be 
'  'infined  to  the  mortgage. 

It  is  sometimes  dillicult  to  dcti'rmine  whether  a  transaction  con- 
'ilutes  a  mortgage  or  an  absolute  sale  and  a  conditional   resale; 
nd  whether  it  shall  be  construed  to  be  one  or  the  other  depends 
upon  the  intention  of  the  parties  as  evidenced  by  the  instrunu^nt 
\ecuted,  an<l  all  the  circumstances  of  the  eas(>.     \o  giMieral  rule 
I'on  the  subject   can   be  laid   down   which   will   govern   all   cases, 
though   it   is  said   that   the   fact   that    there  was   no  debt    which 
'uld  be  personally  enforced  is  a  strong,  but  not  an  absolutely  con- 
oiling  circunjstanc*',  that  the  iransaction  was  not  a  mortgage,  but 
a  sale  and  a  conditional  resale,     hi  nil  tloiihtful  cases  <i  ritntnii' 
will  he  cntisfnird  In  he  a  morhjaijc  rntltrr  tinin  n  rondih'onnl  sn^r. 
iM'cnuse  in  the  ca.<e  (»f  a  mortgage  the  mortgagor,  although  he  b 
"ot  strictly  eomi>lied  with  the  terms  of  the  mortgage,  still  has  h' 
ight  of  redc^mption;  while  in  the  case  of  a  conditional  snie,  with- 


166  SECURITY.  [CHA.P.  nJ 

out  strict  compliance,  the  rights  of  the  conditional  purchaser  are 
forfeited  (Longuet  v.  Scawen,  1  Yes.  Sen.  402;  Glover  v.  Payn,^ 
19  Wend.  578;  Conway's  Exrs.  v.  Alexander,  7  Cranch,  218;! 
Edrington  v.  Harper,  3  J.  J.  Marshall,  354;  Floyer  v.  LavinglonA 
1  P.  Wnis.  268;  Chapman's  Admin'x  v.  Turner,  1  Colls.  K.  280; 
Wharf  V.  Howell,  5  Binney,  499).  In  Floyer  v.  Lavington,  it  is 
said:  "As  to  the  objection  that  there  was  no  covenant  for  the 
payment  of  the  principal  or  interest,  that  was  not  material;  the 
same  not  being  necessary  for  the  making  of  a  mortgage,  nor  yet 
necessary  that  the  right  should  be  mutual,  viz. :  for  the  mortgagee 
to  compel  the  payment  as  well  as  for  the  mortgagor  to  compel  a 
redemption;  since  such  conveyance,  as  in  the  present  case,  though 
without  any  covenant  or  bond  for  the  payment  of  the  money,  wouM 
yet  be  plainly  a  mortgage."  In  Brown  v.  Dewey,  1  Sandf.  Ch.  K. 
56,  it  was  held  that  "  the  absence  of  the  personal  liability  of  the 
grantor  to  repay  the  money  is  not  a  conclusive  test  in  deciding 
whether  the  conveyance  is  absolute  or  is  intended  as  a  security." 
In  Holmes  v.  Grant,  8  Paige,  243,  257,  Denio,  V.  C,  says:  "  It  is 
not  essential  that  the  personal  remedy  against  the  mortgagor  should 
be  preserved.  There  is  a  debt  quoad  the  redemption,  but  not  in- 
respect  to  the  personal  remedy."  In  Flagg  v.  Mann,  14  Pick.  467, 
Putnam,  J.,  says :  "  There  was  no  collateral  undertaking  on  the 
part  of  Luther  (the  grantor)  to  pay  the  money  which  Walker  and 
Fisher  (grantees)  should  advance  in  the  five  years;  so  there  was 
no  mutuality.  And  this  fact,  though  not  conclusive,  is  to  be  taken 
into  consideration  in  ascertaining  whether  the  transaction  was  a 
mortgage,  or  a  sale  with  a  contract  for  a  repurchase  upon  strict 
terms.  (See  also  Rice  v.  Rice,  4  Pick,  349.)  In  Kerr  v.  Gilmorc, 
G  Watts,  405,  Kennedy,  J.,  says :  "  The  want  of  a  personal  secur- 
ity for  the  repayment  of  the  money  has,  taken  in  connection  with 
other  circumstances,  been  regardp*^  as  tending  to  show  that  a  de- 
feasible purchase  and  not  a  ^  tr"  ge  was  intended,  but  this  cir- 
cumstance alone  has  nevri  '>een  held  sufficient  to  prevent  a  re- 
demption." Again,  "that  the  mortgagee  should  have  a  remedy 
against  the  person  of  the  mortgagor  also,  in  order  to  make  tho 
conveyance  a  mortgage,  is  more  than  I  can  assent  to."  ...  In 
Horn  V.  Keteltas,  supra,  Allen,  J.  says  that  the  circumstance  that 
there  was  no  agreement  to  pay  the  money  secured  is  one  entitled 
to  considerable  weight  in  determining  whether  a  conveyance  was 
intended  as  a  mortgage,  but  that  it  is  only  one  of  the  circum- 
stances to  be  considered,  and  not  conclusive;  and  Ch.  J.  Marshall, 
in  Conivay's  Exrs.  v.  Alexander,  7  Cranch,  218,  says:  "  "^hc  want 
of  a  covenant  to  repay  the  money  is  not  complete  evidence  that  a 
conditional  sale  was  intended,  but  is  a  circumstance  of  no  incon- 
siderable importance." 


SKI.  I.]  ILAGO    !•.    MANN'.  1G7 

It  is  clear,  tlRTofon'.  both  upon  jn-incipK'  and  authority,  that  the 
riroumstancr  that  O'Keefe  was  not  j)ersonally  oblifjated  to  pay  to 
tlie  defendant  the  amount  of  the  j)renuunis  which  he  should  ad- 
Aanco  is  not  absolutely  controlliiij,'  upon  the  question,  whether 
there  was  a  niort^M>:c,  or  a  sale  and  a  conditional  resale.  It  is  an 
important  (.iriumstanci-  in  such  cases  and,  in  the  conllict  of  evi- 
dence, not  unfreipiently  a  controlling;  "ne.  There  are  many  ca.scs, 
some  of  which  are  citi'd  by  the  learned  counsel  for  th"  a))pellanl, 
in  which  it  has  been  held  to  be  not  as  matter  of  law  conclusive,  but 
as  matter  of  fact  decisive.  If  we  should  hold  this  to  be  a  case  of 
conditional  resale,  and  that  the  consequence  follows  which  lias 
been  so  learnedly  argued  on  behalf  of  the  defendant,  that  the 
agreement  is  void  under  tbe  statute  of  frauds,  the  intention  of  tlu' 
parties  would  Ije  defeated.  This  is,  therefore,  a  case  where  the 
court  should  lean  to  hold  the  transaction  to  constitute  a  mortgage, 
thus  giving  Mhat  was  clearly  intended,  the  right  of  redemption. 

There  was  nothing  said  about  a  repurchase  or  a  resal(>,  or  a 
reassignment,  but  the  right  to  redeem  was  e.\])ressly  stipulated. 
The  language  used  shows  that  the  parties  intended  that  the  ]»olicy 
should  be  held  as  security  for  the  premiums  paid.  Such  a  con- 
struction is  at  least  as  admissible  as  any  other,  and  hence  the  court 
did  not  err  in  directing  a  verdict  for  the  j)laintiff. 

I  have  treated  the  transaction  as  a  mortgage,  but  it  is  unim- 
portant to  determine  whether  it  was  a  mortgage  or  a  pledge,  as 
the  same  course  of  reasoning  would  apply  and  the  same  conse- 
quences would  follow,  whether  it  was  one  or  the  other.  The  judg- 
ment must  therefore  be  atVirmed. 

All  concur. 

Judgment  nfjinncd. 


Flagg  v.  Manx,  '2  Sumrf.«4l-  -'1837).  On  the  1  Ith  of  May. 
1825,  Luther  Kichardson  conveyed*  certain  premises  in  Lowell. 
wlii(>h  were  then  subject  to  incumbrances  in  favor  of  Joshua  Ben- 
nett and  others,  to  his  brother  Prentiss  Kichardson  by  a  deed  of 
(]uitelaim  and  upon  a  secret  parol  trust  for  the  benefit  of  Luther. 
On  the  (1th  of  May.  IS'^C,  Luther  Richardson  and  his  wife  and 
Prentiss  Kichardson  executed  a  deed  of  quitclaim  of  the  premises 
to  Walker  and  Fisher,  for  the  consideration  of  $'.?000  (as  stated  in 
th(>  deed),  and  on  the  same  day  Walker  and  Fisher  exeeutcnl  a  bond 
for  $10,000  to  Luther  Kichardson  alone,  which  provides  that  the 
obligees  shall  reconvey  the  premises  to  Luther  Kiehard.son  wluii- 
ever,  within  five  years  fnun  date,  he  shall  repay  them  such  sums 
of  money  as  Ihey  shall  expend  in  discharging  incumbrances  ami 
making  improv(>ments  on  the  land.     .\t  the  same  time  Walk,  r  .md 


1()8  SECURITY.  [CHAP.  ,11. 

Fisher  cxec-iited  to  Luther  Kichardson  a  lease  of  a  part  of  the 
])ivmises  for  five  years  upon  the  annual  rent  of  one  cent  during  the 
term,  unless  the  premises  should  ])e  previously  redeemed  according 
to  the  provisions  of  the  bond.  A  few  days  after  this  transaction, 
Walker  and  Fisher  took  from  Bennett  a  quitclaim  deed  of  all  his 
right  in  the  premises,  and  shortly  thereafter  they  took  assignments 
of  several  mortgages  to  which  the  property  was  subject,  and  thus 
l)ecame  the  exclusive  owners  of  the  premises,  subject  only  to  the 
right  of  redemption  of  Luther  Eichardson  under  their  bond  to  him, 
above  referred  to. 

The  question  was  whether  the  conveyance  by  the  Richardsons  to 
Walker  and  Fisher,  connected  with  the  other  papers  and  circum- 
stances, amounted  to  a  mortgage  or  to  a  conditional  sale  of  the 
])remises.'' 

Story,  J.  (531.)  Did,  then,  the  transaction  between  the  Rich- 
ardsons and  Walker  and  Fisher  create  a  mortgage  in  the  premises? 
Some  things  are,  to  my  mind,  exceedingly  clear.  In  the  first  place, 
the  deed  to  Walker  and  Fisher,  and  the  bond  by  them  to  Luther 
Richardson,  are  to  be  treated  as  part  of  one  and  the  same  transac- 
tion. They  were,  in  my  judgment,  executed  at  the  same  time;  and 
if  not,  at  all  events  they  were  intended  to  be  contemporaneous  in 
their  object  and  operation.  Neither  was  to  be  of  any  force  or  valid- 
ity without  the  other.  The  bond  must  have  the  same  precise  effect 
and  construction,  as  if  it  were  inserted  in  the  body  of  the  deed.  If, 
Ijy  l)eing  so  inserted,  a  mortgage  could  be  created,  it  was  equally 
created  by  its  being  in  a  separate  instrument.  In  the  next  place,  no 
consideration  whatsoever  was  paid  by  Walker  and  Fisher  to  Luther 
or  Prentiss  Richardson,  on  account  of  the  deed,  at  the  time  of  the 
execution  of  it,  or  has  been  at  any  time  since.  It  is  true,  that  there 
is  the  consideration  of  the  thousand  dollars  stated  in  the  deed;  but 
it  was  purely  nominal.  No  person  pretends  that  that  sum  or  any 
other  sum  was  in  fact  paid,  or  intended  to  be  paid.  If  this  were 
the  whole  case,  the  deed  would  be  merely  voluntary;  and  the  ques- 
tion of  a  conditional  purchase  could  never  arise;  for  to  constitute  a 
conditional  purchase,  there  must  be  a  sale  for  valuable  consideration 
between  the  parties,  with  a  right  of  repurchase.  A  mere  gift  would 
not  raise  the  question;  and,  indeed,  there  is  no  pretence  in  the  pres- 
ent case  to  say  that  any  gift  was  intended. 

What,  then,  was  the  real  consideration  between  the  parties  ?  To 
uic  it  appears  plain,  that  there  was  an  agreement  by  Walker  and 
1^'islier,  at  the  request  and  for  the  benefit  of  Luther  Richardson,  to 
])ay  off  forthwitli  the  incumbrance  of  Bennett  on  the  premises,  and 
thereby  to  save  the  equiiy  of  redemption  from  being  totally  extin- 

'  The  facts  here  stated  are  extracted  from  the  elaborate  report  of  the 
case,  pp.  480-493. 


SEC.  I.l  ri.ACid     C.     MANN'.  1G9 

^juishod.  Oil  till'  j)art  nl'  |{i(liiii(l>i)ii,  there  was  an  agreement  to 
cniivey  the  jtreinises  to  Walker  aiitl  Kislier,  to  secure  the  jtayinent 
of  tliis  advance  and  .ill  other  advances  made  by  them  toward  the 
extinguishment  of  the  antecedent  mortgages  and  all  expenditures  in 
improvements,  with  a  right  reserved  to  Kichardson  of  reconveyance 
ii|»nn  his  repayment  thereof  within  five  years.  This  was  the  basis 
of  the  ))apers  actually  executed;  and  the  whole  transaction  would 
otherwise  be  without  any  just  aim  or  object.  Bennett's  title  to  the 
premises  would  become  in  a  few  days  ai)solute,  unless  he  was  re- 
<leemed.  Kichardson  was,  notoriously,  unable  to  redeem  from  his 
<>\\u  funds,  ami  that  inability  constituted  the  ground  of  the  applici- 
lion  to  Walker  and  Fisher.     It  would  liave  been  the  idlest  of  forms, 

•and  the  most  useless  of  contrivances,  to  shift  the  title  from  Pren- 
tiss Richardson  to  Walker  and  Fisher,  if  it  was  the  design  of  all 
j)arties  that  it  should  ])erish  in  the  space  of  twelve  days,  without 
jiny  attemjit  of  redemption.  The  very  nature  of  the  transaction 
demonstrates  to  my  n.iind,  that  the  redemption  of  Bennett  by 
Walker  and  Fisher  was  the  sine  qua  non  of  the  whole  arrangement. 
1 1'  there  could  be  the  slightest  doul)t  upon  this  head  from  reading 
the  testimony  of  Walker  and  Fisher,  it  would  be  entirely  removed 
by  the  other  evidence  and  by  admitted  facts.  Bemis  says  that 
about  the  time  the  papers  were  finishing,  Bennett  passed  in  the 
street,  and  was  called  in;  and  Walker  and  Fisher  requested  Bemis 
to  a>k  Bennett  to  a]>j)oint  a  time  when  they  should  meet  him  at 
Bilh'rica  and  \r.\y  him  the  money.  lie  did  so  and  Bennett  ap- 
pointed the  time.  And  on  the  day  so  appointed.  Walker  and 
Fisher  and  Richardson  and  Bemis  met  at  Billerica,  and  tht> 
money  was  paid  by  Walker  and  Fisher,  and  the  deed  was  accord- 
ingly execut(>d  to  them  by  Bennett.  This  is  as  pregnant  and  conclu- 
sive a  proof  of  the  real  nature  of  the  transaction  as  can  be  desired. 

V])on  this  posture  of  the  ca.se,  what  ground  is  there  to  say 
that  there  M-as  a  conditional  .sale  of  the  premises  to  Walker  and 
Fisher?  They  j)aid  nothing  to  Luther  Richardson  for  any  trans- 
fer of  his  right  to  them.  They  simply  paid,  at  his  re<|uest,  a  sub- 
sisting debt  due  rnuii  liiiii  to  Bennett,  and  took  a  transfer  from 
Bi-iniett  of  his  interest  in  the  i>remi.ses.  Beyond  this  they  paid 
notliing;  an<l  upon  the  reimlnirsement  of  this  and  all  other  ad- 
vance's on  account  of  the  j)remi.«<es,  within  five  years,  tln'  premises 
Were  to  be  restored  to  Richardson.  It  was  in  truth  but  the  transfer 
of  a  debt  from  one  creditor  to  another,  with  the  assent  of  the  debtor. 

■expanding  the  e(|uity  to  redeem  the  estate  pledgi>d   for  it    from  a 

'lew  days  to  five  years. 

It  has  been  said,  that   tin-  true  test,  whether  the  conveyance  in 

'biv;  case  was  a  mortgage  or  not.  is  to  ascertain  whether  it   was  a 

nrity  for  the  paynuMit  of  any  money  or  not.    I  agree  to  that ;  and 


170  SECURITY.  [CHAl-.  JI. 

indeed,  in  all  cases  the  true  test,  whether  a  mortgage  or  not,  is  to 
ascertain  whether  the  conveyance  is  a  security  for  the  performance 
or  non-performance  of  any  act  or  thing.  If  the  transaction  resolvt' 
itself  into  a  security,  whatever  may  be  its  form,  it  is  in  equity  a 
mortgage.  If  it  be  not  a  security  then  it  may  be  a  conditional  or  an 
absolute  purchase. 

It  is  said  that  here  there  was  no  loan  made,  or  intended  to  be 
made,  by  Walker  and  Fisher  to  Richardson ;  and  that  they  refused 
to  make  any  loan.  There  is  no  magic  in  words.  It  is  true  that 
they  refused  to  make  a  loan  to  him  in  money.  But  they  did  not 
refuse  to  pay  for  him  the  amount  due  to  Bennett  and  to  take  the 
premises  as  their  security  for  reimbursement  within  five  years. 

It  is  said  that  there  is  no  covenant  on  the  part  of  Richardson  to 
repay  the  money  paid,  which  should  be  paid  by  Walker  and  Fisher 
to  discharge  the  incumbrances  on  the  premises.  But  that  is  by  no 
means  necessary  in  order  to  constitute  a  mortgage,  or  to  make  the 
grantor  liable  for  the  money.  The  absence  of  such  a  covenant  may, 
in  some  cases,  where  the  transaction  assumes  the  form  of  a  con- 
ditional sale,  be  important  to  ascertain  whether  the  transaction  be 
a  mortgage  or  not ;  but  of  itself  it  is  not  decisive.  The  true  question 
is,  whether  there  is  still  a  debt  subsisting  between  the  parties  ca- 
pable of  being  enforced  in  any  way,  in  rem  or  in  persofiam.  The 
doctrine  is  entirely  well  settled ;  and  for  this  purpose  it  is  sufficient 
to  refer  to  Floyer  v.  Lavington,  1  P.  Will.  R.  270,  271 ;  King  v. 
King,  3  P.  Will.  R.  360 ;  Longuet  v.  Scawen,  1  Yes.  R.  406 ;  Mellor 
V.  Lees,  2  Atk.  R.  496;  Goodman  v.  Gricrson,  2  Ball  &  Beat.  R. 
278,  and  Conivay's  Ex'rs  v.  Alexander,  7  Cranch  R.  237,  out  of 
many  cases,  ^ovf,  it  seems  to  me  clear,  upon  admitted  principles 
of  law,  that,  upon  the  payment  of  the  money  due  to  Bennett  by 
Walker  and  Fisher,  Richardson  became  their  debtor  for  that 
amount,  as  it  was  paid  at  his  request,  and  for  his  benefit.  It  is  a 
common  principle,  that  if  A.,  at  the  request  of  B.,  pays  a  debt  due 
by  him  to  C,  A.  may  recover  the  amount  in  assumpsit  for  money 
paid  to  his  use,  or  for  money  lent  and  accommodated.  In  my  judg- 
ment, that  is  the  very  case  at  bar. 

If  it  should  be  asked  why  no  personal  obligation  was  given  by 
Richardson  on  this  occasion  to  pay  the  money,  it  might  be  an- 
swered that  the  whole  circumstances  of  the  present  case  show  an 
extreme  looseness  in  the  transaction  of  business  between  the  parties ; 
and  considering  that  much  of  it  was  done  by  the  advice  and  with 
the  assistance  of  counsel,  it  is  not  very  creditable  to  the  skill  and 
diligence  of  the  profession.  The  negotiations  between  Flagg  and 
^fann  and  Richardson  evince  a  most  obstinate  carelessness  in  the 
draft  and  cxcfiition  of  important  instruments,  leaving  much  to 
personal  confidence  and  the  imperfect  recollections  of  the  parties,  as 


KIC.  I.]  FLACO    r.    .MANN.  171 

well  as  that  of  iho  witnosjfs.  And  tliciv  is  no  ;:rouii(l  for  surjtri.«i' 
in  finding  the  same  laxity  pervade  the  arrangements  of  Kichardsoii 
with  Walker  and  Fisher.  Hut  the  satisfaetorv  answer  is  that  Hieh- 
anlson  was  j)0()r  and  einharrassed,  and  Walker  and  Fisher  relied  on 
tlic  premises  for  a  full  indemnity  and  satisfaction  <»f  all  their  ad- 
vances, helieving  that  Kiehardson  would  never  l)e  ahle  to  redei-m. 
They  were  indifferent  about  the  personal  obligation,  as  they  pos- 
sessed  an   ade([uate   fund   in  their  own   hands. 

It  is  well  known  that  Courts  of  F(iuity  lean  against  construing 
contracts  of  this  sort  to  be  conditional  sales:  and,  therefore,  unless 
the  transaction  be  clearly  made  out  to  be  of  that  nature,  it  is  always 
construed  to  be  a  mortgage.  So  Lord  llardwicke  laid  down  the 
doctrine  in  Lotujtief  v.  Scatirn,  1  A\'s.  K.  40(;,  and  it  has  never  been 
departed  from.  The  onitt;  prohandx,  then,  is  <>n  the  defendant  lo 
establish  it  to  be  a  conditional  sale.  If  it  be  doubtful,  then  it  imi-t 
be  construed  to  be  a  mortgage. 

If  we  look  to  the  condition  of  tlie  bond,  it  is  ditlicull  to  resist  l!" 
iinj)ression  that  it  is  jirecisely  in  its  terms  such  as  would  be  aj*]):'  - 
jtriate  if  the  conveyance  were  a  mere  jnortgage  to  secure  futu:e 
advances  to  be  made  by  Walker  and  Fisher  in  discharge  of  the  in- 
cumbrances referred  to  in  the  recital.  The  language  of  the  aeetuii- 
panying  lease  points  to  the  same  conclusion.  The  dwelling  Imu.-e 
and  garden  (a  valuable  ])art  of  the  premises)  were  let  to  Richard- 
^"U  for  five  years  at  a  nominal  rent:  a  j)roci'eding  not  easily  recon- 

lable  with  the  notion  nf  a  positive  purchase,  but  quite  reconcilable 
with  the  notion  of  a  mortgage.  That  lease  contains  some  language 
not  without  significance  on  this  sul)jeet.  The  lease  is  "  for  the  ternj 
of  five  years  from  this  date,  yielding  and  paying  therefor  the  sum 
of  one  cent  annually,  unless  the  said  premises  shall  be  redeemed  by 
the  said  Luther,  agreeably  to  the  provisions  of  a  IkmuI  bearing 
even  (bite  lierewith  from  Walker  and  Fisher  to  said  Ltither."  I  do 
not  lay  great  stress  upon  the  word,  ''  redeem."  in  this  lease,  a-;  eon- 
ilusive  in  regard  to  the  understanding  of  the  parties,  though  it  is  a 
word  peculiarly  appropriate  to  tlie  case  of  n  mortgage;  for  it  is 
sometimes  used  as  ('([uivali'iit  to  "  reconvey."  But.  certainly,  it  i.s 
not  without  weight  in  a  case  of  this  nature;  and  it  was  relieil  on  by 
Lord  llardwicke  in  Lnirhtj  v.  Hooper.  W  Atk.  If.  v*7S.  as  indieativt» 
of  a  mortgage.  But  the  fact  that  Walker  and  Fisher  were  not  to  go 
into  possession  of  the  entire  premi-es.  but  that  Hichardson  wa>  to 
retain  the  ))ossession  of  a  valuable  portion  f<»r  fiv«'  years,  without 
paynu-nt  of  any  rent,  is  certainly  important.  It  i-;  remarked  by  Mr. 
Butler,  in  his  learned  note  to  Co.  Lit.  '^MM.  b,  that  the  circumstance 
that  the  grantee  was  not  to  be  let  into  imnu'diate  posse.-s.sjon  of  the 
estate,  affords  a  presumption  of  its  being  a  mortgagfv 

It  is  not  unimi)ortant.  also,  that,  in  the  very  a>;-ignmeiu   ina<l>' 


172  .     SECURITY.  [CHAP.  II. 

of  the  bond  by  Richardson  to  Fhigg  and  Mann,  the  conveyance  to 
Walker  and  Fisher  is  expressly  described  as  a  mortgage.  And  sup- 
posing that  assignment  to  be  a  valid  and  subsisting  instrument,  it  is 
not  easy  to  see  how  Mann  can  now  be  permitted  to  set  up  that  con- 
veyance  as  an  absolute  estate  to  defeat  the  rights  of  his  co-assignee, 
he  having  purchased  in  the  title  for  his  sole  account. 

But  what  strikes  me  as  most  material  in  this  case  is  the  allega- 
tion by  both  Walker  and  Fisher  in  their  testimony  that  notwith- 
standing the  conveyance  to  them,  they  did  not  contract,  and  were 
not  bound,  to  pay  off  any  of  the  incumbrances.  If  this  were  true, 
there  would  be  an  end  of  treating  it,  as  has  been  already  suggested, 
as  a  conditional  purchase.  I  have  endeavored  to  show  that  they 
were  positively  bound  to  pay  off  Bennett's  incumbrance.  In  regard 
to  the  antecedent  mortgages,  they  positively  deny  that  they  engaged 
to  pay  them  off.  Now,  if  this  be  true,  it  would  be  impossible  to 
consider  this  as  a  conditional  purchase  without  the  grossest  injus- 
tice. The  purchase  would  be  for  little  less  than  a  tenth  of  the  value 
of  the  property ;  for  Richardson  would  still  be  personally  bound 
for  the  payment  of  those  mortgages.  Nay,  he  Avould  be  bound  to 
pay  to  Walker  and  Fisher,  as  the  assignees  of  those  mortgages,  and 
now  to  Mann,  as  their  assignee,  the  full  amount  due  on  those  mort- 
gages, notwithstanding  the  extinguishment  of  his  title  in  the  prem- 
ises, by  the  lapse  of  the  five  years.  Those  mortgages,  in  their 
view  of  the  matter,  are  still  subsisting  mortgages,  capable  of  being 
enforced  at  law,  and. were  not  to  be  extinguished  by  the  purchase 
and  assignment  to  themselves.  So  that,  if  this  be  admitted  to  bo 
the  true  interpretation  of  the  whole  arrangement.  Walker  and 
Fisher  obtain  property,  confessedly  worth,  in  their  own  opinion, 
more  than  $10,000,  by  the  payment,  at  most,  of  the  sum  of  $1200 
onl}',  to  Bennett.  I  have  not  heard  any  such  doctrine  contended  for 
at  the  argument,  although  it  seems  to  me  a  natural  consequence 
from  the  positions  assumed.  If  the  mortgages  were  not  agreed  to  bi> 
extinguished  by  Walker  and  Fisher  when  they  took  the  conveyance, 
nothing  nas  since  been  done  by  the  parties  to  extinguish  them.  On 
the  other  hand,  if  that  transaction  was  a  mortgage,  the  whole  pro- 
ceedings are,  in  legal  operation,  exactly  what  they  should  be.  The 
debt  to  Bennett  and  the  mortgages  constitute  a  subsisting  lien  on 
the  premises;  and  they  must  be  paid  by  Richardson,  before  he  can 
claim  a  reconveyance.  Now,  it  has  been  well  remarked  by  Mr. 
Butler,  in  the  note  above  cited  (Co.  Litt.  201,  /;.  note  1),  that  if  the 
money  paid  by  the  grantee  is  not  a  fair  ]irice  for  the  absolute  pur- 
chase of  the  property  conveyed  to  him,  it  affords  a  strong  presump- 
tion that  the  conveyance  was  a  mere  mortgage.  The  same  sug- 
gestion was  })ointedlv  made  in  (\)invai/'s  Ex'rs  v.  Alcxonikr  (7 
Cranch,  R.  211). 


sKf.  I.]  l-LA(i<;    C.     MANN.  n'5 

Oil  till-  I'ontrarv,  if,  in  opjjosilioii  i<i  tin*  po.siiivc  ti-stimony  uf 
Walker  ami  Kislu'r,  we  an-  (o  (leoin  it  a  part  of  the  a;,'ri'eincnt  at 
till'  time  of  the  eoiiveyanee  to  them  that  they  shoiiM  pay  olT  tlie 
mort^a^es,  havin^r  their  a-eiirity  fr>r  their  a<lvaneers  Hjioii  thi? 
])rcnuscs,  then  the  same  con.siderationf*  ap])ly  to  this  as  to  the  pay- 
Mient  to  Bi-nnelt.  The  payments  so  made  were  for  dehts  of  Kiehanl- 
-cin,  and  paid  at  his  re(piest. 

I  ohserve  that  the  assi;:nments  of  these  mort>;a;;es  to  Walker  an<l 
Fisher  speak  of  the  dehts  as  suhsistin^  dehts,  and  the  mort^'aj,'es  as 
liable  to  be  redeemed  by  l?iehardson ;  an<l  Walker  and  Fisher  are 
■nithorized  to  receive  the  sums  due  thereon  for  their  own  use. 

But  it  is  said,  that  it  was  distinctly  understood,  that  the  eonvey- 
.inee  should  not  be  a  common  mortj^a^e;  antl  that  the  premises 
-hould  be  irredeemable  after  the  five  years;  and  that  the  shap<? 
which  the  ne-,'oti4tion  took  was  for  the  very  purpose  of  aecomplish- 
in;r  this  object.  Be  it  so;  still  if  in  fact  the  conveyance  was  a 
mere  security  for  advances  to  be  made  to  Kichardson,  and  the 
premises  were  redeemable  upon  payment  of  these  advances  within 
the  five  years,  in  contemplation  of  law  it  was  a  mortj?a;,'e,  whatever 
name  the  parties  mi^dit  choose  to  ^ive  to  it.  Nothing  is  better  set- 
tl(>d  than  the  doctrine,  that  where  the  conveyance  is  a  mere  security, 
it  is  a  mortga<ie;  and  that  if  it  be  a  mortgage,  the  ])arties  cannot — 
by  their  agreement  that  there  shall  be  no  equity  of  redemj)tion  after 
a  limited  time — change  the  rights  of  the  mortgagor.  The  common 
maxim  is,  once  a  inoii(/a(/e,  ahctn/s  a  niortgage.  'i'he  right  to  n-- 
dcem  is  a  necessary  incident,  and  cannot  be  extinguished  by  a  mere 
covenant  that  it  shall  not  be  claimed  after  a  limited  period.  It 
-cems  to  me  that  the  shape  of  the  transaction  was  merely  to  evade 
the  i)rincij)les  of  law  apjilicable  to  mortgages.  Walker  and  Fisher 
were  willing  to  make  advances  to  i)ay  Richardson's  debts,  and  to 
reinstate  him  in  his  equity  of  redemption.  They  were  willing  to 
give  him  five  years  to  repay  the  advances  and  redeem  the  estate. 
But  they  meant,  after  that  lai)se  of  time,  to  hold  the  estate,  if  unre- 
deemed, by  an  ah>olute  title.  This  api)ears  to  be  the  manner  in 
which  liemis  understood  the  transaction:  and  the  only  mistake  in 
he  matter  has  been  a  mistake  of  law.  Luilin-  Richardson's  own 
testimony  points  still  more  distinctly  to  the  transaction  as  being 
a  mortgage  in  contemplation  of  law,  whatever  ndght  have  been 
the  understanding  of  the  |)arties  as  to  its  reileemable  qiuility.  Tli  • 
iiegotiati(»n,  according  to  his  statement,  lu-gan  in  asking  a  loan  and 
ended  in  an  agreement  to  pay  olT  all  the  incund)ranees.  taking  the 
eonveyantr  for  the  repayment  within  live  years. 

TlnTe  is  an  intrinsic  ditlicidty  in  treating  this  transaction  a-  a 
conditional  sale,  in  whatever  manner  the  circumstances  are  viewt-d. 
It  seems  to  be  of  the  verv  essence  of  a  sale,  that  there  should  be  a 


174  SECURITY.  [CHAP.  II, 

fixed  price  for  the  purcliase.  Tlie  language  of  tlie  civil  law  on  this 
subject  is  the  language  of  common  sense.  Pretium  autem  constitui 
oportet;  nam  nulla  emptio  sine  pretio  esse  potest,  say  the  Insti- 
tutes (lib.  3,  tit.  24).  Ulpian,  in  the  Digest,  repeats  the  same  sug- 
gestion; Sine  pretio  nulla  venditio  est  (lib.  18,  tit.  1,  c.  2).  Now, 
here  is  not  the  slightest  proof,  in  this  case,  of  any  sum  being  agreed 
on  as  the  price  of  the  purchase.  No  money  was  in  fact  paid ;  and  if 
Walker  and  Fisher  are  to  be  relied  on,  none  was  contracted  to  be 
paid;  and  even  the  incumbrances  were  not  to  be  discharged.  The 
money  which  was  to  be  repaid  on  the  reconveyance,  was  only  what 
had  been,  in  the  intermediate  time,  actually  paid  to  discharge  the 
incumbrances  and  expended  in  improvements.  If  none  had  been 
so  paid,  none  was  to  be  repaid.  So  that  not  only  was  there  no 
fixed  price;  but  the  premises  stood  as  a  mere  security  for  future 
advances. 

Hitherto  the  case  has  been  considered,  upon  the  question  of  mort- 
gage or  not,  upon  the  footing  not  merely  of  the  conveyance  and 
bond,  but  of  the  parol  evidence  admitted  as  explanatory  of  the  in- 
tent of  the  parties.  It  has  been  suggested,  however,  on  behalf  of  the 
plaintiff,  that  as  the  papers,  upon  their  face,  taken  together,  do 
actually  import  a  mortgage,  it  is  not  competent  to  admit  parol 
evidence  to  control  their  legal  effect.  There  is  weight  in  the  objec- 
tion ;  for,  in  my  judgment,  the  papers,  taken  together,  do  distinctly 
proclaim  the  case  to  be  a  present  mortgage  for  future  advances. 
But  it  is  unnecessary  to  consider  this  objection,  as  the  same  con- 
clusion is  arrived  at  upon  a  full  survey  of  all  the  parol  evidence  and 
circumstances  attendant  upon  the  transaction. 


h».« .  11.]  COTTEKKi.i-   r.   ri  K»  iiA.^i:.  175 


(,'II.\l''ri:i;     II.    {Cnnlltmnl). 


Section  11.    Ausoijii:  l)i:i;i) — r.vinti.  I",\i  m:\ri:. 

COTTEKKLr.    v.     i'lKCllASi:. 

ConiT    or    CiiAXCKUY,    1T;U. 

{('(IS.  I  nil  p.   'J'alh.  <il.) 

The  plaint ifl."  and  her  sister  being  seised  of  an  estate  in  Yorkshire 
as  jointonants,  the  plaintiff  by  lease  and  release,  in  consideration 
of  104/.  conveys  the  moiety  to  the  defendant  and  his  lieirs:  hut  it 
was  admitted,  that  the  conveyance  (tiiou^di  ahsohitc  in  hiw)  was 
intended  by  the  parties  as  a  mortgage,  to  be  redeemable  on  j)aynient 
<if  tlie  money  with  interest.  Sometime  after,  in  the  year  1708.  those 
deeds  were  cancelled;  and  in  consideration  of  a  farther  sum,  which 
made  up  tlu'  wliole  184/.  she  conveys  the  estate  in  manner  as  be- 
fore, but  with  this  farther  covenant,  That  she  would  not  agree  to 
any  division  or  partition  of  the  estate,  or  make,  or  cause  to  be 
iiuide,  any  division  or  partition  thereof,  without  the  licence,  consent, 
.idviee  and  aj)pointment  of  him  the  said  Benjamin  Purchasi'.  At 
ilie  time  of  this  conveyance  the  j>laiiitiH"s  sistt-r  was  in  i)ossession  of 
the  whole  estate,  and  so  continued  till  the  year  1710.  when  the  de- 
fendant turned  her  out  of  possession  of  the  moiety  by  ejectment ; 
and  from  that  time  he  enjoyed  it  quietly  till  1720.  at  which  time 
file  plaiiitiir  filed  luT  bill  to  [1m']  let  into  redemption;  to  which  the 
<!<feiidant  jdeaded  himself  an  ab.'^olute  jjurcha.^er  for  a  valual)le 
« onsideration  ;  and  in  17."VJ.  the  cau.>e  coining  to  be  heard  upon  tln> 
nu'rits,  the  Musdr  of  llir  Halls  was  of  opinion,  that  the  drcds  of 
1708.  amounted  to  an  absolute  eonvi'yance ;  and  dismisssed  the  bill. 

Kor  the  defendant  wen-  given  in  evidence  several  jiarticulars  to 
sb«'W  that  by  the  deeds  of  1708.  the  parties  intended  an  absolute 
Miiiveyaiice  of  iliis  estate.  An<l  it  was  insisted  that  as  the  deeds 
crc  an  al>-i>lutc  conveyance  in  law.  by  the  statute  of  frauds  no 
I  rust  tir  mortgage  coidd  bi'  implietl  without  an  agreement  in 
\\riting.  And  they  insisted  likewise,  that  as  the  defenilant  had 
i'ccn  in  possession  ever  since  the  year  1710.  the  plaintitT  was  barn  d 
'  f  the  redemption  by  the  statute  of  limitations. 

It   was  said  on  tlie  other  hand   for  the  plaintitT,  Tlial   the  d-  - 


176  iSECUKITY.  [CHAP.  II. 

fendaut's  plea  admitted  the  first  conveyance  made  in  consideration 
of  the  104L  to  be  intended  but  as  a  mortgage;  and  tliat  the  second 
conveyance  was  in  the  same  form,  excepting  the  covenant ;  and  that 
it  was  therefore  probably  intended  in  the  same  manner.  That  as  to 
the  covenant,  it  made  strongly  for  the  plaintiff;  since  to  suppose  a 
person  would  absolutely  sell  away  his  estate,  and  then  covenant 
not  to  make  a  division  of  it,  is  absurd.  That  the  statute  of 
frauds  makes  nothing  against  the  plaintiff;  this  being  in  nature 
of  a  resulting  trust,  and  so  within  the  proviso  in  that  statute.  Nor 
can  the  statute  of  limitations  affect  the  plainiff;  since  in  cases  of 
redemptions  the  court  always  gives  what  it  thinks  a  reasonable 
time.  And  though  the  general  rule  be  not  to  exceed  twenty  years, 
unless  it  be  upon  extraordinary  circumstances ;  yet  that  rule  cannot 
affect  the  plaintiff,  who  did  not  lose  possession  till  1710.  and 
brought  her  bill  in  1736. 

Lord  Chancellor  [Talbot].  The  case  is  something  dark. 
The  first  deed  is  admitted  to  be  a  mortgage ;  and  the  second  is  made 
in  the  same  manner,  excepting  an  odd  sort  of  covenant,  which  is 
the  darkest  part  of  the  case:  for,  to  suppose  that  it  is  an  absolute 
conveyance,  and  to  take  a  covenant  from  one  who  had  nothing  to  da 
with  the  estate,  makes  both  the  parties  and  covenants  vain  and 
ridiculous.  But  then  it  will  be  equally  vain  and  ridiculous  if  you 
suppose  the  deed  not  an  absolute  conveyance ;  so  that  it  is  of  na 
great  weight,  and  must  be  laid  out  of  the  question.  Then  as  to  the 
circumstances;  on  one  side  has  been  shewed  an  account  stated  of 
money  received;  and  it  is  there  said  so  mucli  received  on  account 
of  purchase  money,  and  in  another  general  account  the  sum  of 
184Z.  is  called  purchase  money.  Then  as  to  the  agreement  in  1710. 
that  if  the  plaintiff  had  a  desire  for  it,  she  should  have  her  estate 
again  upon  payment  of  the  money  with  interest,  and  the  costs  he 
had  been  at :  this  shews  it  was  not  redeemable  at  first.  There  have 
been  strong  proofs  on  both  sides  as  to  the  value :  one  has  shewn  the 
rent  to  be  but  27Z.  per  ann.  and  then  deducting  one  third  out  of  it 
for  the  dower  of  the  plaintiff's  mother,  a  moiety  of  what  remains  is 
near  the  value  of  the  money  paid.  Tlic  other  side  has  shewn  the  rent 
to  be  4lOI.  per  ann.  But  I  rather  give  credit  to  the  first;  because  it 
is  certain  the  dower  was  but  9?.  per  ann.  So  that,  upon  the  whole, 
I  am  inclined  to  think  this  was  at  first  an  absolute  conveyance.' 
Had  the  plaintiff  continued  in  possession  any  time  after  the  execu- 
tion of  the  deeds,  I  should  have  been  clear  that  it  was  a  mortgage; 
but  she  was  not.  And  her  long  acquiescence  under  the  defendant's 
possession  is,  to  me,  a  strong  evidence  that  it  was  to  be  an  absoltite 
conveyance;  otherwise,  the  length  of  time  would  not  have  signified: 
for,  they  who  take  a  conveyance  of  an  estate  as  a  mortgage,  without 
any  defeazance,  are  guilty  of  a  fraud;  and  no  length  of  time  will 


sKc.  U.J  Ki;i.i.i;i; AN    r.   iu;o\vN.  \',', 

l»iir  a  fraiul.  Ik-sidcs,  In-rc  tlif  Itill  was  lilcd  in  H'-iG.  Ami 
llu)Uji;li  the  cause  lias  lain  dormant ;  yet  it  is  not  like  making  an  en- 
try and  then  lyin^  still;  for,  in  the  present  ease,  the  defendant 
might  have  dismissed  the  l)ill  for  want  of  ])rosecuti">n.  or  Hm-v 
themselves  might  have  set  down  the  plea  to  he  argued. 

In  the  Xortlu'rn  parts  it  i<  the  custom  iti  drawing  mortgagr.-  to 
make  an  ahsolute  deed,  with  a  defea/.ance  separate  from  it;  hut  I 
think  it  a  wrong  way;  aiul,  to  me,  it  will  always  appear  with  a  faee 
of  fraud:  for,  the  del'eazanee  nuiy  he  lost ;  and  then  an  al)solute  con- 
veyance is  set  up.  1  would  discourage  the  practice  as  much  as  pos- 
.^ihle.' 

Upon  the  circumstances  of  the  case,  allirmed  the  decree,  &c. 


KELLERAN  v.  BROWN". 

SupiiEME  Judicial  CotuT  oi-'  M.vssachusetts,  1808. 

(4  Mas.'i.  443.) 

This  was  a  writ  of  entry,  and  upon  the  general  issue  j)leaded 
was  tried  hefore  Thatcher,  .1.,  Sc})tcmher  term,  1SU(>,  when  a  \er- 
dict  was  n-ndcred  for  the  demandant. 

In  sup])ort  of  the  action,  the  demandant  read  in  evidence  a  deed 
of  Timothy  Manly  conveying  the  land  demanded  to  the  deman<l- 
ant  in  fee. 

Tile  tenant,  in  defence  of  the  action,  having  prayed  in  aid  tin- 
title  of  Timothy  Manly,  under  whom  he  claims  the  j)remisc-  a-^ 
his  tenant,  the  counsel  for  the  tenant,  to  show  the  demandant 
ought  not  to  have  judgment,  except  as  in  an  action  upon  a  mort- 
gage, olfered  to  read  in  evidence  an  agri'cment  in  writing  signt-d 
l»y  the  demandant,  and  hearing  even  date  with  the  deed  aforesai<l. 
in  the  following  terms,  viz.:  "  Thomaston,  May  2(».  1800.  I, 
l'.dwar<l  Kelleran,  the  suhscril)er.  having  j)urcha.se(l  of  Timothy 
Manly  a  lot  of  land  lying  in  said  Thomaston,  containing  lifly 
icres  (heing  the  lot  which  the  said  Manly  punliased  of  I-IIumic/it 

'"So  wlu'ie  ail  ali^oluU'  riinvr\aiuf  i"  inadi'  for  Muli  a  -um  of  iiunux , 
and  tlio  person  1o  wlioni  it  was  inado,  in>ti>ad  of  nitiMiii;;  and  icffivini.' 
tho  profits,  demands  interest  f<ir  Iiis  money  and  lias  it  paid  liim,  tliis  will 
1>e  adiiiilled  to  explain  tlie  nature  of  tlie  eonveynnce. "-/'cr  I^ird  <•• 
N'ottin^'liani.  in  Mnj-uiU  v.   /,(/*/(/  Mouutnrtiti-,  Finch.  Pre.  C'h.  !iH\   (17I!>'. 

"  Suppose   a   person   wlio  advaneeH  money   sliouM.   after   lie   has  e\e»u;i-  I 
the  absolute   eonveyan<«'.    refuse    to   exe<'ute   the   ilefeiisame,    will    not    thi 
court    relieve  a;,'ainst    sn<h    fraud?" — /'<  r   Lord  C'h.   Ilardwirke.   in    W'al' 
V.  Walker.  2  Atk.  OS    (17101. 
12 


i;8  SECURITY.  [chap.  II. 

Bly)  for  which  I  have  received  a  warranty  deed;  but  if  the  said 
Manly  shall  repay  me  the  the  sum  of  four  hundred  dollars,  with  the 
lawful  interest  on  the  same  in  one  year  from  the  date  hereof,  I  then 
will  reconvey  the  said  lot  of  land  to  him.  Edward  Kelleran ;"  and 
also  offered  to  prove  to  the  jury  that  the  tenant.  Brown,  at  the 
time  of  the  commencement  of  this  action,  and  for  a  long  time 
before,  was,  and  ever  since  has  been,  tenant  at  will  of  the  premises 
demanded,  under  the  said  Timothy  Manly,  the  aid  of  whose  title 
is  prayed  in  this  action. 

The  demandant's  counsel  objecting,  the  judge  rejected  said 
agreement  and  evidence,  as  inadmissible.  To  which  opinion  of  the 
judge  the  counsel  for  the  tenant  excepted,  as  erroneous;  where- 
upon the  cause  stood  continued  for  the  opinion  of  the  Court  upon 
the  said  exceptions. 

At  last  June  term  in  this  county,  the  cause  was  briefly  spoken 
to  by  Mellen  in  support  of  the  exceptions,  and  thence  continued 
for  advisement,  and  now  the  opinion  of  the  Court  was  delivered  by 

Parsons,  C.  J.  The  demandant  has  sued  a  writ  of  entry,  to 
recover  his  seisin  of  the  lands  demanded  in  his  writ  and  count. 
The  tenant  pleads  the  general  issue,  and  to  maintain  the  issue  on 
his  part,  offers  to  give  in  evidence  that  he  is  the  tenant  at  will  to 
one  Timothy  Manly;  and  that  Manly  conveyed  the  lands  de- 
manded to  Kelleran  in  mortgage.  To  prove  that  the  conveyance 
was  a  mortgage,  he  offered  to  read  in  evidence  a  contract  in  writ- 
ing, under  the  demandant's  hand,  of  the  following  tenor:  (Here 
his  honor  read  the  agreement  before  recited.)  But  the  judge 
rejected  the  evidence  that  he  was  tenant  at  will,  and  refused  to  let 
this  contract  be  read  to  the  jury. 

As  the  demandant,  in  his  writ,  had  demanded  a  freehold  of  the 
tenant,  he,  by  pleading  the  general  issue,  had  admitted  on  record 
that  he  was  the  tenant  of  the  freehold.  He  was,  therefore,  es- 
topped from  proving  that  he  had  not  the  freehold  but  was  a  ten- 
ant at  will. 

As  to  the  effect  of  the  written  contract,  if  it  be  an  instrument  of 
defeasance  at  common  law  of  the  conveyance  made  by  Manly  to 
the  demandant,  the  tenant  might  have  read  it  in  evidence  to  show 
that  the  demandant  was  entitled  only  to  the  conditional  judg- 
ment, as  in  a  suit  to  foreclose  a  mortgage. 

In  chancery,  whenever  it  appears,  from  written  evidence,  that 
land  is  conveyed  as  a  pledge  to  secure  the  payment  of  money,  the 
conveyance  will  be  treated  as  a  mortgage,  in  whatever  form  the 
land  was  pledged,  and  if  we  had  all  the  equity  powers  of  a  Court 
of  Chancery,  I  should  be  satisfied  that  the  conveyance  in  this  case, 
with  the  written  contract  of  defeasance,  would  be  deemed  in  equity 
a  mortgage,  and  the  grantee  would  be  allowed  to  redeem. 


SH-.  II.]  STRONi;    r.    STKWAItT.  179 

Hut  tlio  ccjuiiy  powers  ol"  tlii>  Court  arr  (liriv»'(l  from  statute, 
Hiid  are  extreinely  limited.  We  can  relieve  mortgagors  only  in 
rjisi's  where  the  lands  are  granted  on  conilition,  hy  force  of  any 
iloed  of  inoitgage,  or  bargain  and  sale  with  defeasance.  (  Vide  Stat- 
utes 178."),  c.  22 ;•  1798,  c.  77.)  Now  a  defea.sance  of  any  instru- 
ment of  conveyance  must  Ik-  of  as  high  a  nature  as  the  convey- 
ance, must  be  executed  at  the  same  time,  and  is  to  be  considered 
-as  part  of  it ;  so  tiiat  the  conveyance  and  defeasance  must  be  taken 
logethej"  and  considered  as  parts  of  one  contract.  If,  tiierefore, 
tlie  conveyance  is  by  deed,  the  defeasance  must  be  by  deed.  In 
this  case  the  conveyance  by  ilanly  to  Kdleran  was  by  deed,  and 
ilie  agreement  by  Kelleran  was  merely  by  a  simple  contract;  and, 
however  it  might  in  equity  have  the  elTect  of  a  defeasance,  at  law  it 
i<  not  a  defeasance  of  the  deed  of  Kelleran. 

The  counsel  for  the  tenant  referred  to  the  statute  of  1802,  c.  33, 
which  provides  that  no  conveyance  of  any  land,  unless  for  a  term 
less  than  seven  years,  shall  be  defeated  or  incumbered  by  any  bond 
or  other  deed,  or  instrument  of  defeasance,  unless  they  are  regis- 
tered. This  provision  cannot  avail  to  enlarge  our  jurisdiction, 
which  was  not  within  the  purview  of  the  act.  What  shall  be 
deemed  an  instrument  of  defeasance  must  still  be  determined  upon 
the  prineiples  of  the  common  law.  The  written  contract  to 
Kelleran  not  under  his  seal  was,  in  our  opinion,  properly  rejected 
as  evidence. 

Judgment  according  to  the  verdict. 


STROX(J  V.  STEWART. 

Court  of  Chancery  of  New  York,  ISIO. 

(4  Johns.  Ch.  ir,7.) 

Bill  to  redeem  mortgaged  ])remises.  The  defendant  set  up  an 
absolute  sale,  by  an  assignment,  absolute  in  terms,  of  the  right  of 
Mitchell  in  the  land,  and  denied  the  fact  of  a  loan.  Hut  tiie  de- 
fendant, at  the  same  tinu',  admitted  in  his  answer,  that  after  the 
;uisignmcnt  was  executed  he  gave  Mitchell,  at  his  request,  time  to 
return  the  money,  and  take  l)aek  the  assignment. 

Parol  proof  was  taken,   whicli  estahlislied   c-onelusively   the   fact 

'  .in  .\ct  giving  Re  medics  in  tiiptili/,  I'ripftuiil  Law-*  of  Ma-is.,  ji.  KIS. 
I'oiupnrp  Mass.  Stat.  1855,  v.  VM,  9  l.  (ion.  Stats..  <•.  IKl.  9  1.  and  »c« 
p.»^'t«  190,  post. 


180  SECURITY.  [CHAP.  II. 

of  a  loan,  and  not  a  purchase  and  sale;  and  that  the  assignment 
was  made,  given  and  received,  by  way  of  security  for  a  loan. 

The  Chancellor  [Kext].  On  the  strength  of  the  authorities, 
and  on  the  proof  of  the  loan,  and  of  the  fraud,  on  the  part  of  the 
defendant,  in  attempting  to  convert  a  mortgage  into  an  absolute 
sale,  I  shall  decree  an  existing  right  in  the  plaintiffs  to  redeem. 
The  cases  of  CottereU  v.  Purchase,  Cases  temp.  Talbot,  61 ;  Max- 
well v.  Mountacutc,  Prec.  in  Chancery,  526;  Washburn  v.  Merrilh; 
1  Day's  Cases  in  Error,  139,  and  the  acknowledged  doctrine,  in  2 
Atk.  99,  258,  3  Atk.  389,  and  1  Powell  on  Mortg.  104  (4th  Lon- 
don edit.)  are  sufficient  to  show,  that  parol  evidence  is  admissible 
in  such  cases,  to  prove  that  a  mortgage  was  intended,  and  not  an 
absolute  sale,  and  that  the  party  had  fraudulently  perverted  the 
loan  into  a  sale.  In  this  case,  the  admissions  in  the  answer  were 
sufficient  to  presume  a  mortgage,  against  the  absolute  terms  of  the 
assignment.^ 

Decree  accordingly. 


TOWX    OF    EEADINO   v.    WESTON. 

Supreme  Court  of  Errors  of  Connecticut,  1830. 

(8  Conn.  117.) 

This  was  an  action  of  assumpsit  for  the  support  of  the  wife  and 
minor  children  of  Samuel  Darling. 

The  cause  was  tried  (after  two  former  trials),-  at  Fairfield,  De- 
cember term,  1829,  before  Williams,  J. 

The  paupers  derived  their  settlement  from  Lucy  Darling,  the 
mother  of  Samuel  Darling.  She  was  once  an  inhabitant  of  the 
town  of  Weston.  The  defendants  claimed,  that  in  March,  1808, 
she  became  the  owner  of  a  piece  of  land  in  the  town  of  Reading, 
of  the  value  of  800  dollars,  by  virtue  of  a  deed  from  one  Joseph 

^ "  Courts  of  equity  generally  exercise  such  power.  While  the  ground-^ 
upon  vvhich  the  doctrine  is  admitted  vary  with  diflferent  courts,  there  i^ 
a  great  concurrence  of  opinion  as  far  as  the  result  is  concerned.  In  our 
judgment,  it  is  a  sound  policy  as  well  as  principle  to  declare  that,  to  take 
an  ahsolute  conveyance  as  a  mortgage  without  any  defeasance,  is  in  equity 
a  fraud.  Experience  shows  that  endless  frauds  and  oppressions  would  i>r 
perpetrated  under  such  modes,  if  equity  could  not  grant  relief.  It  is  taking 
an  agreement,  in  one  sense,  exceeding  and  differing  from  the  true  agree- 
ment. Instead  of  setting  it  wholly  aside,  equity  is  worked  out  by  adapting 
it  to  the  purpose  originally  intended.  Equity  allows  reparation  to  be 
made  l)y  admitting  a  verbal  defeasance  to  be  proved." — Per  Peters,  J.,  in. 
Stinchfield  V.  Millikcn,  71  Mc.  5G7    (1880).  '    '  '"'. 

="  Sec  7  Conn.  Rep.  143,  409.— Hep. 


sKc.  II.]  TOWN  OF  i(i;ai)IN<!  v.  wi:ston.  181 

Burr.  'I'his  dm]  \va.-,  on  llu-  lacr  of  it,  an  alj.-olntc  deed,  in  tin' 
u-ual  form,  containin*,'  tlio  usual  covenants.  A  writing  (rccitcil  at 
li'iigth,  7  Conn.  Hrj).  Ill)  was  made  and  signed  by  her,  and  deliv- 
«'re«l  to  Burr,  simultaneously  with  the  delivery  of  the  deed,  bind- 
ing herself,  if  Burr  should  within  three  years  bring  her  the  MOO 
iiollars,  with  interest,  to  deliver  uj)  to  him  sueh  deed,  but  if  he 
iiliould  fail  to  bring  the  money  by  tlic  time  limited,  he  should  for- 
feit all  elaim  to  sueh  deed.  The  defendants  claimed  that  imme- 
•diately  after  the  e.xeeutioiv  of  the  dc'cd,  Lucy  Darling,  the  grantee, 
went  into  possession  of  the  land  therei)y  conveyed,  and  jiossessed 
it  in  her  own  right  in  fee  until  the  year  1813.  It  was  admitted 
that  she  occupied  part  of  the  house  and  garden,  belonging  to  the 
premises;  and  that  Burr  occupied  the  remaining  part,  during  th(> 
period  specilied.  l^viiU'Uce  was  introduced  as  t(»  the  character  of 
their  respective  possessions,  or  the  right  in  which  they  occupied  the 
l»riniises:  the  j)lainti(Ts  claiming  that  Lucy  Darling  occupied  as 
mortgagee  \iiuler  Burr  and  not  in  her  own  right.  In  support  of 
tlii<  claim  the  ))laintiirs  introduced  proof  of  her  declaration  that 
she  had  only  a  mortgage  of  the  premi.-^es,  and  other  i)arol  evidence 
to  shew  that  the  deed  and  writing  were  given  only  to  secure  a  sum 
of  money,  which  Burr  at  that  time  borrowed  of  her,  and  for  which 
he  gave  her  his  notes.  This  evidi'iice  was  objected  to  by  the  de- 
fendants, but  was  received  subject  to  the  opinion  of  the  court.  And 
the  court  charged  the  jury  that  such  evidence  was  proper  to  shew 
the  nature,  character  and  extent  of  her  occupation;  but  that  in  this 
>;uit  parol  evidence  could  not  be  admitted  to  alter,  enlarge  or  ex- 
plain the  deed  or  condition,  or  to  shew  that  this  conveyance  was  a 
mortgage. 

The  jury  returned  a  verdict  for  the  defendants;  and  the  plain- 
tiffs moved  for  a  new  trial,  for  a  misdirection. 

HosMKij,  C'h.  J.  The  only  (luestion  in  tlu'  lase  is,  whether  tlu' 
parol  evidence  ofTt'red  by  the  i)lainti(T,  to  control  or  vary  the  abso- 
lute deed,  was  admissible. 

On  a  former  occasion  between  the  present  parties,  it  was  decided 
liy  this  Court  that  the  writing  in  question  was  only  a  contract,  on 
eirtain  terms,  to  re-convey  the  land;  and  that  it  diil  not  reiuler  the 
deed  a  mortgage  {lieadintj  v.  Wrsloii.  7  Conn.  Hep.  1  13).  In  the 
-e  before  u-j,  the  parol  evidence  adduced  by  the  plaintiffs  to  prove 
an  absolute  deed  to  be  a  deed  on  eoiulition,  was  entirely  inadmis- 
sible. X(i  ease  determined  in  a  court  of  law  j)roving  its  admissi- 
bility, has  been  cited  ;  nor  am  I  aware  that  any  such  case  exists. 
On  the  contrary,  in  Flint  v.  Slirliltiii.  1.3  Mass.  Hep.  1 13,  it  was  ad- 
judged that  an  absolute  deed  of  latul  cannot  be  varied  by  parol 
evidence  shewing  that  it  wa-  for  the  loan  and  re-payment  of  a  sum 
<>f  money.     This  determination  is  directly  in  j)oint  for  the  defend- 


182  SECURITY.  [CIIAIV  11- 

ants.  It  has  been  so  frequently  adjudged  by  the  courts  on  both 
sides  of  the  Atlantic,  as  to  have  the  resistless  force  of  a  maxim,  that 
parol  evidence  cannot  be  received,  in  a  court  of  law,  to  contradict. 
vary,  or  materially  affect,  by  way  of  explanation,  a  written  con- 
tract {Sl'inner  £  al.  v.  Hendriclt,  1  Eoot,  253 ;  Stachpole  v.  Arnold,. 
11  Mass.  Kep.  27;  Jackson  d.  Van  Vechtcn  <£•  al.  v.  Sill  &  ah,  11 
Johns.  Rep.  201;  3  Stark.  Ev.  1002;  1  Phill.  Ev.  423,  441).  It  is 
not  in  opposition  to  this  legal  truth,  that  extrinsic  parol  evidence, 
when  requisite,  is  admissible  to  apply  the  terms  of  a  written  instru- 
ment to  a  particular  subject  matter,  but  in  perfect  consistency  with 
it.  This  is  not  to  vary  or  contradict,  but  to  give  its  intended  effect 
to  the  contract. 

Undoubtedly  there  have  been  determinations,  some  of  which  have 
been  cited,  proving  that  a  stranger  is  not  estopped  by  a  written 
agreement;  but  that  he  may  adduce  parol  testimony  to  prevent  a 
fraudulent  operation  of  it  upon  his  interests  {The  King  v.  Scam- 
monden,  3_  Term  Rep.  474;  New  Berlin  v.  Norwich,  10  Johns.  Rep. 
229;  3  Stark.  Ev.  1018,  1052).  But  this  principle  has  no  appli- 
cation to  the  present  case.  The  plaintiffs  have  not  suggested  that 
there  was  any  fraud  contemplated  and  practised  on  them.  The 
pretence  would  have  been  very  strange  unless  it  were  followed  up 
by  explicit  testimony  to  this  effect.  The  inhabitancy  of  Lucy  Dar- 
ling, 'prima  facie,  with  property  sufficient  to  purchase  a  farm  of  the 
value  of  800  dollars,  was  a  benefit  to  the  plaintiffs,  and  not  a  preju- 
dice ;  and  all  our  towns  would  be  pleased  in  this  manner  to  extend 
their  population. 

It  will  be  observed  that  the  question  before  us  is  not  what  a 
court  of  chancery  may  do,  in  the  exercise  of  its  peculiar  jurisdic- 
tion, but  what  is  the  established  rule  of  a  court  of  law.  It  has  been 
often  decided  in  chancery  that  parol  evidence  is  admissible  to  shew 
that  an  absolute  deed  was  intended  as  a  mortgage,  and  that  a  de- 
feasance was  omitted  through  fraud  or  mistake.  Hence,  a  deed 
absolute  on  the  face  of  it,  and  though  registered  as  a  deed,  will  in 
chancery  be  held  valid  and  effectual  as  a  mortgage,  as  between  the 
parties,  if  it  was  intended  by  them  to  be  merely  a  security  for  a 
debt,  although  the  defeasance  was  by  an  agreement  resting  in  parol 
{Washburn  v.  Merrills,  1  Day,  139,  1  Row.  Mort.  200;  Slron(j  (.(■ 
al.  v.  Stewart,  4  Johns.  Chan.  Rep.  167;  James  v.  Johnson  £•  al. 
6  Johns.  Chan.  Rep.  417;  Maxwell  v.  Jjady  Mountacute.  Free,  in 
Chan.  526 ;  Dixon  v.  Parlcer,  2  Ves.  225 ;  Marks  £  al.  v.  Pell,  1 
Johns.  Chan.  Rep.  594 ;  Clark  v.  Henrij,  2  Cowen,  324;  Sles  v.  Man- 
hattan Company,  1  Paige,  48).  But  these  decisions  are  altogether 
in  support  of  the  determination  of  the  judge  in  this  case.  Chan- 
cery interposes  because  a  court  of  law  does  not  afford  a  remedy. 
The  rule  in  the  courts  of  law  is  that  the  written  instrument,  in 


ISKC.   II.]  SWAH'l'    C.    SKRVIf'E.  183 

contemplation  of  law,  contains  the  true  a|;reenient  of  the  parties, 
and  that  the  writing  furnishes  better  evidence  of  their  intention 
than  any  that  ean  be  su|)j)lied  by  j)arol.  Hut  in  e<juity,  relief  may 
be  had  a^^jainst  any  deed  or  eontraet  in  writing  founded  in  mistake 
or  fraud  ( 1  Madd.  Chan.  41  ;  Muses  v.  Murfjatrorid,  1  Johns.  Chan. 
Kep.  128;  Marks  ct'  al.  v.  Pell,  1  Johns.  Chan.  Kep.  51U  ;  Gillespie 
<t-  MX.  V.  Moon,  2  Johns.  Chan.  Rep.  585 ;  Noble  v.  Comslock,  3 
Conn.  Rep.  V.K>). 

On  the  whole,  it  is  incontrovertibly  clear  that  the  decision  com- 
l)lained  of  is  correct,  and  that  a  new  trial  must  be  denied. 

Peters,  Williams  and  Bissell,  JJ.,  were  of  the  same  opinion. 

Daggett,  J.,  having  been  of  counsel  in  the  cause,  gave  no  opinion. 

New  trial  not  to  he  granted.^ 


SWART     V.     SERVICE. 

Supreme  Court  of  New  York,  1839. 

(21  Wend.  30.) 

This  was  an  action  of  ejectment,  tried  at  the  Saratoga  circuit  in 
May,  1837,  before  the  Hon.  John  Willard,  one  of  the  circuit  judges. 
The  j)laintifrs,  the  chikiren  of  James  Swart,  deceased,  who  was 
the  only  child  and  heir  at  law  of  Derick  Swart,  showed  title  by  lease 
und  release,  bearing  date  21th  and  2r)th  Sejjtember,  1784,  executed 
by  John  Cuerdon  to  Derick  Swart,  conveying  t)8  acres  of  laml,  tiie 
premises  in  question :  which  instruments  of  lease  and  release  were 
duly  acknowledged  by  Cuerdon  on  the  sixth  day  of  April,  1804. 
Cuerdon,  the  releasor  of  the  premises,  died  in  possession  of  the 
premises  eight  or  nine  years  before  the  trial,  having  occupied  them 
since  the  date  of  the  lease  and  release.  The  defendant  was  in  ))n>- 
fession  of  the  premises  at  the  commencement  of  the  suit.  Hi- 
offered  to  prove  that  the  lease  and  release  was  in  fact  given  as  a 
mortgage  for  the  security  of  a  debt  due  from  Cuerdon  to  Swart, 
and  that  the  debt  was  paid  by  Cuerdon  to  Swart  many  years  before 
his  death:  this  evidence  was  objected  to,  unless  the  defendant  would 
' onnect  himself  with  Cuerdon,  and  the  objection  was  sustained  by 
'le  circuit  judge.  The  defendant  then  rcMpiested  the  judge  to 
liarge  that  tlu'  evidence  established  an  adverse  possession  in  Cuer- 
don. The  judge  refused  so  to  charge,  and  directed  a  verdict  for  tin- 
plainliffs.  and   the  jury   found   accordingly.     The  defendant    now 

'  MrClnnr  v.   Whilr.  .%  Minn.   17s    (lS«il)  ;    <}at<s  v.  Sutherland.  7<>   Mich. 
•2:n    (1880),  accord. 


184  SECURITY.  [CHAP.  II. 

moved  for  a  new  trial  on  the  two  grounds  raised  at  the  circuit,  and 
on  the  additional  ground,  that  from  lapse  of  time,  payment  of  the 
mortgage  might  be  presumed.     .     .     . 

M.  T.  Rei/nolds  for  the  defendant. 

S.  Stevens,  for  the  plaintiffs,  insisted  that  a  grantor  cannot  set 
up  adverse  possession  against  his  grantee ;  and  that  it  is  not  admis- 
sible at  law  to  give  parol  evidence,  showing  that  a  deed  is  in  fact 
a  mortgage,  unless  fraud  or  mistake  be  shown. 

By  the  Court:  Cowex,  J.  The  first  offer  made  by  the  defendant 
had  no  dependence  on  privity  of  title  between  him  and  Guerdon. 
It  was  a  simple  offer  to  prove  an  outstanding  title,  by  turning  the 
conveyance  by  lease  and  release  into  a  mortgage,  and  shewing  its 
extinction  by  payment.  That  would  divest  the  title  of  Swart  and  of 
his  grandchildren,  the  plaintiffs ;  for  payment  extinguishes  a  mort- 
gage at  law  as  well  as  in  equity  {Jackson,  ex  dem.  Rosevelt,  v. 
Stacl'house,  1  Cowen,  122).  But  independent  of  that,  if  Swart 
were  a  mere  mortgagee,  neither  he  nor  those  claiming  under  him 
could  recover  (2  E.  S.  237,  §  37,  2d  ed.,  Jaclson,  ex  dem.  Titus, 
V.  Myers,  11  Wendell,  533,  538,  539;  Steivart  v.  Hutchins,  13  Wen- 
dell, 4.^^;  Morris  v.  Mowatt,  2  Paige,  586). 

It  has  often  been  held  in  the  courts  of  equity  of  this  State,  that  a 
deed,  though  absolute  on  its  face,  may,  by  parol  evidence,  be  shown 
to  have  been  in  fact  a  mortgage,  in  the  terms  offered  here ;  and  the 
same  doctrine  was  held  by  this  court  in  Boacli  v.  Cosine,  9  Wendell, 
227,  and  ^Yalton  v.  Cronley's  Adnir,  14  id.  63,  equally  applicable  to 
a  court  of  law,  and  has  it  seems  ceased  to  be  the  subject  of.  contest ; 
for  no  objection  to  the  doctrine  is  now  made.  For  one,  I  was  al- 
ways at  a  loss  to  see  on  what  principle  the  doctrine  could  be  rested, 
cither  at  law  or  in  equity,  unless  fraud  or  mistake  were  shown  in 
obtaining  an  absolute  deed  where  it  should  have  been  a  mortgage. 
In  either  case,  the  deed  might  be  rectified  in  equity;  and  perhaps 
even  at  law,  in  this  State,  where  mortgages  stand  much  on  the 
same  footing  in  both  courts.  Short  of  that,  the  evidence  is  a  direct 
contradiction  of  the  deed ;  and  I  am  not  aware  that  it  has  ever  been 
allowed  in  any  other  courts  of  equity  or  law.  But  with  us  the  doc- 
trine is  settled,  and  I  am  not  disposed  to  examine  its  foundations, 
at  least,  without  the  advantage  of  discussion. 

It  is  not  necessary  to  say  whether  the  lapse  of  time  might  be 
called  in  as  presumptive  proof  of  payment,  though  that,  as  a  gen- 
eral doctrine,  is  too  clear  to  be  disputed.  If  the  defendant,  on  a  new 
trial,  shall  succeed  in  making  out  a  mortgage,  he  will  be  entitled  to 
such  proofs  of  payment  as  the  nature  of  his  case  may  afford,  subject 
to  the  answering  proofs  of  the  plaintiffs,  provided  proof  of  payment 
shall  become  necessary. 

It  will  not,  however,  be  necessary  that  we  see,  to  complete  his  de- 


sKf.  11.]  :  sw  Aiti'   /•.  si;i;\i(i;.  185 

i.nsc  lull',  wliatfVtT  it  may  lir  uii  a  lull  lilcd  to  I'oroclo.-«c  hy  tlio 
n-'pri'si'iitativos  of  Di-rirk  Swart  ;  for  .-iinc  ilic  revised  statutes, 
showing'  that  the  i)laintiirs  or  tliosi-  hiuUt  whom  tliey  claim  are 
iiitre  morl;,'a^H'es,  |)rov<s  as  we  have  st-eii,  an  oiitstantliii^  title. 

'rh(i\'  was  no  c\i(hiuc  of  adverse  pos.se.ssion  in  Cuerdon.  I  am 
111'  opinion  that  a  new  trial  should  he  granted;  the  cost.s  to  abide 
the  event. 

Till-:  C'iiii:f  Jistk  i;  |  Nki-sox  |  loiuurred. 

.Mi{.  Jlstum:  BitoNso.v  delivered  the  following  dissenting  opinion  : 

Although  I  seldom  allow  myseH"  to  depart  from  the  decisions  of 
those  who  have  gone  before  me  in  this  court,  I  cannot  agree  with  my 
brethren  in  following  one  or  two  recent  ca.ses  which  hold  that  an 
absolute  deed  can  be  tnrned  into  a  mortgage  in  a  court  of  law,  by 
]»arol  evidence.  Where  the  transaction  was  intended  as  a  mortgage, 
and  tlirough  fraud  or  mistake  the  conveyance  lia.s  been  made  abso- 
lute in  its  terms,  a  court  of  equity,  acting  \ii)on  well-established 
principles,  can  ri'form  the  deed.  But  this  will  only  be  done  on  a 
direct  and  appro])riale  ])roeceding  for  that  purpose,  and  after  such 
ani|)le  notice  to  all  parties  in  interest,  as  will  tend  most  effectually 
to  guard  against  suri)ri>e,  fraud  and  false  swearing.  And  besides,  a 
court  of  erpiity  can  and  will  protect  third  persons  who  may  have 
parted  with  their  money  on  the  faith  of  the  deed,  liut  a  court  of 
lav;  lias  neither  power  nor  process  to  reform  a  deed.  If  parol  evi- 
dence to  contradict  or  in.sert  a  condition  in  the  conveyance  can  be 
received  at  all,  it  must  of  necessity  be  in  a  collateral  proceeding; 
and  it  must  be  received  whenever  either  party  chooses  to  offer  it. 
It  can  be  given  without  notice,  and  without  the  means  of  guarding 
against  the  obvious  danger  of  fraud,  surprise  and  perjury.  And  be- 
yond this:  when  a  court  of  law  turns  an  absolute  deed  into  a  mort- 
gage, it  has  no  power  to  protect  a  bona  fide  ])urchaser.  OtluT  mis- 
chiefs will  be  likely  to  result  from  admitting  such  evidence;  but 
without  attempting  at  this  time  to  point  them  out,  T  shall  content 
myself  with  dissenting  from  what  1  deem  a  new  and  very  danger- 
ous doctrine. 


186  SECURITY.  [CHAP.  II. 


HODGES    V.     THE    TENNESSEE     MARINE    AND     FIRE 
INSURANCE     CO. 

Court  of  Appeals  or  New  York,  1853. 

(8  N.  Y.  416.) 

This  was  an  action  brought  in  the  Superior  Court  of  the  city  of 
New  York  upon  a  policy  of  insurance  upon  a  hotel  in  Massachu- 
setts, issued  by  the  defendant  to  Joseph  A.  Slamm  on  the  first  of 
September,  1848.  On  the  same  day  Slamm  conveyed  the  premises 
to  the  plaintiff  by  a  deed  absolute  on  its  face.  On  the  4th  of  the 
same  month  Slamm  with  the  assent  of  the  company  assigned  the 
policy  to  the  plaintiff  "  as  a  collateral  security."  The  property  in- 
sured was  burned  in  the  month  of  April,  1849. 

In  the  complaint  the  plaintiff  alleged  that  Slamm  had  conveyed 
the  insured  premises  to  him  by  deed,  "  and  that  prior  tO  and  at  the 
time  of  the  conveyance  the  said  Slamm  had  been  and  was  legally  in- 
debted to  him,  and  as  a  further  security,  simultaneously  with  the 
conveyance "  assigned  the  policy  to  him  as  a  collateral  security. 
The  defendant  in  the  answer  denied  the  plaintiff's  right  to  recover, 
on  the  ground  that  the  assignment  was  approved  on  the  represen- 
tation that  it  was  intended  as  a  collateral  security  upon  an  indebt- 
edness secured  by  a  mortgage,  when  in  fact  the  insured  premises 
had  been  conveyed  absolutely  to  the  plaintiff,  by  means  whereof 
the  policy  became  void.  The  plaintiff  replied,  denying  that  any 
representation  that  the  indebtedness  was  secured  by  a  mortgage 
was  made,  or  that  the  approval  of  the  defendant  was  made  on  the 
faith  of  such  a  representation,  and  averring  that  at  the  time  of  ap- 
proving the  assignment  the  defendant  was  informed  of  the  deed. 

Oil  the  trial  the  plaintiff,  after  giving  in  evidence  the  policy  and 
assignment  and  proving  the  loss,  rested.  The  defendant's  counsel 
then  moved  for  a  nonsuit,  which  was  denied.  The  deed  from 
Slamm  to  the  plaintiff  was  then  given  in  evidence,  and  it  was  proved 
by  witnesses  in  the  defendant's  office  that  at  the  time  the  approval 
of  the  assignment  was  made,  it  was  understood  to  be  collateral  and 
to  cover  some  mortgage,  and  that  the  blank  for  the  assignment 
was  there  filled  up  at  the  request  of  the  plaintiff.  The  defendant 
then  rested.  The  plaintiff  then  called  a  witness  to  show  that  the 
deed  was  given  merely  as  a  security  for  money  due  to  him  from 
Slamm.  The  defendant's  counsel  objected,  on  the  ground  that  the 
])laintiff's  pleadings  alleged  the  deed  to  be  an  absolute  conveyance, 
and  the  court  sustained  the  objection.  The  plaintiff's  counsel  then 
moved  to  amend  the  complaint  by  adding  an  averment  that  the  con- 


BTU-.  11.)  IlOlMiKS    J'.    TKNN.    M.    4     I'.    INS.    t'O.  1^7 

vcyanic  of  tlic  insuivd  jirciniscs  was  made  as  a  collalcral  M-tuniy 
for  an  indt'litciliU'ss  of  Slainm  to  llic  plaintilf.  Tin-  (h'ft'iHlanl  op- 
posed the  anu'iuliiicnt,  on  tlic  ground  that  proof  of  such  proposcil 
alli'gation  was  inadmissible,  as  it  went  to  contradict  or  vary  the 
deed,  and  also  that  it  was  not  allowaldc  under  the  code  of  pro- 
cedure, as  it  went  to  make  out  a  new  case,  and  to  remedy  a  failun? 
of  j)roof.  The  court  overruli'd  the  objections  and  allowed  the 
amendment  on  condition  that  it  he  deemed  traversed  by  the  answer. 

The  plaintiff  then  ])rove(l  hy  ])arol  that  the  deed  was  <;iven  as  a 
collateral  security  for  money  owinj,'  to  him  by  Slamm,  and  also  to 
cover  expected  advances.     Tlu'  parties  then  rested. 

The  defendant's  counsel  then  submitted  that  the  testimonj 
showed  an  absolute  title  in  tlie  plaintitf  under  tlie  deed:  that  if  as 
between  the  immediate  parties  to  it  it  might  be  construed  as  a 
mortgage,  yet  as  to  the  defendant  it  was  wh;'t  it  puri)orted  to  lie,  an 
absolute  deed.  The  court  overruled  the  objection  and  directed  a 
verdict  for  the  plaintiff.  The  judgment  rendered  upon  the  verdict 
was  allirmed  by  the  court  en  banc,  and  the  defendant  appealed. 

Johnson,  J.  The  determination^  of  the  judge  in  allowing  the 
amendment  of  the  pleadings  was  within  iiis  discretionary  power, 
and  is  not  the  subject  of  review,  in  this  Court. 

The  remaining  question  in  the  cause  relates  to  the  existence  of 
an  insurable  interest  in  Slamm  at  the  time  of  the  assignment  of  the 
policy  'o  Hodges  and  of  the  loss.  If  such  an  interest  <'xisted,  then 
the  plaintiff's  recovery  cannot  be  disturbed. 

Upon  the  evidence  there  is  no  doubt  of  the  following  facts: 
That  at  the  time  when  the  in.surance  was  effected,  September  1, 
1848,  Slamm  was  the  owner  in  fee  of  the  premises  insured;  that 
on  the  -1th  of  Sejitember,  1848,  he  conveyed  the  premises  to  Hodges 
by  a  deed  absolute  upon  its  face,  but  intended  to  operate  as  a  mort- 
gage, and  that  upon  the  same  day  he  transferred  the  policy  to 
Hodges  as  collateral  security,  and  that  this  transfer  was  made  by 
till'  assent  of  tlu'  comi)any. 

If  there  is  no  rule  of  law  forbidding  us  to  take  notice  of  the  fact 
that  the  deed  was  intended  as  a  mortgage,  then  lu'yond  all  (pu'stion 
Slamm  as  the  owner  of  the  equity  of  redemption  in  the  |)remises  liad 
an  interest  in  the  insurance  which  had  been  cfTeeted  by  him  as  the 
owner  of  the  fee,  and  tlu-  assignment  with  the  company's  assent 
transferred  this  interest  to  Hodges  as  collateral  .security,  and  he 
may  upon  the  ground  of  the  same  interest  sustain  the  recovery 
which  has  been  had  in  this  case. 

The  (piestion  then,  taking  it  mo.-t  strongly  against  the  plaint ilT. 
is,  whether  in  eipiity  Slamm  might  have  a  bill  to  redeem  again-t 
Hodgpt!,  notwithstanding  the  deed  was  absolute  njion  its  faei\ 
M'rhh  V.  nirr.  C  Hill,  '.'1!'.  does  not  conflict  with  the  proposition  that 


188  SECURITY.  [CHAP.  II.. 

such  a  l)ill  might  be  maintained.  It  only  professes  to  decide  that  at 
law  unwritten  evidence  is  inadmissible  to  show  that  a  deed  was  in- 
tended as  a  mortgage.  From  an  early  day  in  this  State  the  admis- 
sibility of  such  evidence  had  been  established  as  the  law  of  our 
Courts  of  Equity,  and  it  is  not  fitting  that  the  question  should  now 
be  re-examined.  Upon  the  authority  of  Strong  v.  Stewart,  4  J.  C, 
107;  Claris  v.  Ilcnri/,  2  Cow.  .332;  Whittick  v.  Kane,  1  Paige,  206; 
Van  Burcn  v.  Ohnsiead,  5  Paige,  10;  Mclntyre  v.  Humphreys,  1 
Hoff.  31:,  with  which  agree  Taylor  v.  Little,  2  Sumner,  328;  Jen- 
l-ins  v.  Ehlrcdfjc.  3  Story,  293,  in  all  which  cases,  except  Clarh  v. 
Henry,  the  point  was'  directly  before  the  Court,  we  think  that  the 
plaintiff's  recovery  in  this  case  ought  to  be  sustained. 

Ruggles,   Ch.   J.,  and   Gardiner,  Jewett  and  Morse,  JJ.,  con- 
curred with  Judge  Johnson  in  favor  of  affirming  the  judgment. 

Willard,^  Taggart  and  ]\Iason,  JJ.,  were  for  its  reversal. 

Judgment  affirmed. 


DESPxVPl)    v.     WALBEIDGE. 
Court  of  AppEAts  of  Xew  York,  185T.  • 

(15  X.   Y.   374.) 

This  action  was  brought  to  recover  for  the  use  and  occupation  of 
a  store,  in  Buffalo,  by  tlie  defendant,  from  j\Iay  1st,  1851,  to  August 
1st,  1851,  which  the  complaint  averred  to  be  worth  $375.  It  also 
averred  that  the  defendant  on  May  1st,  1851,  agreed  to  pay  for  such 
use  and  occupation  $1500  per  annum,  payable  quarterly.  The  ac- 
tion was  tried  before  a  referee,  who  found  the  following  facts :  On 
the  8th  of  ]\Iarch,  1850,  one  Sherwood  demised  to  H.  B.  Eitchie  the 
store  above  mentioned,  and  another  adjoining,  for  two  years  from 
tlie  first  of  May  then  next,  with  a  right  of  renewal  on  certain  con- 
ditions, Ritchie  covenanting  to  pay  a  certain  rent.  On  the  17th  of 
Noveml)er,  1850,  Ritchie  assigned  this  lease  and  his  title  to  the 
term  tlierel)y  granted  to  the  plaintiff.  At  the  time  of  such  assign- 
ment the  defendant  was  in  possession  of  the  premises  as  a  sub- 
tenant of  Ritchie,  under  a  lease  executed  April  30th,  1850,  for  the 
term  of  one  year  from  ]\ray  1st,  1850. 

Sherwood,  the  original  lessor,  on  the  J)th  of  October,  1850,  as- 
signed liis  interest  in  the  lease  executed  by  Ritchie  to  Robert  Codd 
for  the  purpose  of  securing  a  debt  which  he  owed  to  Codd.  On  the 
19th  of  November,  1850,  Ritchie  assigned  to  Codd  all  his  interest 
as  landlord  in  the  siil)-lense  executed  between  himself  and  the  de- 

'  Tlie  dissenting  oi)inioii  of  W'illard,  J.,  is  oniilted. 


j,K<'.  11.)  DKsi'Aiii)  r.   \vai,iii;iim;i;.  Ib'J 

fi'liilaiit.  The  (Icrfiidaiit  u«(U]»ii'»l  llu-  jnH'iiii.-o  iiudtr  ilir  lta.«c 
from  Kitcliie,  and  altir  iIk.-  assi^Miiiicnl  thereof  to  L'odd  jmid  llie 
rent  to  the  hitter.  On  the  1st  day  of  May,  1851,  the  i)hiinliir  .-erved 
oil  tlie  (U'l'i'iidant  a  written  notice  that  he  was  the  assi;j;nee  of 
IJitehie's  term,  and  tlial  in  ease  the  defen»hiiit  hehl  <»vcr  hcyond  hii 
term,  then  at  the  |)(»int  of  ex|iiriii;r.  the  |thiinliir  wmdd  collider  the 
premises  as  heUl  and  taken  l»y  di  IVndant  U>v  llie  itrni  of  one  year 
from  May  1st,  1.S51,  at  the  annual  rent  of  .$1.>00,  payable  <jiiarterly. 
The  j)huiitiir,  having  ])r()ved  these  faets,  rested  his  ea.»e,  and  the 
defeiKhint  moved  for  a  non-suit,  which  Ijeiiig  refused  Ijy  the  referee, 
lie  took  an  exeejition.  Other  exceptions  were  taken  upon  the  trial, 
and  to  the  n-feree's  report,  which,  with  tlie  facts  relating  thenio, 
-utlicii'iitlv  ap[)ear  in  the  oj)iiiion  (d'  the  court.  The  referee  reported 
that  the  defendant  occui)ied  under  an  inijdied  agreement  to  pay 
what  the  occupation  of  the  premises  was  reasonably  worth,  which 
he  found  to  be  at  the  rate  of  .$riOO  per  annum.  Judgment  was 
ntered  \\\)on  his  report,  which  was  allirnied  hy  the  Supreme  Court 
it  general  term,  ancl  the  defeiKhiiit  a])[)caled. 

SiiLUEN,  J.'  .  .  .  The  ])rincipal  (|uestion  i-  that  which  ari.-es 
upon  the  exception  stated  in  the  referee's  report.  It  is  .set  forth  in 
the  answer,  in  substance,  that  the  assignment  of  the  Sherwood  lease 
from  liitchie  to  the  i)laintitr  was  made  at  tlie  re<pie>t  and  for  the 
benefit  of  Codd,  and  for  the  sole  purpose  of  aiding  the  latter  in  the 
collection  of  his  delit  against  Sherwodd.  It  is  also  stated  that 
this  debt  had  been  fully  paid  before  May  1st,  1851,  by  Hiram  E. 
Howard,  who  liad  succe<'ded  to  the  rights  of  Sherwood  in  the 
premises,  and  tliat  Kitcliie,  on  the  1st  of  May,  1851,  surrendered  all 
Ids  rights  in  the  premi.<es  to  Howard,  wlio.-e  tenant  the  defendant 
then  became.  These  facts  the  defendant  offered  to  prove  and  his 
offer  was  rejected.     .     .     . 

But  it  is  urged  that  the  ])njof  offered  was  properly  excluded  for 
another  reason.  The  assignment  to  the  plaintiff  being  abxdute  in 
its  terms,  it  is  said  that  parol  evidence  was  inadmissible  to  show- 
that  it  was  intended  as  security  merely;  and  the  case  of  Webh  \. 
liicc,  G  Hill,  'iWK  is  cited  in  support  of  this  position.  H  was  hehl 
in  that  ea.se  that  in  an  action  at  law  jtarol  evidence  could  not  1h' 
received  to  show  that  a  deed,  absolute  u|)oii  its  face,  was  inteiidi-d  as 
a  mortgage.  It  was  conceded,  however,  that  the  rule  was  .settled 
otherwise  in  e«piity.  In  the  ca.se  of  ffoihjcs  v.  The  Tiinu'ssn-  Insur- 
ance ComiKun/.  I  Seld.  1  Hi,  this  ccnirt  held  that  the  rule  in  etpiily 
continued  the  same  since  the  case  of  Webb  v.  liicr  as  before.  The 
only  (piestion,  therefore,  upon  this  subject  is  whether  the  ecpiity 
rule  is  applicable  to  the  present  ca.se,  which  is  a  purely  legal  action. 

'  Portions  of  liic  upiiiioii,  dialing'  witli  foreign  question-,  arc  uniittcd. 


190  SECURITY.  [chap.  ir. 

As,  however,  since  the  enactment  of  the  Code  of  Procedure  a  de- 
fendant may  avail  himself  of  an  equitable  as  well  as  a  legal  defense 
in  all  eases,  whatever  may  be  the  nature  of  the  action,  there  would 
8cem  to  be  but  little  room  for  doubt  upon  the  point  {Dobson  v. 
Pierce,  2  Kern,  156;  Crary  v.  Goodman,  id.  26G;  Code,  §  150,  subd. 
2).  That  a  deed  absolute  on  its  face  was  intended  as  a  mortgage, 
would,  before  the  Code,  have  been  an  equitable  defense,  because  it 
could  not  have  been  proved  at  law.  In  order  that  it  should  now  be 
made  available  in  legal  actions,  as  provided  by  the  Code,  the  evi- 
dence to  establish  it  must  be  admitted  in  that  class  of  actions. 

It  may  still  be  said  that,  admitting  it  to  be  shown  that  the  assign- 
ment to  the  plaintiff  was  merely  collateral  to  the  debt  of  Sherwood 
to  Codd,  and  that  this  debt  had  been  fully  paid  prior  to  May  1st, 
1851,  yet  so  long  as  the  lease  was  not  reassigned,  the  legal  title 
remained  in  the  plaintiff,  and  that  Eitchie  could  not  surrender  the 
lease  while  this  title  remained  outstanding.  The  answer  to  this  is, 
that  if  the  assignment  was  collateral,  it  is  the  same  as  if  the  con- 
dition had  been  incorporated  in  the  assignment  itself,  that  upon 
payment  of  the  debt  the  rights  of  the  assignee  should  cease ;  and  in 
such  a  case  it  is  clear  that  no  formal  reassignment  would  be  neces- 
sary. Whatever  might  be  the  effect  of  such  an  assignment  in  the 
hands  of  a  subsequent  bona  fide  assignee,  it  cannot  be  set  up  by  the 
original  assignee  as  evidence  of  a  subsisting  title  in  him,  after  full 
performance  of  the  conditions  upon  which  it  was  made. 

There  is  still  another  question  of  fact  which  arose  at  the  trial, 
but  which  was  not  passed  upon  by  the  referee,  viz.,  whether  the 
assignment  to  the  plaintiff  was  intended  as  a  security  not  only  for 
the  debt  of  Sherwood  to  Codd,  but  for  that  of  Ritchie  also. 
Should  it  turn  out  upon  the  new  trial  that  the  lease  was  assigned 
as  security  for  both  debts,  and  either  remained  unpaid  on  the  1st  of 
May,  1851,  then  the  case  on  the  part  of  the  plaintiff  would  be  made 
out. 

The  judgment  must  be  reversed  and  a  new  trial  must  be  ordered, 
with  costs  to  abide  the  event. 

All  the  judges  who  had  heard  the  argument  concurring  in  this 
opinion.  New  trial  ordered} 

'  That  such  evidence  is  admissible  at  law,  see  Jackson  v.  Lodge,  36  CaJ.  28 
(18(18),  elaborately  reviewing  the  authorities;  McAnnulty  v.  Seick,  59  la. 
oSO  (1882);  Calif.  Civ.  Code,  1885,  §  2925:  No.  Dak.  Civ.  Code,  1895, 
§  4703. 

As  to  the  weight  of  evidence  required  to  prove  an  absolute  deed  a  mort- 
gage, see  Wilson  v.  Parshall,  129  N.  Y.  223    (1891). 


,j:,..  ,,.]  CAMl'UKLL    /  .    DK.VItMOKN. 


191 


CAMTRKLL  v.    DKAKU*  >HN'. 

Supreme  Jlduiai.  Coi  kt  t)F  Massachusetts,  1872. 

(109  Mass.  130.) 

Bill  in  oquity,'  filed  July  12,  ISCJl),  to  compel  a  reconveyance  of 
land  l)y  the  defendant  to  the  plaint ilT,  on  the  j^round  that  the  plain- 
tiir's  conveyance  of  it  to  the  defendant,  althouf,d»  in  form  ahsolute, 
was  in  suhstanee  a  mortgage. 

Tlic  bill  allefjed  that  the  plaintiff  on  June  11,  18G(J,  agreed  with 
Artemas  Tirrill  for  the  purchase  by  him  from  said  Tirrill  of  a  par- 
.  el  of  land  in  C'harlestown,  and  at  the  same  time  Tirrill  ^'ave  him 
a  bond  to  convey  the  land  at  any  time  within  three  years  from 
-aid  June  11,  upon  the  payment  to  him  of  $5500,  the  plaintiff  to 
j)ay  all  assessments  upon  the  land  meanwhile;  that  since  taking  the 
IkhkI  the  i)laintilT  has  occupied  the  land;  that  in  the  early  part  of 
June,  18G!t,  he  made  arrangements  to  borrow  the  sum  of  $5500 
from  Charles  J.  Walker,  in  order  to  tender  the  same  to  Tirrill,  and 
-ecure  performance  of  his  obligation  to  convey,  within  the  time 
lixed  in  the  bond;  that  on  June  11,  18GJ),  being  disappointed  in 
linding  Walker,  he  met  the  defendant ;  that  the  defendant  expressed 
regret  that  the  plaintiff  should  be  obliged  to  lose  fulfilment  of  the 
bond  through  not  having  in  time  the  money  required,  and  V(dun- 
tarily  offered  to  lend  to  the  plaintiff  the  required  amount,  and  the 
plaintiff  ac<-ei)ted  the  offer  as  an  act  of  frii-ndship,  as  he  supposed; 
that  the  defendant   and  the  plaintiff  went   immediately  to  Tirrill 
ind  tendered  to  him  said  sum  of  $5500,  and  Tirrill  thereujwn  de- 
livered to  the  plaintiff  his  deed  of  the  land  in  fee  simple,  in  com- 
j.liance  with  the  houd,  which  deed  was  dated  May  21,  and  was 
icknowledged  before  the  di'fendant  as  a  justice  of  the  peace  on  said 
•fune  11,  lS»;i);  that  upon  leaving  Tirrill  the  defendant  said  to  the 
idaintifT  that  he  ought  to  be  secured  for  his  loan  in  some  way,  and 
proposed  that  they  should  go  to  tiie  defendant's  attorney,  to  have 
the  necessary  iiajH'rs  jirepared  ;  that   they  thereupon  went   to  the 
attorney's  otlice.  where  the  defendant   and  the  attorney  consulted 
together  privately,  and.  withoid  consulting  the  j)laintiff.  an  instru- 
ment was  drawn,  and  handed  to  him  to  sign,  wliieh  upon  reading  he 
found  to  be  drawn  fo  convey  tlu*  land  in  fee  simple  to  the  defiMid- 
iint  ;  that  the  |)laintitf  objecled  fo  this  form  of  conveyance,  an<l  de- 
sired to  have  a  mortgage  drawn  insteail,  but  was  assured  by  both 
the  attorney  nnd  tin'  defendant  that  the  instrumi-nt  |)repan<l  would 

'  Tlio  xfatoiiicut  (if  fa>t*  lin-  been  somowfiat  curtailed. 


19g  SECURITY.  [chap.  il. 

have  the  same  effect ;  that,  being  ignorant  of  tlie  legal  effect  of  said 
instrument  made  under  such  circumstances,  and  relying  on  the 
statements  of  the  attorney  and  the  defendant,  he  on  said  June  11 
executed  and  delivered  said  deed  to  the  defendant;  and  that  it 
was  recorded  in  the  registry  of  deeds  at  the  same  time  witli  Tir- 
rill's  deed.    .    .    . 

The  defendant,  in  his  answer,  denied  that  he  ever  made  or  of- 
fered to  make  any  loan  to  the  plaintiff;  alleged  that,  on  the  con- 
trary, he  refused  a  request  of  the  plaintiff  for  a  loan;  and  further 
alleged  that  "  the  defendant  agreed  to  pay  Tirrill  the  said  sum  of 
$5500  for  the  premises  described  in  the  bill,  provided  the  title  to 
said  premises  should  stand  in  the  defendant's  name,"  and  the 
plaintiff  agreed  that  immediately  on  payment  of  the  sum  to  Tirrill 
the  land  should  be  conveyed  in  fee  simple  to  the  defendant,  ''and 
the  plaintiff  should  not  have  any  interest  or  title  thereto;"'  that 
thereupon  the  defendant  paid  the  $5500  to  Tirrill,  and  Tirrill  exe- 
cuted and  delivered  to  the  plaintiff  a  deed  of  the  land.   .  .  . 

Wells,  J.  Eegarding  the  money  paid  to  Tirrill  for  the  land  as 
the  money  of  the  plaintiff,  by  loan  from  the  defendant,  there  is  still 
no  resulting  trust  in  favor  of  the  plaintiff  arising  from  the  whole 
transaction.  A  deed  was  taken  to  the  plaintiff,  according  to  his 
equitable  interest ;  and  he  thereupon  conveyed  to  the  defendant  by 
his  own  deed.  The  recitals  and  covenants  of  that  deed  preclade 
him  from  setting  up  any  trusts  by  implication,  against  its  express 
terms  (BlodgeU  v.  Ilildrcih,  103  *Mass.  484).  His  agreement  with 
the  defendant  for  a  reconveyance  cannot  be  enforced  as  a  contract 
for  an  interest  in  lands  (Gen.  Sts.,  c.  105,  §  1),  nor  will  it  create 
an  express  trust  (Gen.  Sts.,  c.  100,  §  19).  The  question  then  is, 
Can  the  deed  be  converted  into  a  mortgage,  or  impeached  and  set 
aside,  or  its  operation  restricted,  upon  any  ground  properly  cogniz- 
able in  a  court  of  chancery  ? 

This  question  was  somewhat  discussed,  though  not  decided,  in 
Newton  v.  Fay,  10  Allen,  505.  Some  suggestions  were  made  as  to 
the  bearing  of  the  statute  of  frauds  upon  it,  in  Glass  v.  Hidbert, 
103  Mass.  24.  For  the  reasons  there  suggested,  we  do  not  regard 
the  statute  of  frauds  as  interposing  any  insuperable  obstacle  to 
the  granting  of  relief  in  such  a  case ;  because  relief,  if  granted,  is 
attained  by  setting  aside  the  deed ;  and  parol  evidence  is  availed  of 
to  establish  the  equitable  grounds  for  impeaching  that  instrument, 
and  not  for  the  purpose  of  setting  up  some  other  or  different  con- 
tract to  be  substituted  in  its  place.  If  proper  grounds  exist  and  are 
shown  for  defeating  the  deed,  the  equities  ])et\veen  the  parties  will 
be  adjusted  according  to  the  nature  of  the  transaction  and  the  facts 
and  circumstances  of  the  case;  among  which  may  be  included  the 
real  agreement.     It  does  not  violate  the  statute  of  frauds,  to  admit 


si;( .  II. J  CA.Mi'Ui;i.i,   c.   iti;.\i;it()i[N'.  VJ'i 

jtainl  ivitk'Uce  of  ihu  real  a;,^n'i'iin.iil,  a>  an  t-loincnt  in  tlii'  proof 
of  fraud  or  otlier  vice  in  tlu'  transat-tion,  which  is  n'lie(l  on  to  dc- 
fi-al  the  writlun  instruini'Ut. 

Wliat  will  justify  a  court  of  chancery  in  .setting  aside  a  formal 
deed,  and  •;ivin<;  Iho  grantor  an  oi)|)ortunity  to  redeem  the  laml, 
on  the  ground  that  it  was  conveyed  oidy  for  security,  although  no 
defeasance  was  taken,  is  a  question  of  great  dilliculty,  and  one  u|»o!i 
which  there  exists  a  considerable  diversity  of  adjudication,  as  well 
as  of  opinion.  In  Story  Eq.,  i^  lUlS,  it  is  stated  in  general  terms 
to  be  "  fraud,  accident  and  mistake."  In  4  Kent  Com.,  Gtli  ed.. 
142,  113,  it  is  laid  down  that  "  jjarol- evidence  is  admissiljle  in 
ecpiity,  to  show  that  an  absolute  dee<l  was  intended  as  a  mortgage, 
and  that  the  defeasance  was  omitted  or  destroyed  by  fraud,  sur- 
])rise  or  mistake."  "  It  is  determined,  on  the  statute  of  frauds,  that, 
if  a  mortgage  is  intended  by  an  absolute  conveyance  in  one  deed  and 
a  defeasance  making  it  redceniable  in  another,  the  first  is  exccuti'd. 
and  the  party  goes  away  with  the  defeasance,  that  is  not  within  the 
statute  of  frauds"  {Divon  v.  I'arkcr.  2  Ves.  Sen.  211),  225).  Similar 
declarations  are  to  be  foujid  in  Walh-iT  v.  Walker,  2  Atk.  98  ;  Joyitcs 
V.  SfiillniDi,  3  Atk.  3S8,  and  Maxirrll  v.  Monnlacute,  Pre.  Ch.  52^: 
and  adjudications  in  Wdshhurn  v.  Merrills,  1  Day,  130:  Daniels  v. 
Ahurd,  2  Eoot,  UlG,  and  Braincrd  v.  Ih-ainerd.  ir»  Conn.  -17">:  and 
FCC  Story  Eq..  §  7G8. 

This  indeed  is  only  one  form  of  api>licaiion  of  ihe  general  rule 
of  equity,  that  one,  who  has  induced  another  to  act  upon  the  sup- 
])osition  that  a  writing  had  1)een  or  would  be  given,  shall  not  take 
advantage  of  that  act,  and  escape  responsibility  himself,  by  plead- 
ing the  statute  of  frauds  on  account  of  the  absence  of  such  writing, 
which  has  In'cn  caused  by  his  own  fault.  Besides  the  cases  cited  in 
(ilass  V.  llulhcrt,  102  Mass.  24,  see  Bartlett  v.  Vickersgill.  1  Eden, 
h\7>\  s.  r.  1  Cox  C'h.  lo;  Browne  on  St.  of  Frauds.  §  Dl.  But  tliis 
principle  will  not  help  the  plaintiff  here,  because  he  does  not  allege 
that  any  defeasance  was  intended  or  expected;  and  it  is  found  by 
the  report  that  the  deed  "  was  executi'd  by  the  ])laintitT  intelligently, 
and  not  by  a<Hident  or  mistake,  and  that  no  fraud  was  practised 
to  procure  its  execution,  other  than  may  be  inferred  *'  from  the 
facts  stated. 

From  those  facts,  ami  from  the  bill  and  answer,  we  think  these 
points  must  be  taken  to  be  established,  to  wit,  1st,  that  the  plainiilT 
had  jiurehased  the  ])arcel  of  land  in  controversy  and  held  a  con- 
tract from  Tirrill  for  its  conveyance  to  himself  upon  payment  «»f 
the  sum  of  $.')."')()();  2d.  that  the  money  was  ]iaid  to  Tirrill.  and 
the  land  conveyed  Ity  Tirrill  to  the  plaintiff;  in  fulfilment  of  that 
eoiitra<t:  3d.  that  the  money  was  advanced  by  the  defendant  to 
the  jilaintiff  a<  a  loan,  and  the  deed  from  the  plaintiff  t"  tb.-  de- 
13 


194  SECURITY.  [CHAP.  ir. 

fondant  was  given  by  way  of  security  therefor.  Tlie  report  finds, 
''  from  all  the  circumstances  surrounding  the  transaction,  and  from 
tlie  acts  and  declarations  of  the  parties  at  the  time,  that  the  plain- 
tiff believed  and  had  reason  to  believe"  this  to  be  the  case. 

The  defendant,  in  his  answer,  does  not  pretend  that  he  ever  made 
iiny  contract,  either  with  Tirrill  or  the  plaintiff,  by  which  a  price 
was  agreed  upon  to  be  paid  by  him  as  and  for  the  purchase  of  the 
premises  for  himself.  His  only  allegation  to  this  point  is,  at  most, 
indirect  and  equivocal.  He  denies  that  said  estate  was  purchased 
of  Tirrill  for  the  plaintiff's  benefit,  "neither  did  this  defendant 
agree  to  purchase  it  for  the  benefit  of  the  plaintiff,  but  for  the  use 
iind  benefit  of  the  defendant."  This  is  followed  by  an  argumen- 
tative assertion  of  equitable  title  acquired  as  a  resulting  trust  from 
]iayment  of  the  purchase  money,  and  that  the  deed  from  the  plain- 
tiff was  given  "for  the  purpose  of  vesting  both  the  legal  and  equi- 
table title  in  the  defendant."  He  does  allege  that  he  "  agreed  to 
pay  Tirrill  the  said  sum  of  $5500  for  the  premises  described  in  the 
bill,  provided  the  title  to  said  premises  should  stand  in  the  de- 
fendant's name."  He  alleges,  with  sufficient  fulness  and  minute- 
ness, that  he  refused  to  make  a  loan  of  the  money  to  the  plaintiff 
1)otli  "  before  and  at  the  time  of  said  payment  to  said  Tirrill,"  and 
refused  "  to  allow  the  plaintiff  to  have  any  interest  in  said  money, 
or  the  premises  purchased  therewith,"  and  that  it  was  agreed  that 
the  premises  should  be  conveyed  in  fee  simple  to  the  defendant. 
"  and  the  plaintiff  should  not  have  any  interest  or  title  thereto." 
He  further  avers  "  that,  before  the  plaintiff  signed  and  executed  his 
deed  to  this  defendant,  said  deed  was  read  in  the  presence  and  hear- 
ing of  the  plaintiff,  and  he  was  then  and  there  informed  that  the 
same  was  an  absolute  conveyance,  and  that  he  ceased  thereby  to 
have  any  interest  whatever  therein."  Taking  the  facts  to  be  liter- 
al lly  as  thus  alleged,  they  significantly  suggest  the  inference  that 
the  money  was  advanced  by  the  defendant  for  the  accommodation 
of  the  plaintiff  in  his  purchase  of  the  land,  and  the  deed  given  to 
the  defendant  for  his  security  therefor;  but  that  it  was  agreed  be- 
tween them  that  the  plaintiff  should  retain  no  legal  right  of  re- 
demption. He  was  to  trust  himself  wholly  to  the  good  faith  and 
forbearance  of  the  defendant. 

It  is  alleged  in  the  bill,  and  not  denied  in  the  answer,  that  the 
land  has  been  all  the  time  in  the  occupation  of  the  plaintiff.  We 
lliink  it  is  also  to  be  inferred  that  the  land  is  of  considerably  greater 
value  than  the  sum  advanced  by  the  defendant. 

From  the  whole  case  we  are  satisfied  that  it  was  a  transaction 
between  borrower  and  lender,  and  not  a  real  purchase  of  the  land 
by  llic  defendant.  We  are  brought,  then,  to  the  question.  Can 
equity  relieve  in  such  a  case? 


»M  .   II.]  tAMl'HIM.I.    /.    l»i:.VI!llOI!N'.  11*5 

TIr'  di'iisions  in  tlic  t-oiirts  of  the  Uuilcd  Slati's,  iiiul  tin.-  ((pin- 
ions doclari'd  l>y  its  judj^cs,  are  uniform  in  favor  of  the  oxistcntc 
of  the  ])owc'r,  and  the  jtroprirty  of  its  exercise  by  a  court  of  chan- 
cery {Iluyhes  v.  /'Jdicanls,  "J  Wlieat.  489;  Spriyj  v.  Bank  of  Mount 
Pleasant,  14  Tet.  201,  208;  Morris  v.  Nixon,  1  How.  118;  Russell 
V.  ."Southard,  12  TTow.  130;  Tai/lor  v.  Luther,  2  Sumner,  228;  Fhig;/ 
V.  Mann,  ih.  48(1;  Jenkins  v.  KJdredtje,  3  Story.  181;  Bentley  v. 
Phelps,  2  Woodh.  &  Min.  42(5;  Wi/man  v.  Bahcocl',  2  Curtis  C.  C. 
38(i,  3!I8;  .<.  r.  1!)  IIow.  28!)).  Althou^di  not  hound  by  the  author- 
ity of  the  courts  of  the  United  States,  in  a  matter  of  tliis  sort,  still 
Me  deem  it  to  be  important  that  uniformity  of  inter[)retation  and 
administration  of  l)oth  law  and  equity  should  prevail  in  the  state 
and  federal  courts.  We  are  disposed  therefore  to  yield  much  defer- 
ence to  the  decisions  above  referred  to,  and  to  follow  them,  unles.s 
we  can  see  that  they  are  not  supported  by  sound  principles  of  juris- 
pruilence,  or  that  tliey  conflict  with  rules  of  law  already  settled  by 
the  decisions  of  our  own  courts. 

We  cannot  concur  in  the  doctrine  advanced  in  some  of  the  eases, 
that  the  subsequent  attempt  to  retain  the  property,  and  refusal 
to  ])ermit  it  to  be  redeemed,  constitute  a  fraud  and  breach  of  trust, 
which  alTords  ;,M-ound  of  jurisdiction  and  judicial  interference. 
There  can  be  no  fraud  or  legal  wrong  in  the  breach  of  a  trust  from 
which  the  statute  M-ithholds  the  right  of  judicial  recognition.  Such 
conduct  may  sometimes  ajq)ear  to  relate  back,  and  give  character  to 
the  original  transaction,  by  showing,  in  that,  an  express  intent  to 
deceive  and  defraud.  But  ordinarily  it  will  not  be  connected  with 
the  original  transaction  otherwise  than  constructively,  or  as  in- 
volved in  it  as  its  legitimate  conscfpience  and  natural  fruit.  In  this 
aspect  only  can  we  regard  it  in  the  present  case. 

The  decisions  in  the  federal  courts  go  to  the  full  extent  of  alTord- 
ing  relief,  even  in  the  absence  of  j)roof  of  express  deceit  or  fraudu- 
lent purpo.se  at  the  time  of  taking  the  deed,  and  although  the  in- 
strument of  defeasance  "be  omitted  by  design  upon  mutual  confi- 
dence between  the  parties."  Tn  Russell  v.  Southard.  12  Ilmv.  1.3!>, 
1  18.  it  is  declared  to  be  the  doctrine  of  the  court,  "that.  wIkmi  it 
is  alleged  and  proved  that  a  loan  on  security  was  really  intended. 
and  the  defendant  sets  uj)  the  loan  as  ])ayment  of  purchase  money. 
and  the  conveyance  as  a  sale,  both  fraud  and  a  vice  in  the  consid- 
eration are  sulliciently  averred  and  proved  to  re(|uire  a  court  of 
njuity  to  hold  the  transaction  to  be  a  mortgage."  The  conclusion 
of  the  court  was,  "that  the  transaction  was  in  substance  a  loan  of 
money  upon  security  of  the  farm,  and.  being  so,  a  court  of  efjuitv 
IP  Ixnind  to  look  through  the  forms  in  which  the  contrivance  of  the 
lender  has  enveloped  it.  ;ind  dechire  the  conveyance  <^f  the  land  to 
be  a  mortgage." 


196  SECUKITY.  [CIIAP.  II. 

This  doctrine  is  analogous,  if  not  identical  with  that  ■which  lias 
so  frequently  been  acted  upon  as  to  have  become  a  general  if  not 
universal  rule,  in  regard  to  conve^-ances  of  land  where  j^rovision  for- 
reconveyance  is  made  in  the  same  or  some  contemporaneous  in- 
strument. In  such  cases,  however  carefully  and  explicitly  the  writ- 
ings are  made  to  set  forth  a  sale  with  an  agreement  for  repurchase,, 
and  to  cut  off  and  renounce  all  right  of  redemption  or  reconveyance- 
otherwise,  most  courts  have  allowed  parol  evidence  of  the  real  na- 
ture of  the  transaction  to  be  given,  and,  upon  proof  that  the  trans- 
action was  really  and  essentially  upon  the  footing  of  a  loan  of 
money,  or  an  advance  for  the  accommodation  of  the  grantor,  have 
construed  the  instruments  as  constituting  a  mortgage ;  holding  that 
any  clause  or  stipulation  therein,  which  purports  to  deprive  the  bor- 
rower of  his  equitable  rights  of  redemption,  is  oppression,  against 
the  policy  of  the  law,  and  to  be  set  aside  by  the  courts  as  void  (4 
Kent  Com.,  6th  ed.,  159 ;  Cruise  Dig.,  Greenl.  ed.,  tit.  xv.,  c.  1,  §  21 ;. 
3  Washb.  Eeal  Prop.,  3d  ed.,  42 ;  Williams  on  Ileal  Prop.,  353 ;, 
Story  Eq.,  §  1019;  Adams  Eq.,  113;  3  Lead  Cas.  in  Eq.,  3d  Am., 
ed. ;  White  &  Tudor's  notes  to  Thornhorough  v.  Bal-er,  pp.  605- 
[*874]  &  seq.;  Hare  &  Wallace's  notes  to  s.  c.  pp.  624  [*894] 
cf-  seq.). 

The  rule  has  been  frequently  recognized  in  Massachusetts,  where, 
until  1855,  the  courts  have  held  their  jurisdiction  of  foreclosure- 
and  redemption  of  mortgages  to  be  limited  to  cases  of  a  defeasance- 
contained  in  the  deed  or  some  other  instrument  under  seal  (Erskine- 
V.  Townsend,  2  Mass.  493 ;  Kelleran  v.  Brown,  4  Mass.  443 ;  Taijlor 
V.  Weld,  5  Mass.  109;  Carey  v.  Raivson,  8  Mass.  159;  Paris  v. 
Hall,  2  Pick.  206,  211;  Rice  v.  Rice,  4  Pick.  349;  Flagg  v.  Mann. 
14  Pick.  467,  478;  Eaton  v.  Green,  22  Pick.  526).  The  ease  of 
Flagg  v.  Mann  is  explicit,  not  only  upon  the  authority  of  the  court 
thus  to  deal  with  the  written  instruments  of  the  parties,  but  also 
npon  the  point  of  the  competency  of  parol  testimony  to  establish 
the  facts  by  which  to  control  their  operation ;  although, upon  consid- 
eration of  the  parol  testimony  in  that  case,  the  court  came  to  the 
conclusion  that  there  was  a  sale  in  fact,  and  not  a  mere  security  for 
a  loan. 

By  the  St.  of  1855,  c.  194,  §  1,  jurisdiction  was  given  to  this  court 
in  equity  "  in  all  cases  of  fraud,  and  of  conveyances  or  transfers  of 
real  estate  in  the  nature  of  mortgages"  (Gen.  Sts.  c.  113,  §  2).^ 
The  authority  of  the  courts,  under  this  clause,  is  ample.  It  i;' 
limited  only  by  those  considerations  which  guide  courts  of  full 
chancery  powers  in  the  exercise  of  all  those' powers. 

If  then  the  advantage  taken  of  the  borrower  by  the  lender,  in  re- 
quiring  of  him  an  agreement  that  he  will  forego  all  right  of  redemp- 
tion in  case  of  non-payment  at  the  stipulated  time,  or  an  absolute 


j^j(.   II.]   '  C'AMrUKl.l.    1.    ItLAlIllollV.  1!*T 

il«vil  Willi  a  1m. 11(1  or  c-crlilicati'  haik,  wliicli  fal.-ely  rcciU's  ilir  diiir- 
lulcr  of  tilt'  tiaiisaclioii,  ivpiTscntin^'  il  to  l)e  a  sale  of  tlic  land  with 
a  iirivilcge  of  rVpureliase,  be  a  sullicicnt  j^round  for  inlerfcrcucM' 
in  Oiiuity  by  restricting  the  oj^'ration  of  the  deed,  and  eonvorting 
the  writings  into  a  mortgage,  contrary  to  the  expressed  agreement, 
it  is  dillitult  to  see  why  the  court  may  not  and  ought  not  to  inter- 
pose to  defeat  the  same  wrong,  when  il  attempts  to  reach  its  object 
by  the  sinijiler  process  of  an  absolnte  deed  alone.  In  each  ease 
the  relief  is  contrary  to  the  terms  of  the  written  agreement.  In 
one  ease  it  is  against  the  exjjress  words  of  the  instrument  or  chaise 
relied  on  as  a  defeasance,  on  the  ground  that  those  words  are  falsi  ly 
written  as  a  cover  for  the  wrong  i)ractised,  or  an  evasion  of  tlu; 
right  of  redemption.  In  the  other  it  is  without  an  instrument  or 
clause  of  defeasance,  on  the  ground  that  it  was  ojjpressive  and 
wrongful  to  withhold  or  omit  the  formal  difeasance.  In  strict- 
ness, there  is  no  defeasance  in  either  case.  The  wrong  on  the  part 
of  tlie  lender  or  grantor,  which  gives  the  court  its  power  over  his 
deed,  is  the  same  in  both.  "  For  they  who  take  a  conveyance  as  a 
mortgage  without  any  defeasance  are  guilty  of  a  fraud  "'  (Cottrrrll 
v.  Piirrlinse.  Cas.  innii.  Talbot,  (il).  See  also  Pxdnhnrl  v.  Grrni- 
^hiclJs,  0  Moore  P.  C.  lS\Balrr  v.  Wiinl.  1  Ves.  Sen.  1(50;  Mellor 
v.  Lccs,  2  Atk.  404  ;  Williams  v.  Owen,  5  :Myl.  &  Cr.  303 ;  Lincoln 
V.  Wriyht,  4  De  Cex  cS:  Jones,  10. 

As  a  question  of  evidence,  the  princi|)le  is  the  same.  In  either 
case  the  parol  evidence  is  admitted,  not  to  vary,  add  to  or  contra- 
dict the  writings,  but  to  establish  the  fact  of  an  inherent  fault  in 
the  transaction  or  its  consideration,  which  afTords  ground  for  avoid- 
ing the  elTect  of  the  writings,  by  restricting  their  operation,  or  d  •- 
feating  them  altogether.  This  is  a  general  princii)le  of  evidence. 
well  established  and  recognized  both  at  law  and  in  e(|uity  (Shul- 
pole  V.  Anwhl,  II  Mass.  27;  Fletcher  v.  Willanl,  1  I  I'i.k.  IH!  :  1 
Creenl.  Ev.,  i;  281 ;  Perry  on  Trusts,  §  22(1). 

The  reasons  for  I'xtending  the  doctrine,  in  I'lpiity,  to  absolute 
deeds,  where  there  is  no  ])rovision  for  reconveyance,  are  ably  pre- 
sented by  Hare  i^'  Wallace  in  their  notes  to  Woollani  v.  Ileum.  2 
Ix'ad  Cas.  in  K(|..  3d  .\in.  ed.,  (iTCt.  and  to  Thornhnrnutjli  v.  liulrer. 
.1  ih.  r,21.  See  also  Adams  K(i.,  Ill;  1  Sugd.  Vend.,  8th  Am. 
ed.,  Perkins  notes,  pp.  207,  2(18.  302,  303.  The  doctrine  thus  ex- 
tended is  declared,  in  numerous  decisions,  to  prevail  in  Xew  York  ; 
also  in  Vermont  and  several  other  States.  Mr.  Washburn,  in  hi> 
chapter  on  Mortgages,  5^  1,  has  exhibited  the  law  as  held  in  the 
difTerent  States,  in  this  particular;  and  the  numerous  references 
there  made,  as  well  as  by  the  annotators  in  the  other  treatises  which 
we  have  cited,  render  it  sujierfluous  to  rejM'at  them  here  (2  Washb. 
KN'ul  Prop..  3d  I'd..  3.")  tf*  .sr^y.).     Upcui  the  whole,  we  are  convinced 


198  SECURITY.  [cnxv.  II. 

that  the  doctrine  may  be  adopted  without  violation  of  the  statute  of 
frauds,  or  of  any  principle  of  law  or  evidence;  and,  if  properly 
guarded  in  administration,  may  prove  a  sound  and  salutary  prin- 
ciple of  equity  jurisprudence.  It  is  a  power  to  be  exercised  with  the 
utmost  caution,  and  only  when  the  grounds  of  interference  are  fully 
made  out,  so  as  to  be  clear  from  doubt. 

It  is  not  enough  that  the  relation  of  borrower  and  lender,  or 
debtor  and  creditor,  existed  at  the  time  the  transaction  was  entered 
upon.  jSTegotiations,  begun  with  a  view  to  a  loan  or  security  for 
a  debt,  may  fairly  terminate  in  a  sale  of  the  property  originally 
proposed  for  security.  And  if,  without  fraud,  oppression,  or  unfair 
advantage  tal^en,  a  sale  is  the  real  result,  and  not  a  form  adopted 
as  a  cover  or  pretext,  it  should  be  sustained  by  the  court.  It  is  to 
the  determination  of  this  question  that  the  parol  evidence  is  mainly 
directed. 

The  chief  inquiry  is,  in  most  cases,  whether  a  debt  was  created 
by  the  transaction,  or  an  existing  debt,  which  formed  or  entereii 
into  the  consideration,  continued  and  kept  alive  afterwards.  "If 
the  purchaser,  instead  of  taking  the  risk  of  the  subject  of  the  con- 
tract on  himself,  take  a  security  for  repayment  of  the  principal, 
that  will  vitiate  the  transaction,  and  render  it  a  mortgage  security" 
(1  Sugd.  Vend.,  8th  Am.  ed.,  303,  in  support  of  which  the  citations 
by  Mr.  Perkins  are  numerous).  But  any  recognition  of  the  debt  as 
still  subsisting,  if  clearly  established,  is  equally  efficacious;  as  the 
receipt  or  demand  of  interest  or  part  payment  (Eaton  v.  Green, 
22  Pick.  526,  530). 

Although  proof  of  the  existence  and  continuance  of  the  debt,  for 
which  the  conveyance  was  made,  if  not  decisive  of  the  character  of 
the  transaction  as  a  mortgage,  is  most  influential  to  that  effect ;  yet 
the  absence  of  such  proof  is  far  from  being  conclusive  to  the 
contrary  (Rice  v.  liice,  4  Pick.  349;  Flagg  v.  Mann,  14  Pick.  467, 
478;  Ihissell  v.  Southard,  12  How.  139;  Brown  v.  Dewey,  1  Sandf. 
Ch.  f(^>).  When  it  is  considered  that  the  inquiry  itself  is  supposed 
to  h'i  made  necessary  by  the  adoption  of  forms  and  outward  appear- 
anoo  differing  from  the  reality,  it  is  hardly  reasonable  that  the 
al/Pence  of  an  actual  debt,  manifested  by  a  written  acknowledgment 
or  an  express  promise  to  pay,  should  be  regarded  as  of  more  signifi- 
cance than  the  absence  of  a  formal  defeasance.  It  of  course  compel-' 
the  party  attempting  to  impeach  the  deed  to  make  out  his  proofs 
by  other  and  less  decisive  means.  But  as  an  affirmative  proposition 
it  cannot  have  much  force. 

A  mortgage  may  exist  without  any  debt  or  other  personal  liability 
of  the  mortgagor.  If  there  is  a  large  margin  between  the  debt  or 
sum  advanced  and  the  value  of  tlie  land  conveyed,  that  of  itself  i^ 
an  assurance  of  payment  slrong(M'  than  any  promise  or  bond  of 


SEC.  II.]  rAMriiiM.i.  r.   DiCAitiunts.  10!> 

a  necx'ssitous  borrower  or  dditor.  IIi'Ikt  i!ia(l('(|uacv  of  j>ri(.«',  in 
Mieli  case,  Ixroinos  an  iiii|)(irtanl  I'U-mciit  in  cstaljlislung  tlu-  cliar- 
ucter  of  the  transaction.  lnaiU'(iuacy  of  price,  though  not  of  itself 
alone  sulVicient  ground  to  set  in  motion  chancery  powers  of  tho 
court,  may  nevertheless  j)roperly  he  efTeetive  to  quicken  their  exer- 
cise, where  other  sullicicnt  ground  exists  (Story  Kfj.,  sj^i  'i'-^^,  -l">. 
24G)  ;  and  in  connecticm  with  other  evidence  may  alT(»rd  strong 
ground  of  inrereiiee  that  the  transaction  |nir|)orting  to  he  a  sale 
was  not  fairly  and  in  reality  so  (Kerr  on  I'raud  and  Mistake,  isc 
and  note;  Wlmrf  v.  Iloirrll,  5  Binn.   I!>:»). 

Another  circumstance,  that  may  and  ought  to  have  much  weight. 
is  the  continuance  of  the  grantor  in  the  use  and  occupation  of  the 
land  as  owner,  alter  the  ai)parent  sale  and  conveyance  {Cotlercll 
V.  Purchase,  Cas.  temp.  Talhot,  01  ;  lAncohi  v.  Wriyht,  4  Dc  Gcx 
i*;'  Jones,  Ui).  These  several  considerations  have  more  or  les.-i 
weight,  according  to  the  circumstances  of  each  case  {Conwaij  v. 
Alexander,  7  ("ranch,  318;  BenUeij  v.  Phelps.  2  Woodh.  &  Min. 
■\2C}).  It  is  not  necessary  that  all  should  concur  to  the  same  result 
in  any  case.  Each  case  must  he  determined  uj)on  its  own  special 
facts;  hut  tho.se  should  he  of  clear  and  decisive  import. 

In  the  present  case,  we  arc  able  to  arrive  at  the  clear  and  satis- 
factory conclusion  that  there  was  no  real  purchase  of  the  land  hy 
the  defendant,  either  from  Tirrill  or  from  the  i)laintifT;  that  hi.- 
advance  of  the  purchase  money  at  the  request  of  the  plaintilT  created 
a  deht  upon  an  implied  assumpsit,  if  there  was  no  express  proini-e ; 
and  that  it  was  the  expectation  of  both  parties  that  the  money  wouhl 
he  repaid  soon  and  the  land  rcconveyed.  Whatever  may  have  been 
the  intention  of  the  defi'iidant.  he  must  have  known  that  this  was 
the  expectation  of  the  ])laintifT;  and  it  is  most  favorable  to  him  to 
suppose  that  it  was  his  own  expectation  also.  These  concl\ision< 
are  not  in  the  least  modified  in  his  favor  by  an  examination  of  his 
answer. 

We  must  declare  therefore  that  in  equity  he  holds  the  tith'  subjeel 
to  redemjjtion  by  the  plaint ifT  in  such  manner  and  upon  such  terms 
as  shall  he  determined  upon  a  hearing  therefor  before  a  single 
justice. 

Decree  acronlintjhj} 

"^vv  Horn  V.  I\rlrlt,i.i.  4C>  N.  V.  dO.")   (1S71). 

Tlio  view  tluit  fraud,  mistak*'  (ir  uikIuc  inlliienco  imi><t  l>o  sliown.  omv 
HciUTiil,  lias  Imtii  for  tin*  most  part  altaii(iom'«l.  See.  for  «'\aiii|>lt>.  Uminrnt 
\.   lirainerd,   15   Conn.   575    (lS4.'n    ami    I'rnwh    v.    liunt.s.   li't   Conn.   3.'»1> 

l.SCiS).  It  siiivivos,  liowi'vcr.  in  a  few  S(at»'><  ( .Vorn'.v  v.  Mrl.iiui,  KM 
\.  C.  l.'iO  (ISSni  :  r,n.  Cod..,  1HH5.  §  272.">:  Mi^^s.  .Ann.  Cod.'.  §  42X\\ .  and  it* 
inftnoncc  may  hv  (racrd  in  many  otIipr>i  (Suliihru  v.  ('iishnuni.  .1.%  Fll.  ISii 
|lrtt;.tl;  Sfinrhfirlfl  y.  .Ui7/(Ar;.,  7 1  Me.  .^>t!7  (ISSOl;  Russrll  v.  Snulh.int.  12 
How.   no,  147-S   [isr.ll  ). 

"  It  will  1)0  pcr<civ(><l  tli.it   in  none  of  tlu's.»  cnsos  did  tlip  court  utteni|it 


•^H»0  SECURITY.  [CIIAP.  II. 

N.  H.  Gen.  Laws,  c.  136.  §  1.  Every  conveyance  of  lands, 
made  for  the  purpose  of  securing  the  payment  of  money,  or  the  per- 
formance of  any  other  thing  in  the  condition  thereof  stated,  is  a 
mortgage  within  the  meaning  of  this  chapter. 

§  2.  No  conveyance  in  writing  of  any  lands  shall  be  defeated,  nor 
any  estate  encumbered  by  any  agreement,  unless  it  is  inserted  in  the 
condition  of  the  conveyance  and  made  part  thereof,  stating  the 
f-um  of  money  to  be  secured  or  other  thing  to  be  performed. 


Penn.  Laws,  1881,  No.  91.  §  1.  Be  it  enacted,  &c.,  That  no  de- 
feasance to  any  deed  for  real  estate,  regular  and  absolute  upon  its 
face,  made  after  the  passage  of  this  act,  shall  have  the  effect  of  re- 
ducing it  to  a  mortgage,  unless  the  said  defeasance  is  made  at 
the  time  the  deed  is  made  and  is  in  writing,  signed,  sealed,  acknowl- 
edged and  delivered  by  the  grantee  in  the  deed  to  the  grantor,  and 
is  recorded  in  the  office  for  the  recording  of  deeds  and  mortgages 
ill  the  county  wherein  the  said  lands  are  situated,  within  sixty  days 
from  the  execution  thereof ;  and  such  defeasances  shall  be  recorded 
and  indexed  by  the  recorder. — Approved  the  8th  day  of  June,  A.  D. 
1881. 


to  range  the  jurisdiction  to  turn  an  absolute  deed  into  a  mortgage,  by 
parol  evidence,  under  any  specific  head  of  equity,  such  as  fraud,  accident 
or  mistake;  but  the  rule  seems  to  have  grown  into  recognition  as  an  inde- 
pendent head  of  equity.  Still  it  must  haA'e  its  foundation  in  this,  that 
where  the  transaction  is  shown  to  have  been  meant  as  a  security  for  a  loan, 
the  deed  will  have  the  character  of  a  mortgage,  without  other  proof  of 
fraud  than  is  implied  in  showing  that  a  conveyance,  taken  for  the  mutual 
benefit  of  both  parties,  has  been  appropriated  solely  to  the  use  of  the 
grantee.  For  when  we  seek  in  the  standard  authorities  for  the  ground  or 
jirinciple  upon  which  the  doctrine  of  the  admissibility  of  parol  evidence 
originally  rested,  i';  will  be  found  in  the  old  and  familiar  heads  of  equity, 
such  as  fraud,  accident,  mistake  or  trust.  Chancellor  Kent,  4  Com.  143, 
states  the  doctrine  thus :  *  A  deed,  absolute  on  the  face  of  it,  and  though 
registered  as  a  dccJ,  will  be  valid  and  eflfectual  as  a  mortgage,  as  between 
the  parties,  if  it  was  intended  by  them  to  Le  merely  a  security  for  a  debt, 
and  this  would  be  the  case,  though  the  defeasance  was  by  an  agreement  rest- 
ing in  parol,  for  parol  evidence  ir,  admissible  in  equity  to  show  that  an  abso- 
lute deed  was  intended  as  a  mortgage,  and  that  the  defeasance  has  been 
omitted  or  destroyed  by  fraud,  surprise,  or  mistake.'  Story,  speaking  of  the 
same  subject,  says:  '  Even  parol  evidence  is  admissible  in  some  cases,  as  in 
cases  of  fraud,  accident,  and  mistake,  to  show  that  a  conveyance,  absolute 
on  its  face,  was  intended  between  the  parties  to  be  a  mere  mortgage  or  se- 
curity for  money'  (2  Eq.  Jur.,  §  1018,  note  2) ."—Per  McAllister,  J.,  in 
Ruckman  v.  Alwood,  71  111.  155  (1873). 


SKC.  II.]  I'AltOL    KVIDKNt'i:.  201 

(Ja.  Code.  1805.  g  2725.  A  deed  or  bill  of  sale,  absolute  on  its 
face  and  accompanied  with  po.sse.s.>^ion  of  tiir  jn-opi-rty,  shall  not  be 
j)roved  (at  the  instance  of  the  parties)  by  parol  evidence  to  be  a 
mortgage  only,  unless  fraud  in  its  procurement  is  the  issue  to  be 
tried.' 

'  Misti.  Ann.  C'udi',  §  4233,  is  to  the  same  effect. 


CHAPTER  III. 

THE  OBLIGATION  SECUEED. 

Section  I.    Is  an  Obligation  Necessary? 

ACTON  V.  ACTON. 

Court  of  Chancery,  1704. 

{Finch,  Pre.  Ch.  237.) 

The  plaintiff's  husband  before  marriage  gives  her  a  bond  to  leave 
her  1000?.  if  she  survived  him,  and  the  same  day  marries  her; 
and  some  years  after  dies  intestate,  leaving  a  freehold  and  copyhold 
estate  all  in  mortgage. 

The  plaintiff  takes  out  administration,  but  the  personal  estate  not 
being  near  sufficient  to  satisfy  the  said  bond,  she  brings  her  bill 
against  the  heir  and  mortgagee  to  redeem,  and  be  let  in  to  have 
satisfaction  of  the  said  bond. 

The  defendant,  the  heir,  urged,  that  by  the  marriage  the  bond  be- 
came void  in  law,  and  could  not  be  maintained  here,  especially 
against  him,  who  is  chargeable  only  in  such  case  by  being  specially 
named ;  and  though  it  would  be  supported  as  a  marriage  agreement 
in  writing,  yet  could  only  charge  the  personal  estate ;  and  that,  how- 
ever, it  cannot  affect  the  copyhold. 

On  the  other  side  it  was  said,  this  was  once  a  good  bond,  and  tlio 
heirs  are  bound  in  it ;  and  though  by  the  marriage  it  lost  its  force  in 
point  of  law,  yet  in  equity  it  will  have  the  same  force  as  before,  and 
bind  the  husband,  and  entitle  the  plaintiff  to  a  redemption;  as  if 
the  obligee  loses  his  bond,  yet  equity  will  set  it  up,  and  give  him  the 
same  advantage  of  it,  as  if  it  were  in  being;  and  if  equity  does  sup- 
port it,  it  must  support  it,  not  only  as  an  agreement  in  writing,  but 
as  a  bond,  and  therefore  the  plaintiff  ought  to  have  the  redemption 
as  a  bond  creditor  would  have  had ;  and  though  it  was  agreed,  it 
would  not  entitle  her  to  redeem  the  copyhold,  if  mortgaged  by 
itself,  yet  when  that  and  the  freehold  are  mortgaged  together,  she 
must  redeem  the  whole,  and  cannot  redeem  by  parcels ;  and  though 


MX.  l.J  lM<kl.lN     /.     lUt'KI.IN.  203 

till'  heir  on  |)aynu'nl  of  wliut  is  iliic  on  tlic  nior(;,'ap'  will  have  back 
the  copviiokl  from  u>,  yet  we  shall  hold  thi'  frcrholtl  till  satisfied  the 
bond. 

LoHO  Ki;KrKU  [\Viiu;iit|  -aid,  if  tiu-  bond  Wiv  .xrciurd  (which 
bi'ing  doubtful,  was  ordiTcd  to  lie  tried)  the  court  would  support 
it  as  a  bond;  and  that  the  frei'hold  and  copyhold  being  mortgaged 
together,  the  plaiutilT  should  redeem  both.* 


BUCKLIX  V.  lUCKLlX. 

Court  of  Appeals  of  Xi:\v  Yohk,  1864. 

(1  Abb.  A  pp.  (V/.S.  242.) 

Olive  E.  Bueklin  brought  this  action  in  the  Supreme  Court 
against  William  and  (ieorge  K.  Bueklin,  to  foreclose  a  mortgage 
made  by  their  ancestor,  William  Bueklin,  Sr. 

William  Bueklin,  Sr.,  and  his  wife,  Esther,  previous  to  his  ex- 
ecuting this  mortgage  had  separated,  and  she  had  filed  a  bill  in 
chancery  for  a  judicial  separation  ((;  meiisa  ct  thoro)  on  ihe 
ground  of  his  cruel  treatment  of  her.  In  the  bill  she  prayed  that 
he  might  be  compelled  to  maintain  her,  and  that  the  custody  of 
their  infant  daughter,  Olive  E.,  might  be  awarded  to  her.  Upon 
the  bill  she  obtained  an  injunction  restraining  him  from  molesting 
the  child. 

In  order  to  eom|)romise  tlu-  controversy  and  stay  the  prosecution 
of  the  suit,  the  husband,  William  Bueklin,  Sr.,  agreed  to  make 
provision  for  the  support  of  his  wife  and  the  infant,  together,  and 
separate  from  himself,  and  convey  a  house  and  lot  to  the  child 
within  six  months. 

To  effect  this  settlement  the  mortgage  in  suit  was  executed  to 
\'eddcr  (ireen  (who  apj)eared  as  the  next  friend  of  the  wife  in  her 
divorce  suit)  and  was  expressed  to  be  made  to  him  in  trust  for  the 
wife  and  infant  daughter. 

The  mortgage,  which  was  set  forth  in  the  complaint,  recited  the 

'  "  As  1((  tlic  (il)j((tii)ii  (hilt  licre  was  no  covfiuiiit  fm  tin-  jtaymont  of  tin* 
]iiinoi|)a!  or  inttrest,  \\v  said  lliat  was  not  nuitrrial ;  \\\v  sanu*  not  l>oinjr 
nrct'ssary  for  tlio  nmkiri;  of  a  niortnanc  nor  yet  nrct-ssary  (hat  (ho  ripht 
Hhniihl  W  mutual — viz.,  for  (ho  jnort^ap'o  (o  <'om)|h-1  (lu"  payment  an 
well  as  for  (lio  mort^japor  to  comjM-l  a  rt><l<-mp(ion  :  sin<<<  sinli  ttmvoyanco 
ns  in  (lio  presf-nt  case,  (hoii^li  without  any  rovcnnnt  or  t)on(l  for  (lio  pny- 
tnpn(  of  (he  money,  wotild  yet  l)e  plainly  a  mor(jraj;e." — Sir  .?i>Heph  .Tekyll. 
nrpurnilo,  in  Floi/vr  v.  Lavingtnn.  1  P.  U'nis.  2t»8  (1711*.  And  .see  I. it.. 
5  33S.  and  Co.  Li(.,  200,  n.  h.  p.  1 1 .  .vii/)ra. 


204  THE   OBLIOATIOX    SECURED.  [ciiAr.  ill. 

above  facts,  and  after  providing  for  the  said  support  of  the  wife 
and  daughter,  and  the  suspension  of  proceedings  in  the  suit,  with- 
out modification  or  discontinuance,  the  mortgage  contained  the  fol- 
lowing language :  "  Xow,  for  the  purpose  of  securing  the  perform- 
ance by  the  said  William,  of  the  aforesaid  agreements  and  covenants 
on  his  part  to  be  performed,  this  indenture  witnesseth — that  the 
said  "William  Bucklin,  in  consideration  of  the  premises,  and  also 
on  consideration  of  the  sum  of  one  dollar,  paid  to  the  said 
William  by  the  said  Vedder  Green,  the  receipt  of  which  sum  is 
hereby  confessed  and  acknowledged,  hath  granted,  bargained, 
sold,"  &c.,  "  and  doth  grant,"  &c.,  to  Yedder  Green  and  his  heirs 
and  assigns  forever  (hero  was  inserted  the  description  of  the  lands; 
habendum  to  him,  his  heirs,  and  assigns,  forever),  ''provided,  that 
if  the  said  William  Bucklin  shall  within  the  period  of  six  months 
convey  to  Olive  Esther  Bucklin  real  estate  of  the  value  of  one  thou- 
sand dollars,  to  consist  of  a  dwelling,"  &c.,  and  if  he  shall  permit 
Esther  to  occupy  the  same  without  molestation,  and  if  he  shall  pay 
to  Esther  Bucklin  three  hundred  dollars  annually  during  their  joint 
lives,  and  shall  permit  the  said  Esther  Bucklin  to  have  the  custody, 
management,  (Src,  of  said  Olive  Esther  Bucklin,  without  any  inter- 
ference on  his  part  (and  if  he  should  also  perform  certain  other 
conditions  relating  to  personal  property),  then  this  indenture  shall 
be  void.  And  it  is  hereby  declared  that  this  mortgage  is  given  to 
Yedder  Green  in  trust  for  the  benefit  of  Esther  Bucklin  and  her  in- 
fant daughter,  Olive  Esther  Bucklin.  And  in  case  the  above  con- 
ditions on  the  part  of  said  William,  or  any  of  them,  shall  be 
broken,  and  it  shall  at  any  time  hereafter  be  necessary  to  enforce 
this  mortgage,  the  amount  that  shall  be  recovered  on  said  mortgage 
shall  be  recovered  for  the  benefit  of  the  said  Esther  and  her  infant 
daughter  or  the  survivor  of  them. 

The  complaint  then  averred  that  Bucklin,  Sr.  wholly  failed  to 
convey  land  and  dwelling,  &c.,  as  he  agreed  (though  payment  of 
the  annuity  was  admitted),  and  demanded  Judgment  for  the  fore- 
closure of  the  mortgage  for  the  sum  of  one  thousand  dollars,  the 
value  of  the  land  and  dwelling  promised  to  be  conveyed,  and  in- 
terest, &c. 

When  the  mortgage  was  made,  in  183G,  the  child  (the  present 
plaintifi')  was  about  three  years  of  age.  The  trustee,  Yedder 
Green,  died  in  1841,  the  husband  and  Avife  died  in  1843  and  1844. 
In  1857,  the  daughter,  coming  of  age,  procured  an  order  of  court 
appointing  her  to  enforce  the  trust  and  bring  an  action  in  her  own 
name. 

The  defendants  were  heirs  of  the  mortgagor  in  possession. 

The  judge  before  whom  the  cause  was  tried  sustained  the  mort- 
gage; found  that  the  husband  and  wife  never  afterward  cohabited. 


sKC.  I.J  BLlKLIN     r.     lUtKl.IN.  205 

lliou<;h  for  a  >lioil  liiiif  they  rrsidrd  in  the  suiiu"  Iioum-,  and  li«j 
piw  jml^'incnt  for  j)laintitr  with  interest  from  the  (hitu  of  tlie 
inort^Mp'. 

Tile  Sui»niiie  ("oiirt,  at  (It'iierai  'i'eriii,  allirrmd  liiis  jiul<,'ineiit, 
liokling  tliat  tliis  was  au  action  on  a  sealed  instrument,  and,  if  the 
I  ause  of  action  had  accrued  after  the  Code  of  Procedure  went  into 
.  tTecl,  it  would  have  heen  «;overned  i)y  section  IM)  of  the  Code,  but 
that  as  it  had  accrued  hefore  tliat  time,  it  was  j^overned  hy  2  \l.  8., 
<•.  8,  tit.  3,  art.  1,  i;  D,  which  enacts  that  the  time  which  sliall  have 
lapsed  between  the  death  of  any  person,  and  the  grantin«;  of  letters 
ti'stamentary  or  of  administration  on  his  estate,  shall  nj)t  be  deemed 
anv  |)art  of  the  time  limited  by  any  law,  for  the  commencement  of 
actions  by  executors  or  administrators.  That  had  the  trust  de- 
scended to  the  personal  representatives  of  the  trustee,  this  cause  of 
action  would  have  been  saved  from  the  operation  of  the  statute;  and 
ihat  the  cestui  que  trust  should  not  be  prejudiced  by  having  the 
trust  fall  on  the  court  of  chancery,  as  it  did  on  the  death  of 
(Jreen,  but  that  an  analogous  rule  should  be  applied,  and  the  whole 
term  of  twenty-one  years  allowed  in  which  to  bring  the  action, 
which  would  ]irevent  it  from  being  barred. 

From  that  judgment  the  defendants  appealed  to  this  court. 
F.  h'enian  for  defendants,  apj)ellants. 
John  II.  Rei/nohls  for  plaintiff,  respondent. 
Ihf  the  Court:  Denio,  Ch.  J.    The  mortgage,  so  far  as  it  is  now 
MUght  to  be  enforced,  was  created,  among  other  objects,  to  secure 
he  jdaintifT,  then  an  infant  of  tender  age,  a  portion  of  her  father's 
Toperty,  to  aid  in  her  maintenance  during  her  infancy,  and  to 
iirnish  her  with  a  small  independent  estate  in  real  jjroperty.    The 
.litTerences  which  had  arisen  between  her  parents  presented  the  oc- 
I  asion  for  this  gift ;  but  its  validity  did  not  depend  upon  the  merits 
■f  that  controversy,  nor  yet  upon  the  legal  effect  of  the  agreement 
:or  a  separation  l)ctwecn  her  father  and  mother,  nor  upon  the  legal- 
ity of  the  provisions  made  by  the  former  for  the  latter.    The  con- 
tract, so  far  as  it  relates  to  that  i>rovision,  lias  either  been  per- 
formed or  it  is  now  incajiable  of  performance.     The  j)arty  entitled 
to  its  benefits  has  been  long  dead,  and  it  does  not  apjiear  that  >he 
left  any  representative  capable  of  enfoning  any  of  its  stipulations 
which  were  not  performed  at  her  death.     Moreover,  this  suit  was 
not  brought   to  recover  such  interest.     Hut   the  plaintiff  survives, 
and  is  entitled  to  the  settlement  attemiifed  to  be  jiia<le  in  hi-r  favor, 
provided  it  was  legally  vali<l  when  made,  and  provided  her  rights 
have  not  been  lost  by  laps(>  of  time.' 

'The  sprond  portion  of  the  opinion,  «l«alin^'  witli  (lio  i-lTt-rt  of  the  Iap*e 
<if  tinip.  is  onnttrd.  the  conclusion  Ijcinj;  reached  that  tlie  Statute  of  Limita- 
tion-; \v;i«  not   ;i  l)ar. 


206  THE    OBLIGATION    SECURED.  [CHAP.  III. 

1.  Where  the  rights  of  creditors  do  not  stand  in  the  way,  and 
there  appear  not  to  have  been  any  in  this  case,  it  is  perfectly  lawful 
for  a  parent  to  make  such  provision  out  of  his  estate  for  a  child  or 
children,  by  present,  gift  or  by  testament,  as  he  may  think  proper. 
There  are  cases  in  which  a  voluntary  executory  gift  will  not  be 
enforced  by  the  courts;  but  an  executed  one  is  as  valid  as  though 
based  on  a  full  pecuniary  consideration. 

A  mortgage  is  an  executed  conditional  transfer  of  the  real  estate 
mortgaged.  In  judgment  of  law,  any  conveyance  which  would 
be  sufficient  to  pass  the  title  to  a  purchaser  conveys  it  to  the  mort- 
gagee. The  instrument  executed  by  William  Bucklin  to  Yedder 
Green  would  be  a  perfect  deed  of  bargain  and  sale  but  for  the  con- 
dition by  which  it  was  to  become  void  upon  performance  of  the 
agreement.  It  expresses  a  pecuniary  consideration  which,  though 
nominal,  is  as  adequate  to  waive  a  use  as  though  it  were  the 
full  value  of  the  land,  and  though  it  may  not  have  been  paid,  the 
defendant  is  estopped  by  his  deed  from  denying  its  payment.  By 
the  Revised  Statutes  it  is  denominated  a  grant ;  but  for  all  substan- 
tial purposes  it  has  the  effect  of  a  deed  of  bargain  and  sale  (1  E.  S., 
738,  739,  §§  137,  138,  142).  At  common  law,  and  before  the  juris- 
diction of  courts  of  equity  to  relieve  against  forfeitures  had  been 
established,  this  deed  would  have  vested  in  the  trustee  an  estate  in 
fee  simple  defeasible  only  by  the  performance  of  the  conditions. 
This  is,  of  course,  a  technical  view  of  the  nature  of  a  mortgage. 

By  applying  to  the  transaction  the  equitable  doctrines  of  the 
courts  of  equity,  now  also  recognized  to  a  great  extent  by  the  courts 
of  law  and  by  modern  statutes,  the  mortgage  is  simply  a  security 
for  the  payment  of  the  money  it  was  given  to  secure,  and  the  mort- 
gagor continues  to  own  the  land,  while  the  mortgagee's  interest  is 
that  of  a  creditor  only. 

But  the  defendants'  position  is  formal  also.  They  insist  that 
courts  of  equity  will  not  decree  the  performance  of  a  voluntary 
executory  agreement  even  where  the  subject  is  a  portion  intended 
for  a  child  or  other  relative,  and  authorities  are  referred  to  to  sustain 
that  position  (Duvoll  v.  Wilson,  9  Barb.  487,  and  cases  cited ;  but 
see  Souverhye  v.  Arden,  1  Johns.,  Ch.  240,  26G,  and  cases  referred 
to  by  Chancellor  Kent).  If  the  settlement  be  an  executed  one,  like  a 
deed  or  mortgage,  the  doctrine  relied  on  has  no  application.  The 
title  of  the  mortgaged  premises  is  transferred  by  legal  conveyance. 
The  mortgagor  retains  an  equity  of  redemption,  equivalent,  for 
many  purposes,  to  a  general  ownership  of  the  land,  but  yet,  in  point 
of  form,  an  equity.  The  mortgagor  may,  it  is  true,  come  into  a 
court  of  equity  to  enforce  his  mortgage,  as  the  mortgagee  must  in 
order  to  redeem.  The  reason  why  a  mortgagee  must  resort  to  equity 
is  not  because  the  mortgage   is   an  executory   transaction,   and 


,,'.  I.)  IMCKLIN      r.     mCKI.IN.  v07 

■  iiiiin's  the  iiid  <il"  a  toiirt  <il'  cliaiKcry  l<>  tniii|»il  a  >i>i'(i(ic  iK'rr<>nii- 
ancr.  On  iioii-ixTforiiiaiicc  of  tin-  conditions  the  mortgage  is  for- 
lVit«'(l  at  law,  but  the  e(|uilv  ol"  rccK-niption  remains  in  the  mort- 
gagor or  his  rej)res('ntativ(s.  No  j(ros]>e(tivo  hmguage  of  the 
parties  which  c-an  In'  writti-n  is  strong  enough  to  j)ro(Iuce  the  for- 
fi'itiire  of  that  ('(juity,  which  can  only  he  extinguished  hy  a  decree, 
or  an  equivalent  proceeding,  under  a  jtositive  statute.  Tliis  rule  is 
cx|)ressed  hy  the  jihrase.  "  once  a  mortgage,  always  a  mortgage." 
The  mortgagee  cannot  destroy  this  (Mpiity  t-xcept  hy  a  suit  in  ehan- 
cerv  or  a  statute  foreclosure.  Formerly,  he  could  bring  ejectment  to 
get  |)ossession  of  the  estate,  after  forfeiture  at  law,  but  that  is  now 
forbidden  by  statute.  Still  if  he  can  be  got  into  possession  with- 
out a  breach  of  the  peace,  his  title  under  the  mortgage  ^\oc(\  is  strong 
4nough  in  law  to  enable  him  to  defend  an  ejectment  brought  by  the 
mortgagee  {MIckIrs  v.  Pilhiifc.  IT  X.  Y.  SO;  Mirklcs  v.  Townarml, 
18  id  57.")).  The  j)laintilV  brings  her  suit  in  equity,  not  for  the 
l)urpose  of  being  aided  in  establishing  her  mortgage  under  the  no- 
tion of  remedying  a  defective  conveyance,  or  obtaining  a  specific 
])crformance,  but  to  foreclose  and  extinguish  the  defendants'  equity 
of  redemption,  which  a  court  of  law  is  not  competent  to  deal  with. 
She  does  not  come  to  establish  a  voluntary  equitable  agreement, 
but  to  enforce  a  legal  title  under  an  executed  conveyance,  and  to 
<iit  ofT  an  equity  attached  to  that  legal  title  and  vested  in  the  de- 
fendants. 

A  point  is  made  that  the  mortgage  is  invalid  because  made  to 
(Jreen  as  a  trustee,  he  confessedly  having  no  beneficial  interest,  and 
because  the  purposes  of  the  trust  are  not  such  as  are  contemplated 
by  the  fifty-fifth  section  of  the  chapter  of  the  Revi.-^ed  Statutes  relat- 
ing to  uses  and  trusts.  Now,  although  for  the  purpose  of  showing 
that  a  mortgage  is  an  executed  conveyance  and  not  a  mere  execu- 
tory agreement,  I  have  recurred  to  the  legal  nature  of  that  instru- 
ment as  a  conveyance  of  the  land  mortgaged.  I  am  not  prepared  to 

'Hcede  that  it  .should  be  regarded  as  "  a  disposition  of  the  land  by 
leed"  within  the  meaning  of  the  article  of  the  Kevi.sed  Statutes 
respecting  uses  and  trusts  (1  R.  S..  727).  The  modern  idea  of  :i 
mortgage  is  a  jdedge  of  the  land  to  secure  the  payment  of  money. 
The  statute  relates  to  interests  in  lands,  properly  .<o  called,  and  not 

•  collateral  i)ledges  made  for  the  purpose  of  securing  interests  in 
jMTSonalty.  I)ebts  secured  by  mortgage  are  declared  to  be  personal 
assets  and  go  to  the  jtersonal   representatives   (2  K.  S.,  82.  §  Ti. 

idxl.  H). 

A  trust  of  personalty  is  not  within  the  statutes  of  uses  and  trust<. 
and  may  l)o  created  for  any  purpo.se  not  forbidden  by  law.  This 
mortgage  is  not,  therefore,  at  all  within  the  influence  of  the  fifty- 
fifth  section,  or  within  the  one  which  abolishes  uses  and  trusts.    Hut 


208  THE    OBLIGATIOX    SECURED.  [CIIAP.  III» 

if  it  were  otherwise,  and  if  the  interest  in  the  hmd  conveyed  by  a 
mortgagor  to  a  mortgagee  were  regarded  as  within  the  purview  of 
that  section,  the  only  effect  in  this  instance  would  be  to  annihilate 
the  title  and  strike  out  the  name  of  Green,  the  trustee,  and  to  invest 
the  beneficiaries  with  the  title  nominally  conferred  on  Green.  This 
effect  is  produced  by  section  -19  of  said  article,  which  declares  that 
if  a  disposition  of  land  be  made  to  one  or  more  persons,  to  the  use 
of  or  in  trust  for  another,  no  estate  or  interest,  legal  or  equitable, 
shall  vest  in  the  trustee;  and  section  47,  which  confers  upon  the 
beneficiary  in  such  cases  an  estate  of  the  same  quality  as  his  ben- 
eficial interest.  Again,  a  trust  may,  by  section  55,  also  be  created  to 
sell  lands  for  the  purpose  of  satisfying  any  charge  thereon.  This 
does  not  require  a  pre-existing  charge.  One  created  at  the  same 
time  and  by  the  same  instrument  which  contains  the  conveyance 
would  be  sufficient  to  bring  the  disposition  within  the  terms  and 
spirit  of  the  section,  and  would  embrace  the  case  of  a  mortgage. 

I  think,  therefore,  that  the  instrument  contained  a  valid  mort- 
gage of  the  land  described  in  it,  and  that  it  was  an  available  security 
for  the  performance  of  the  contract  to  purchase  and  convey  lands 
to  the  value  of  one  thousand  dollars  to  and  for  the  benefit  of  the 
plaintiff. 

H.  E.  Selden,  J.,  was  absent.    All  the  other  judges  concurred. 

Judgment  affirmed,   with   costs. 


CAMPBELL  V.  TOMPKI^vTS. 

Court  of  Chancery  of  New  Jersey,  1880. 

(32  N.  J.  Eq.  170.) 

Bill  to  foreclose.    On  final  hearing  on  pleadings  and  proofs. 

The  Chancellor  [Eunyon].  This  suit  is  brought  to  foreelose 
a  mortgage  given,  October  13th,  18G8,  by  Daniel  F.  Tompkins  and 
his  wife  to  the  complainant,  on  land  of  Mrs.  Tompkins,  to 
secure  the  payment,  according  to  the  bond  of  Mr.  Tompkins  to 
the  complainant,  of  that  date,  of  $2100  in  one  year  from  the 
date  thereof,  Avith  interest,  and  all  national,  state,  county,  city 
and  township  taxes  which  might  be  assessed  upon  the  money 
loaned  and  thereby  secured  or  upon  the  mortgage  or  bond.  The 
defense  set  up  by  the  mortgagors  in  their  answer  is,  that  only 
$1100  were  lent,  and  the  rest  of  the  $2100  was  an  allowance  by  way 
of  compensation  for  the  trouble  and  expense  to  which  the  firm  of 


SKC.    I.] 


(  \Mnu:i.i.  V.  TOMPKINS.  20J> 


('aniphcll,  Lane  A:  ('•).  {of  which  the  cDinphiinant  was  a  iiK-in'iMr 
ami  lor  which  tho  homl  ami  m<)rt<2:a;.C('  wore  taken,  though  taken  in 
the  name  of  the  eomjjlainant  ak)ne)  liail  heen  subjected  hy  rea-on  of 
tlie  defense  nuide  hy  the  lirm  of  Nichols  &,  Tompkins  (of  wliieli  Mr. 
'romi)kins  was  a  member),  against  certain  promissory  notes  put  by 
the  hitter  firm  on  the  money  market,  and  bought  by  Cami)bell,  Lane 
&  Co.  The  notes  amountecl  in  the  aggregate  to  over  $7000.  The  re- 
sult of  the  litigations  was  that  Cami)bell,  Lane  &  Co.  recovered  only 
what  they  had  paid  for  the  notes,  with  interest.  The  litigations 
were  ended  and  the  money  for  which  judgment  was  recovered 
therein  jniid  before  the  mortgage  was  given. 

When  the  agreement  for  the  mortgage  was  made,  Mr.  Tompkins 
applied  to  the  complainant  for  a  loan  of  $1000  on  mortgage  of  tlu? 
premises  described  in  the  mortgage.  Wholly  of  his  own  accord,  and 
without  suggestion  from  the  conii)lainant,  or  any  member  of  his 
firm,  or  any  one  else  on  his  or  their  account,  Mr.  Tonijjkins  pro- 
posed that  if  the  loan  was  made  the  mortgage  would  be  given  for 
such  an  amount  as  to  include  a  sum  sufficient  to  compensate  Mr. 
Cami)beirs  firm  for  their  expense  and  troulde  in  prosecuting  the 
suits  upon  the  notes.  This  proposition  was  wholly  voluntary  on  his 
part,  and  the  amount  of  the  proposed  compensation  ($1000)  was 
fixed  by  him. 

Mr.  Camj)lKll  acceded  to  the  proposition  thus  made,  and  made 
the  desired  loan,  the  amount  of  which  was,  at  the  refpiest  of  Mr. 
Tompkins,  raised  from  $1000  to  $1100,  and  took  the  mortgagr.  In 
187n,  before  the  commencement  of  this  suit,  the  complainant 
bought  the  interest  of  his  partners  in  the  mortgage,  so  that  wh.  n 
this  suit  was  brought  he  was  the  sole  owner  of  the  mortgage. 

Bv  their  answer,  "Mr.  and  Mrs.  Tompkins  insist  that,  as  to  the 
$1000  included  in  the  mortgage  as  compensation  for  expense. 
trouble,  &c.,  in  the  litigations  on  the  notes,  the  mortgage  was  with- 
out consideration,  and  that,  therefore,  there  should  be  no  decree  U'V 
that  money;  or,  if  there  should  be  any  decree  on  that  account,  it 
should  be  for  a  smaller  sum.  They  insist  that  $1000  was  an  un- 
reasonably large  allowance  on  that  account.  Neither  in  th(>  answ.  r 
nor  in  the  testimony  is  any  fraud  alleged  or  even  hintetl  at.  'i'ii  • 
conduct  of  the  complainant  appears  to  have  been  entirely  fair.  Nor 
is  it  alleged  that  any  manner  of  deceit  or  misroi)resentation  w;h 
practised  on  Mrs.  Tompkins,  nor  that  she  was  not  fully  aj>pri-Ml  .>•' 
all  the  partieidars  of  the  transaction  which  res\dtfd  in  the  ni'>r:- 
gage.  The  only  question,  therefore,  is,  whetlier  the  defence  of  want 
of  consideration  is  available  to  the  mortgagors. 

The  seals  to  the  bond  and  mortgage  import  a  consideration,  and. 
before   the  passage   of  the   act    "concerning  sealed    instrument-." 
which  was  approved  April  (!th,  1875  (Kcv.  p.  387),  neither  a  ."v.rt 
14 


^10  THE    OBLIGATION    SECURED.  [CIIAP.  III. 

•of  law  nor  equity  would  allow  the  consideration  of  such  instruments 
to  be  inquired  into  with  a  view  to  declaring  the  instrument  void  for 
want  of  consideration,  but  a  court  of  equity  would  do  so  for  the 
}3urpose  of  ascertaining  what  was  due  upon  it  (Farnum  v.  Burnett, 
{)  C.  E.  Gr.  87) .  That  act  provides  that  in  every  action  upon  a  sealed 
instrument  or  where  a  set-off  is  founded  upon  a  sealed  instrument, 
the  seal  thereof  shall  be  only  presumptive  evidence  of  a  sufficient 
consideration,  which  may  be  rebutted  as  if  such  instrument  was  not 
sealed.  That  act  is  a  mere  change  of  the  rule  of  evidence  and  does 
not  operate  to  make  a  valuable  consideration  necessary  where  the 
requisite  did  not  exist  when  the  contract  was  made  {Aller  v.  Aller, 
11  Vr.  446). 

As  before  stated,  the  mortgage  in  this  case  was  given  in  1868, 
prior  to  the  passage  of  that  act.  It  cannot  be  doubted  that  even  now 
a,  valid  mortgage  may  be  given  where  no  valuable  consideration  ex- 
ists. Otherwise,  the  absolute  control  of  the  owner  over  his  property 
is  taken  away,  for  he  would  not  be  permitted  to  give  it  away  in  his 
lifetime  by  deed.  The  mere  fact  that  there  was  no  consideration 
would  not  now  render  the  mortgage  invalid.  A  mortgage  may  be 
sustained  as  against  all  except  creditors  whose  claims  existed  at  the 
time  of  giving  it,  although  it  was  intended  merely  as  a  gift ;  and, 
when  executed  and  delivered,  it  is  as  valid  as  if  it  were  based  upon  a 
full  consideration,  and  it  is  not  open  to  the  objection  that  it  is  a 
voluntary  executory  agreement,  but  it  may  be  enforced  according 
to  its  terms  as  an  executed,  conditional  transfer  of  the  real  estate 
mortgaged  (Bj'ooIs  v.  Dalrymple,  12  Allen,  102 ;  Bucklin  v.  Buck- 
Tin,  1  Abb.  App.  Dec.  242;  Jones  on  Mort.,  §  614). 

In  this  case  there  was  no  fraud,  illegality  or  oppression.  The 
act  of  the  mortgagors  in  giving  the  mortgage  to  secure  the  payment 
of  the  compensation,  was  entirely  voluntary  and  was  the  result  of 
Mr.  Tompkins's  unsolicited  and  uninvited  proposition.  He  made  it 
part  of  the  consideration  of  the  loan  which  he  solicited,  and  it  is, 
perhaps,  not  too  much  to  say  that  without  this  inducement  the  loan 
would  not  have  been  made. 

The  voluntary  mortgage  by  the  wife  of  her  land  to  secure  the 
payment  of  her  husband's  bond  is  binding  upon  her  not  only  so  far 
as  the  loan  is  concerned,  but  as  to  the  debt  voluntarily  created  by 
him  against  himself  and  arising  from  a  merely  moral  obligation 
Avhich  he  acknowledged  without  demand  or  even  solicitation,  but 
solely  from  his  sense  of  justice.  A  married  woman  may,  with  her 
husband,  mortgage  her  land  to  secure  the  payment  of  the  debt  of 
her  husband  or  of  any  other  person,  for  the  payment  of  which  she  is 
in  no  way  liable  and  in  which  she  has  no  interest  (Jones  on  Mort., 
§  113).  And  her  mortgage,  given  to  secure  the  payment  of  the  bond 
of  her  husband,  will  not  be  regarded  as  having  no  validity  or  bind- 


HLC.  I.]  HAllil)     /  .     IIAIUI).  211 

in^^  tiri'it  simply  becaust.'  ila-  LoiisiiK-ration  of  iIk-  lx)nil  is  an  obliga- 
\iou  merely  moral  and  not  enforceable  at  law  or  in  e(|uity. 
There  will  be  a  decree  in  accordance  with  these  views. 


l^AIIM)  \.  I'.AIIII). 

Court  of  Aim-kals  ov   \i:\v   ^'<ti;K,  1805. 

(115  X   y.  (i5!».) 

Appeals  from  judgement  of  tiie  (Jeneral  Term  of  the  Supremo 
Court  in  the  lil'lh  judicial  department,  entered  upon  orders  made 
October  2,  1804,  which  aflirmed  judgments  in  favor  of  defendants 
entered  upon  decisions  of  tlie  special  county  judjre  of  Monroe 
I'ountv  on  trial  at  Sj)ecial  Term,  dismissing  the  complaint  in  each 
action. 

The  folluwing  is  the  opinion  in  full : 

"  Prior  to  the  year  1873,  John  Baird,  the  plaintiff's  husband 
and  testator,  was  the  owner  of  the  farm  which  is  covered  by  the 
two  mortgages  sought  to  be  foreclosed  in  these  actions.     In  that 

ar,  his  two  sons,  William  and  James,  defendants,  went  into 
jiobsession  of  it,  and  the  father  directed  the  assessors  to  transfer 
(he  assessment  on  the  farm  to  his  sons.  Tiiey  have  remained  in 
pos.session  ever  since.  In  October,  1874,  the  father  deeded  the 
farm  to  the  sons,  who  took  title  under  tliese  deeds  as  tenants  in 

■  inmon.  It  appeared  that  the  father  had  two  other  farms,  all  of 
which  had  been  paid  for  and  imj)r()vcd  with  the  aid  of  tlie  lal)or 
and  .services  of  his  sons,  who  had  worked  for  him  after  their  ma- 
jority. On  a  settlement  between  the  father  and  the  two  sons,  it 
was  agreed  that  he  was  indebted  to  them  in  the  sum  of  $3000,  and 
that  was  the  consideration  for  the  conveyance.  A  deed  was  given 
to  each  son  conveying  an  undivided  half  of  tiie  farm  in  considera- 
tion of  $'ioOO.  The  evidence  tended  to  show,  and  the  trial  court 
has  found,  that  the  intention  was  to  vest  the  title  in  the  sons  in 
lei';  but  it  ap|>ears  that  the  father  had  some  fears  that  liis  sons 
would  not  be  al)le  to  take  care  of  the  property  thus  conveyed  ami 
tliat  it  might  be  lost  in  sjH'culation  or  otherwise.  In  order  to 
prevent  such  a  result,  as  he  said,  he  recpiired  the  sons  to  give  back 
to  him  mortgages  for  $1500  each  on  tlu;  farm.  \o  bond  was  given 
and  no  actual  di-bt  was  intended  to  be  see\ired.  and  thev  were  not 
recorded  by  the  father  in  his  lifetime.  Willi  n>spect  to  the  pur- 
[Hise  and  consideration  of  these  innrtL'ages  the  testimony  t<'niled  to 
show,  and  the  trial  court  found,  that  thev  were  not   intended  to 


212  THE    OBLIGATION    SECURED.  [CHAP.  ml 

secure  any  debt  or  to  be  or  become  a  valid  subsisting  security,  or  to 
be  recorded  or  enforced,  and  were,  in  fact,  without  any  considera- 
tion whatever.  In  the  year  1875  the  wife  of  John  Baird,  and 
mother  of  the  defendants,  died,  and  the  year  following  he  mar- 
ried the  plaintiff.  lie  died  in  1883,  leaving  a  will,  in  which  the 
plaintiff  was  named  as  executrix.  In  that  capacity  she  brought  ac- 
tions against  each  of  the  sons  to  foreclose  the  mortgages  given  by 
them  respectively.  The  complaint  was  dismissed  in  each  case  and 
the  judgments  were  affirmed  at  General  Term.  There  are  two 
appeals  and  two  records,  but  both  judgments  rest  on  precisely  the 
same  facts,  and  the  questions  involved  in  both  appeals  are  identical. 
Both  cases  may,  therefore,  be  conveniently  considered  and  disposed 
of  as  one. 

"  The  plaintiff's  right  to  enforce  the  mortgage  is  the  same  and 
no  other  than  the  mortgagee,  her  husband  and  testator,  had  in  his 
lifetime.  She  stands  in  the  place  of  her  husband,  and  cannot  en- 
force the  instrument  unless  he  could,  and  every  defense  that  the 
defendants  could  urge  against  the  mortgage  during  the  life  of  the 
father,  they  may  interpose  now  against  his  personal  representative. 
The  instruments  purport  to  have  been  given  to  secure  the  payment 
of  money,  but  it  was  shown  at  the  trial  affirmatively,  and  found 
by  the  trial  court,  that  no  debt  in  fact  existed  in  favor  of  the  father 
against  either  of  the  sons;  that  there  was  no  intention  to  give  the 
mortgage  on  the  one  hand,  or  to  hold  it  on  the  other,  as  security 
for  any  debt ;  that  in  fact  there  was  no  legal  or  equitable  con- 
sideration moving  between  the  parties  and  no  intention  on  either 
side  to  treat  the  instruments  as  binding  obligations  or  as  valid 
or  subsisting  securities.  The  evidence  upon  which  these  findings 
were  made,  if  competent,  was  sufficient  and  the  fact  is  not  open  to 
question  or  review  here. 

"  The  findings  are  based  upon  the  business  relations  which  the 
parties  occupied  to  each  other  before  the  father  gave  up  the  posses- 
sion of  the  farm  to  the  sons  and  then  conveyed  it  to  them,  taking 
back  the  mortgages  in  question,  and  upon  his  subsequent  conduct 
and  declarations  as  to  the  character  of  the  instruments  and  the 
purpose  of  their  execution  and  delivery.  The  general  principle 
that  an  instrument  under  seal,  in  the  form  of  a  mortgage  upon 
real  estate,  which  upon  its  face  expresses  a  consideration  and  pur- 
ports to  have  been  given  as  security  for  a  debt  may,  nevertlieless. 
as  between  the  parties,  be  shown  to  have  been  purely  voluntary  or 
Avithout  any  consideration,  and  so  invalid,  is  not  denied  (Davis  v. 
Bechstcin.  HO  K  Y.  440;  TliU  v.  Hnnle.  11 G  id.  299;  Brir/fjs  v. 
Lafigford,  107  id.  080;  Thomas  on  Mort.  §  84  7;  Jones  onMort. 
ij  1297). 

"The  point   upon   which  the  learned  counsel   for  tlic  plaintirf 


,,,!.]  HAIItl)    r.     II  AllUt.  213 

I.  ill'.-,  is  that  i'\  iili'iuc  was  not  ailmissiblc  at  llu'  trial  to  wholly 
.Hiitradict  and  (Icfcat  tlu'  iiistruinciits  \>y  showing',  contrary  to 
wliat  aj)i)ear(»l  on  their  face,  that  they  wen-  intended  to  have  no 
(Iteration  whatever.  It  is  sou<^ht  to  (listin;:\iish  this  ease  from 
that  of  a  ileed,  ai)solute  upon  its  fnee,  which  may  he  shown  to  be 
in  fact  a  mortj^a^o,  and  from  the  numerous  other  casis'in  which 
eijuitv  i)ermits  a  i)arty  to  show  that  an  instrument,  appearing 
upon  its  face  <o  he  of  one  character,  is  or  ou>:hl  to  he  in  truth  of 
<|iiite  another  character.  It  is  said  that  the  jjrincijjle  upon  which 
these  cases  rest  gives  no  sanction  to  what  was  held  hy  the  court 
helow  in  this  case,  that  a  party  may  impeach  his  deed  hy  show- 
iuiT.  not  only  that  it  was  without  consideration,  hut  that  it  was 
intended  to  have  no  validity  oi-  hecome  of  any  hinding  force  wluit- 

••V.T. 

•  The  desire  on  the  part  of  the  fatlu'r  to  retain  some  sort  of 
j:uardianship  over  the  title  to  the  farm  whiih  he  had  conveyed  to 
the  di'fendants  was,  perhaj)s,  natural  enou^^di  under  the  circum- 
istances,  and  it  is  frequently  shown  in  such  transactions.  That 
the  mortgages  were  not  intended  to  he  held  hy  him  for  any  other 
]turi)ose  is  supported  hy  the  circumstances  that  no  bond  was  given, 
that  they  wi-re  not  recorded,  and  no  claim  was  nuide  by  the  mort- 
gagee during  his  life,  a  jjcriod  of  about  nine  years,  that  they  were 
in  his  hands  for  any  otlier  ])urpose  or  for  the  payment  of  either 
principal  or  interest  though  jiast  due.  All  the  circumstanees, 
when  considered  with  the  proof  of  the  statenu-nts  and  declarations 
of  the  father,  were  sulhcient  to  warrant  the  findings  of  the  trial 
lourt  with  resjiect  to  the  real  purpose  with  which  tlu^  instruments 

■  re  nuule  and   tlu'ir  true  consideration    (Ifolmcs  v.  Rojirr.    Ill 
..  Y.  (>7  ;  Li/on  v.  Uirkcr,  id.  t?'^")).     '' Th(>  presumption  of  soiue 

■  iisideration  that  arose  from  the  j)resence  of  a  seal  was  overthrown, 
id  we  must  assume  that  the  instruments  were  without  considera- 
•n  of  any  kind  (  flniif  v.  linrion.  ')'>  X.  Y.  C.S  :  lirst  v.  Thirl.  79  iil. 

'. ;  Torn/  v.  lihiH-.  hn  i,l  185;  Home  Ins.  Co.  v.  Wafson.  50  id. 

'.'»;  f)iif)<>i.^  V.  Ifcniiatur,  5(1  id.  Cu^) . 

"There  is  no  reason  that  we  can  perceive  for  giving  to  these 
instruments  any  greater  force  or  effect  than  was  eoutemplated  by 
'be  parties  when  they  were  executed  and  delivered.     There  is  no 

-topj)el  or  any  right  which  attached  in  favor  of  third  parties,  ami 
we  are  not  aware  of  anv  prin(i|ile  which  would  now  retpiire  a 
court  of  e<piity  to  treat  these  instruments  as  valid  subsisting  (tbli- 

itions  unless  thev  were  intended  a<  such  when  mai1e.  and  this  is 

•gatived  by  the  findings. 

"  Xor  do  we  j)erci'ive  anv  good  reason  why  the  real  pur|»ose  aiul 
irue  consideration  and  object  of  the  mortgages  sho\dd  not  be  made 
to  appear  when   Ibr  aid  of  m  conrl   nf  cipiifv   i-   invoked    for  their 


214  THE   OBLIGATION    SECURED.  [CHAP.  III. 

enforcement.  The  authority  relied  upon  by  the  learned  counsel 
for  the  plaintiff  in  support  of  his  contention  is  a  remark  of  Judge 
llapallo  in  the  case  of  Ilutchlns  v.  Hutchins,  98  N.  Y.  56,  in 
which  it  is  said :  '  It  has  never  been  held  that  a  deed  can  be  so  far 
contradicted  by  parol  as  to  show  that  it  was  not  intended  to  operate 
at  all,  or- that  it  was  the  intention  or  agreement  of  the  parties  that 
the  grantee  should  acquire  no  right  whatever  under  it,  or  that  he 
should  reconvey  to  the  grantor  on  his  request  without  any  consid- 
eration.' 

"  That  remark  must  be  understood  with  reference  to  the  fact* 
of  the  case  then  under  consideration,  which  was  the  case  of  a  deed 
absolute  in  form  but  intended  as  a  mortgage.  The  defendant'? 
answer  was,  however,  so  drawn  as  to  leave  room  for  the  construc- 
tion that  he  intended  to  urge  that  the  conveyance  was  intended 
to  be  wholly  inoperative,  or  in  trust,  or  to  secure  a  debt  which  the 
parties  had  agreed  should  never  be  paid,  and  it  was  with  reference 
to  this  feature  of  the  case  that  the  expression  was  used.  It  was 
applicable  to  the  case  then  under  review,  but  cannot  be  regarded 
as  authority  for  the  proposition  that  the  defendants  in  this  case 
are  precluded  from  showing  that  the  mortgages  were  without  any 
consideration  in  fact,  or  that  they  were  not  intended  by  any  of  the 
parties  to  have  the  effect  of  incumbering  or  defeating  the  title 
which  the  father  had  just  conveyed  to  his  sons.  The  rule  which 
excludes  evidence  of  parol  negotiations  or  conditions,  when  offered 
to  contradict  or  substantially  vary  the  legal  import  of  a  written 
agreement,  does  not  prevent  a  party  to  the  agreement,  in  an  action 
between  the  parties,  from  showing,  by  way  of  defense,  the  existence 
of  a  contemporaneous  oral  agreement,  made  at  the  time  the  writing 
was  executed  and  delivered,  which  would  render  the  use  of  the 
written  instrument,  for  any  purpose  contrary  to  or  inconsistent 
with  the  oral  stipulation,  dishonest  or  fraudulent  (JuWiard  v. 
Chaffee,  93  N.  Y.  529).  The  consideration  of  a  written  instru- 
ment is  always  open  to  inquiry,  and  a  party  may  show  that  the 
design  and  object  of  the  agreement  was  different  from  what  the 
language,  if  alone  considered,  would  indicate  (id.).  Parol  evi- 
dence may  also  be  given  to  show  that  a  writing,  purporting  to  be 
a  contract  or  obligation,  was  not  in  fact  intended  or  delivered  as 
such  by  the  parties  (Gricrson  v.  Mason,  60  N".  Y.  394).  So,  a  con- 
veyance absolute  in  form  may  be  shown,  as  against  the  heir  at  law 
of  the  grantee,  to  have  been  made  in  trust  for  the  benefit  of  a 
partnership  firm,  of  which  the  grantee  was  a  member,  and  so  held 
by  him  in  trust  for  the  firm  (Banl-  v.  Grotr,  110  N.  Y.  12).  Of 
course  there  may  be  cases  where  the  rights  of  innocent  third  par- 
ties intervene  to  modify  or  change  the  rules,  as  in  the  case  of  nego- 
tiable instruments,  or  where  there  exists  some  element  of  estoppel. 


^^^:(•.  i.J  UAIItl)    r.    IIAIKD.  '^l"> 

but  as  In-twi'di  iIk'  j)arlit's  to  tlu-  iiisiriniu-iil  tliciv  is  no  reason  why 
the  truth,  with  respect  to  tin-  real  object  and  consideration  of  the 
instrunu-nt,  nuiy  not  be  niach'  to  ajjpcar.  The  plaintill  was  not 
entitled  to  maintain  the  actions  for  ihi'  foreclosure  of  the  niort- 
<,'ap's  unless  it  was  found  that  there  was  some  del)l  due  to  her  for 
the  payment  of  which  they  were  the  security.  The  lindin;,'s  are 
that  no  debt  ever  existed,  and  this  is  conclusive  against  the  plain- 
titT's  richt  of  action.  In  an  action  to  enforce  a  niort^^a^'c  by  sab- 
of  (he  land  the  anu)unt,  if  anythin*,',  of  the  lien  is  an  issue  which 
the  i)arties  certainly  have  the  ri^dit  to  contest.  It  is  the  debt  which 
gives  the  mortgage  vitality  as  a  charge  uj)on  the  land,  and  gener- 
ally where  there  is  no  debt  or  obligation  there  is  no  subsisting  mort- 
gage. The  instruments  contain  a  consideration  clause  and  a  seal, 
and  much  of  what  has  been  said  l)y  courts  and  writers  to  the  efrecl 
that  a  party  cannot  be  permitted  to  defeat  his  own  deed  by  parol 
j)ro()f  is  based  upon  the  importance  which  was  attached  to  the  pres- 
ence of  these  conditions  in  an  instrument  by  the  common  law.  Th<- 
conception  that  some  consideration  was  necessary  to  support  every 
promise  and  covenant  was  borrowed  from  the  civil  law,  but  tlw 
consideration  was  formerly  deemed  to  be  conclusively  established 
by  the  ])resence  of  the  consideration  clause  or  the  seal.  It  was 
originally  suj)posed  that  the  recitals  and  clauses  of  a  contract  e.\- 
j)ressing  a  consideration  coidd  not  Ik-  varied  by  parol  ])roof  to  the 
contrary,  but  tiiat  rule  was  gradually  al)andoned  and  now  that 
clause  is  open  to  parol  proof  {McCrca  v.  Purmot,  1(1  Wend.  irtO; 
Jlehhard  v.  Ifaufjliian,  70  X.  Y.  54;  Ham  v.  Vun  Onlrn.  84  id. 
2<>9).  So.  also,  the  conclusive  ])resumj)tion  of  a  consideration 
which  formerly  arose  from  the  presence  of  a  seal  was  modifle<l 
by  statute,  and  it  is  now  open  to  the  maker  of  such  an  instrument 
to  allege  and  i)rove  the  absence  of  any  consideration  in  fact  as  a  de- 
fen.^e  (3  R.  S.  [.5th  ed.]  (501,  i;$<  77,  78;  Code,  )<  SIO). 

"There  are.  it  is  true,  expressions  to  be  fouiul  in  some  cases  to 
the  efTect  that  while  the  (pu'stion  of  consideration  is  open  to  be 
varied  i)y  parol  jjroof,  yet  the  ])arty  cannot  be  permitted  to  claim 
that  a  deed  or  other  instrument  with  a  consideration  clause  or  a 
seal,  or  both,   is  wholly  without   consideration,  and  thus  entirely 
defeat  it.     If  this  idea  is  anything  more  than  a  sonu-what  shad- 
owy and  fanciful  remnant  of  the  ancient  law.  it  is  not  easy  to  de- 
fine its  precise  scope  or  practical  application  when  applied  to  an 
\ocutory  instrument  like  a  mortgage.     To  say  that  in  a  case  like 
'lis  it  is  open  to  the  defendant  to  reduce  by  j)arol  proof  the  sum 
\pressed  as  the  consideration  to  one  dollar  or  any  other  nominal 
-um,  but  that  he  cannot  go  any  farthiT.  would  bo  to  confess  that 
the  distinction,  if  it  exists,  is  altogether  without  substance.     The 
instniment  would  be  d(>feated  in  either  ca.<;e.     It  is  quite  certain 


•^16  THE    OBLIGATION'    SECURED.  [CHAP.  III. 

that  by  recent  adjudications  deeds  and  other  instruments  have  been 
defeated,  in  a  great  variety  of  cases,  by  parol  proof  of  want  of 
consideration,  or  that  they  were  delivered  upon  conditions  which 
would  render  their  use  for  any  other  object  a  fraud  upon  the 
maker,  or  that  the  purpose  for  which  delivery  was  made  was  dif- 
ferent from  that  indicated  upon  their  face.     It  will  be  sut?icient 
to  refer  to  some  of  the  cases  without  further  comment :  Reynolds 
V.  Bolnnson,  110  X.  Y.  654;  Bhioitt  v.  Boorum,  142  id.  357;  An- 
dreas V.  Brewster,   124  id.   433.     So,  also,   actions  to   foreclose 
mortgages  have  been  defeated  upon  allegations  and  proof  differing 
in  no"  substantial  respect  from  that  appearing  in  this  case  {Briggs 
V.  Langford,  107  N.  Y.  680;  Haniian  v.  JIannan,  123  Mass.  441; 
^Ycar$e  v.  Pcirce,  24  Pick.  141;  UiU  v.  Iloole,  116  N.  Y.  299; 
Davis  V.  Beclisiein,  69  id.  440;  Parl-liurst  v.  Higgins,  38  Hun^ 
113).     There  may  be  cases,  no  doubt,  where  the  party  will  be  held 
estopped  by  his  deed  from  claiming  that  it  is  void  for  want  of 
consideration,  especially  where  by  its  terms  it  appears  to  be  an  ab- 
solute conveyance  of  land  (Matter  of  Mitchell.  61  Hun,  372).     A 
voluntary  conveyance,  intended  to  take  effect  as  such,    and    not 
■executory,  is  generally  good  between  the  parties  without  actual 
consideration,  but  that  principle  has  no  application  to  this  ease. 
It  is  not  quite  correct  to  say  that  the  defendant  was  permitted  to 
show  bv  parol  that  these  instruments  were  never  to  have  any  oper- 
ation or  effect.     They  were  in  fact  executed  and  delivered  for  a 
purpose,  though  not  to  secure  the  payment  of  money,  and  they  may 
luive  accomplished  the  very  object  contemplated.     That  was  to  pro- 
tect the  defendants  against  their  own  improvidence  in  contracting 
<lcbts  upon  the  faith  of  their  title  to  the  farm.     Whether  that  pur- 
])ose  was  lawful,  or  practicable,  or  possible,  or  the  contrary,  is  quite 
foreign  to  the  inquiry.     It  is  enough  to  know  that  such  was  the 
motive  and  consideration  in  the  minds  of  all  the  parties  which 
induced  the  execution  and  delivery,  and  no  other.     Having  pro- 
cured them  in  that  way,  it  would  be  unconscionable  now  for  the 
mortgagee  or  his  personal  representative  to  use  or  enforce  them  as 
'    obligations  for  the  payment  of  money. 

'^  Tlie  defendants  had  been  in  possession  of  the  farm  under  the 
final  contract  between  them  and  their  father  to  convey  it  to  them, 
in  consideration  of  the  amount  found  due  upon  the  settlement,  for 
more  than  a  year  before  the  deeds  or  mortgages  were  given.  Dur- 
ing that  time  they  were  in  a  position  to  enforce  specific  perform- 
ance, and  hence  the  execution  and  delivery  of  the  mortgages  were 
purely  voluntary  acts  on  their  part,  and  constituted,  so  far  as  ap- 
pears, no  element  of  tlie  consideration  for  the  deeds. 

"The  acts  and  declarations  of  the  mortgagee  with  respect  to  the 
consideration,  conditions  and  purpose  under  which  the  instruments 


>i:c.  I.I  it\ii;i»   / .    HAli;i».  217 

Were  iiiiulc  and  dtlivcri'tl,  lu-in;,'  ailinissions  apiinst  his  inlerests, 
would  have  Imiii  niiii|ii'li'nl  jnoof  a^Miiist  liiiii  in  a  suit  to  enforce 
the  ni()rt;j:a^('s  in  his  lifclinu',  and  hciuc  arc  now  coinix'lcnt  a;,Minst 
tlic  plaint iir  who  r('|H'fsents  him  {Ifolincs  v.  Uojirr.  Ill  X.  \.  07; 
l.iian  V.  li'lrhir.  i<l.  ■-'•.'.■•;  llnlmrl  v.  IIi)hnrl.  i".'.'  iil.  S(»). 

**  We  think  tJKTt'  was  no  error  in  tlie  re>uh  and  thai   ilir  judg- 
ments shouhl  !)('  alhrmed,  with  costs." 

W .  A.  i^utln'rhuitl  for  api>cliant. 

(Jeuryc  A.  Jicnlon  for  rcsponcK'nl. 

O'Brien,  J.,  reads  for  allirmancc. 

Barth'tt,  J.,  concurs;   Pi'ckham   and    dray,  JJ.,  concur   in   the 
result ;  Andrews,  Ch.  J.,  dissents;  Ilaigiit,  J.,  not  sitting. 

Judgments  affirmed. 


218  THE    OBLIGATION    SECURED.  [cHAP.  III. 


CHAPTER    III.    (Continued). 

Section  II.     Illegal  Obligations. 

WHALEY  V.  NOETOiW 

High  Court  of  Chancery,  1687. 

(1  Vern.  483.) 

The  bill  was  to  be  relieved  against  a  bond  and  judgment,  defeaz- 
anced  for  the  payment  of  4001.  to  the  defendant;  and  the  bill 
charged,  that  whereas  the  security  recited  400?.  to  have  been  lent 
and  paid  by  the  defendant  to  the  plaintiff,  that  in  truth  the  money 
was  never  really  lent  or  paid:  the  defendant  by  answer  confessed,, 
that  the  400/.  was  not  lent  or  paid  by  her,  and  that  it  was  never 
meant  or  intended  so  to  be,  and  that  it  was  the  mistake  of  the 
scrivener  in  making  the  security  after  that  manner,  for  that  the 
400?.  thereby  intended  to  be  secured  was  the  free  gift  of  the  plain- 
tiff unto  the  defendant. 

The  truth  of  the  case  was,  that  the  defendant  was  for  some  time 
kept  by  the  plaintiff,  and  this  400/.  was  given  her  upon  that  ac- 
count; but  of  that  no  notice  was  taken  in  the  bill,  and  the  counsel, 
for  the  defendant  insisted,  that  it  being  a  free  gift,  no  equity  could 
relieve  against  it;  and  cited  the  case  of  Bourman  and  Uphill, 
which  was  this  very  case  in  point,  and  the  equity  laid  in  the  bill 
the  same,  to  wit,  that  it  purported  to  be  a  security  for  money  lent; 
Avhereas  no  money  was  really  lent  or  paid :  and  the  Court  would 
not  relieve  in  that  case,  though  the  gift  was  upon  the  like  account : 
and  the  case  of  Peacock  and  Mainlin  was  also  cited. 

The  Master  of  the  Rolls  [Sir  John  Trevor]  said,  that  there 
would  be  a  difference  in  these  cases  between  a  contract  executed 
and  executory ;  and  that  this  Court  would  extend  relief  as  to  things 
executory,  which  if  done,  it  maybe  might  stand :  but  as  this  case 
was,  he  saw  no  ground  to  relieve  the  plaintiff,  nothing  appearing 
to  him,  but  it  was  a  free  and  voluntary  gift,  without  anything  of 
turpis  contractus:  and  in  case  it  had  been  so,  yet  wo  know  that 
Adam  was  punished,  tliough  tempted  by  Eve ;  because  he  would 
be  tempted.  But  if  it  liad  been  cliargod  in  the  bill,  that  the  de- 
fendant was  a  common  strumpet,  and  she  commonly  dealt  and 


BEc.  II.]  w r.  B .     u r.   w .  21M 

practised  after  that  sort,  and  used  to  draw  in  yoim^'  griitifiiicn,  m 
Mich  case  lie  thought  it  reasonable  the  Court  should  relieve;  and 
the  plaintitTs  had,  in  this  cause,  proved  as  much;  but  the  defend- 
ant's counsel  ojjposed  the  reading  to  that  matter,  by  reason  it  was 
not  charged  in  the  bill,  nor  in  issue  in  the  cause;  so  they  prayed 
liberty  to  amend  their  bill,  and  to  charge  that  special  matter,  pay- 
ing the  costs  of  that  day,  and  of  the  depositions  taken  in  the 
cause.* 


W V.  B- 

B V.  W- 


TlIE    KOLLS    COUKT,    ClIANCKUV,    18G3. 

(32  Bear.  574.) 

The  Master  of  the  Kolls  (8iu  John  Komilly)." 

This  is  a  case  which  has  caused  me  considerable  ])ain;  but  I  can 
state  very  shortly  why  I  think  that  this  deed  cannot  be  supported. 

There  are  two  suits,  one  to  enforce  a  deed  of  the  20th  of  August, 
1855,  by  which,  in  consideration  of  1700/.  lent  by  the  defendant 
Mr.  W.  to  Mr.  B.,  Mr.  B.  and  his  five  children  (two  only  of  whom 
were  adult)  covenanted  to  surrender  copyholds  for  securing  that 
amount.  The  second  suit  is  instituted  by  B.  and  his  two  daughters 
to  set  that  deed  aside. 

The  case  is  a  very  painful  one  in  this  respect:  It  aj)pears  that 
Mr.  W.  .seduced  C,  one  of  Mr.  B.'s  daughters,  and  that  in  June, 
1855,  Mr.  T.,  a  brother-in-law  of  Mr.  B..  had  pointed  out  to  him 
the  attentions  paid  to  his  daughter  by  Mr.  \V..  that  it  was  a  matter 
of  notoriety  in  the  town  in  which  they  resided,  and  that  it  was 
e.s.spntial  to  put  a  stop  to  it.     At  the  ■^ame  time,  Mr.  T.  toM  Iiini 

'"Has  llioie  been  any  case  upon  tluil  distinction  [between  a  retonipen-.< 
for  past  and  a  jirovision  for  future  coluiliitation].  wliere  tlio  ••ourt,  tindinir 
ttio  woman  in  actual  possession  of  the  property,  lias  upon  tluit  ;rround  taken 
it  out  of  lier  liands?  Tlie  distinction  upon  the  doctrine  of  iinrmium  innln  i- 
tifr  lias  prevailed  in  the  case  of  restrainin;.'  her  from  enforciufr  a  aecjiritv. 
Hut  I  doubt  whether  there  is  any  instance  of  taking,'  the  property  out  of 
her  hands,  except  as  to  cretlitors." — I'rr  I.ord  Kldon.  I,.  Ch..  in  /I'lW.  r  \. 
Kidiler,  10  Ves.  .ICO.  3(5(5    (ISO.")). 

"  Kv«'n  in  cases  of  a  j>ra-iiiiiiiii  innlicititr,  the  di'>t inctiou  has  been  cun- 
>«tan(ly  maintained  bcl  ween  bills  for  rest  rainin;:  the  woman  fr<im  enforcin;j 
the  security  piven.  an<l  bills  for  compellin;;  her  to  j:i\e  up  pro|)erty  nireadv 
in  her  possession  umler  the  contract.  .\t  least  (here  is  no  case  to  ln>  ftuiml 
where  (he  contrary  doc(rine  has  been  ac(ed  on.  except  where  creditors  were 
concerned. ■■ — Story.  V.t\.  .Turis..  5  20!)   llS4(M. 

'Thi<  -(atcnicnt  of  facts  and  a  portion  of  the  opinion  are  omitted. 


220  THE    OBLKIATTOX    SECURED.  [eilAP.  III. 

lie  should  require  the  moucy  due  to  him  to  be  repaid,  which  con- 
sisted of  1 100/.,  and  two  sums  of  3007.  each  for  which  he  was  surety. 
When  T.  required  the  money  to  be  repaid,  Mr.  B.  applied  to  Mr. 
W.  for  an  advance.  A  day  or  two  after,  in  June,  1855,  in  conse- 
quence of  the  strong  remonstrances  of  Mr.  T.  and  of  Mrs.  T.,  who 
was  the  aunt  of  this  young  lady.  Mr.  B.  wrote  a  letter  to  Mr.  W., 
in  which  he  told  him,  that  in  consequence  of  the  reports,  he  must 
discontinue  his  visits  to  his  house.  In  answer  to  this,  Mr.  W. 
wrote  that  there  was  no  truth  in  the  suggestion,  but  that  he  ac- 
quiesced in  the  propriety  of  the  refusal  to  allow  a  continuance  of 
his  visits.  On  the  following  day  after  writing  this  letter,  Mr.  W. 
wrote  to  Mr.  B.  and  told  him  that  he  would  advance  the  money 
required  by  Mr.  B.,  and  a  treaty  took  place,  and  it  was  arranged 
that  the  advance  should  be  made,  and  it  was  effected  on  the  20th 
of  August,  1855,  about  two  months  after. 

It  is  impossible  to  read  the  letters  and  the  evidence  in  this  case, 
and  not  come  to  the  conclusion,  that  a  part  of  the  considera- 
tion for  the  advance  of  the  money  by  ]\Ir.  W.  and  for  the  security 
which  was  given,  was  a  promise  that  W.  should  be  at  liberty  to  con- 
tinue his  visits  to  the  daughter.  It  is  impossible  that  the  father 
should  not  have  been  aware,  after  all  the  representations  made  to 
him  by  Mr.  T.  and  by  the  public  talk,  that  Mr.  W.  had,  at  that 
time,  actually  succeeded  in  seducing,  or  that  ho  was  attempting  to 
seduce,  his  daughter.  It  is  impossible  to  doubt  the  fact  that  the 
money  was  given  in  order  that  Mr.  W.  should  be  allowed  to  con- 
tinue his  attentions  to  the  daughter,  whether  successful  or  not. 

I  am  of  opinion,  in  that  state  of  the  evidence,  that  no  person 
can  come  into  a  Court  of  Equity  and  ask  that  effect  should  be 
given  to  a  deed,  the  consideration  for  which  was  of  that  character. 
The  Court  is  compelled  to  look  at  the  whole  of  the  consideration. 
and  cannot  execute  the  deed  in  part.  And  I  am  of  opinion  that 
no  person  can,  on  such  evidence  and  facts  as  are  here  established, 
require  this  Court  to  give  any  assistance  to  either  party  concerned 
in  such  a  transaction. 

It  occurred  to  me  that  I  could  leave  the  matter  there,  but,  ob- 
serving that  others  besides  the  parties  to  the  corrupt  bargain  are 
atfected  by  this  deed,  I  am  of  opinion  that  I  ought  not.  I  am  also 
influenced  by  this  consideration,  that,  upon  an  action  on  the  deed, 
the  same  defense  would  1)0  open  at  law,  and  I  think  that  I  should 
not  act  properl}',  if  I  did  not,  as  far  as  I  am  able,  put  an  end 
to  this  painful  case.  Without  saying  anything  as  to  what  might 
be  done  in  an  action  at  law  to  recover  the  money  lent,  I  shall  order 
tlie  deed  to  be  delivered  up  to  be  cancelled. 

The  grounds  on  which  I  decide  this  case  make  it  unnecessary 
for  me  to  enter  into  the  consideration  whether  proper  protection 


sKr.  11.)  l(()>\Nv'  i;i  1'    '.    I>A>1I\\<><>I).  '.'"'l 

uas  alVdixlcd  to  iIr-  iwu  \ouii;,'  liKiio  ill  this  matter;  l)Ut  it  woiiM 
1)0  dillicult  lo  see  liow  i-itlicr  of  tlicsi-  deeds  of  J 85:5  and  1855  could 
be  supported  in  this  Court  as  upiinst  them. 


r,osA.\(,)ri;i"r  \.  dasiiwood. 

CULKT    Ol"    ('llA.\(  i;UV.     \','->'>. 

{Cas.   ln,ii>.    Tiilh.   :?S.) 

The  ])laintiirs  htiii^f  Assignees  under  a  Commission  of  Bank- 
ru])toy  against  the  two  Cottons,  brought  their  Bill  against  Dajli- 
wood  the  Defendant,  as  Exeeutor  of  Sir  Samuel  Dashwood,  who 
had  in  his  Life-time  lent  several  .Sums  to  the  Cottons,  the  Bank- 
rupts, uj)on  Bonds  bearing  G/.  per  Cent.  Interest;  and  had  taktii 
Advantage  of  their  neeessitous  Cireumstanees,  and  eompelled  them 
to  pay  at  the  Kate  of  10/.  per  Cent,  to  whieh  they  submitted,  and 
enter'd  into  other  Agreements  for  that  Purpose;  and  so  eontinucd 
paying  10/.  per  Cent,  from  the  Year  ITIO,  to  the  Year  17'^  1. 

"Twas  deereed  at  the  Bolls  that  the  Defendant  should  aeeount ; 
and  that  for  what  had  been  really  lent  legal  Interest  shouhl  be 
eomj)uted  and  allowed;  and  what  had  been  ijaid  over  and  above 
legal  Interest  should  be  dtdueted  out  of  the  Prineijtal  at  the  Time 
paid;  and  the  I'laintill's  to  ])ay  what  >hould  be  due  on  the  Aeeount : 
And  if  the  Testator  had  reeeived  more  than  was  due  with  legal  In- 
terest, that  was  to  be  refunded  by  the  Defendant,  and  the  Bonds  t<> 
be  delivered  up. 

Mr.  Solicitor  General  and  Mr.  Faiakerleij  insisted  for  the  Di- 
fondant.  That  'twas  hard  to  intpiire  into  a  Transaetion  of  so  long 
standing,  the  Parties  having  on  all  sides  submitted  to  the  Agree- 
ment, and  that  Voleiili  non  fit  Injuria;  whieh  was  the  Beason  of 
the  Lord  Holt's  ojjinion  in  the  Ca-se  of  Tomkins  versus  Unmet.  1 
Salk.  22.  why  an  Aetion  would  not  lie  for  Beeovi-ry  of  Money  \m\'u\ 
upon  an  usurious  Contract;  and  tlrat  the  Bankrupts  being  /'<//•- 
ticipes  Criininis.  should  have  no  more  Advantage  here  than  at  Law. 
Nothing  was  more  eomnion  than  to  admit  the  Party,  after  he  had 
paid  the  Money,  to  be  an  Lvidtiiee  in  an  Infornuition  upon  the 
Statute  of  Lsury;  whieh  shews  he  is,  in  the  Eye  of  the  Law.  afttr 
Payment,  an  inditVerent  Person;  And  compared  it  to  the  Ca-e  of 
Gaming;  where,  if  the  Loser  pays  the  Money,  and  does  not  sue  for 
the  Beeovery  within  the  Time  jireseribed  by  the  Act.  he  i>  barred 
And  cited  the  ease  of  Walker  versus  I'enri/.  2  AVrn.  7S.  115. 

LoKi)  CiiANCKLLou  fT.vLUOT|.  Tinre  is  no  Doubt  of  the  Bond< 
and  Contracts  therein  being  good :  But  it  is  tlie  subso«pu'nt  .Xgn-e- 


222  THE    OBLIGATIOX    SECURED.  [cHAP.  in* 

ment  upon  which  the  Question  arises.  It  is  clear  that  more  has 
been  paid  than  legal  Interest.  That  appears  from  the  several 
Letters  which  have  been  read,  which  prove  an  Agreement  to  pay 
107.  per  Cent,  and  from  Sir  Samuel  Dashwood's  Receipts;  but 
whether  the  Plaintiffs  be  intitled  to  any  Relief  in  Equity,  the 
Money  being  paid,  and  those  Payments  agreed  to  be  continued,  by 
several  Letters  from  the  Cottons  to  Sir  Samuel  Dashwood,  wherein 
are  Promises  to  pay  off  the  Residue,  is  now  the  Question? 

The  only  Case  that  has  been  cited,  that  seems  to  come  up  to  this, 
is  that  of  Tomhins  versus  Barnet;  which  proves  only,  that  where  the 
Party  has  paid  a  Sum  upon  an  illegal  Contract,  he  shall  not  recover 
it  on  an  Action  brought  by  him.  And  tho'  a  Court  of  Equity 
will  not  differ  from  the  Courts  of  Law  in  the  Exposition  of  Stat- 
utes ;  yet  does  it  often  vary  in  the  Remedies  given,  and  in  the  Man- 
ner of  applying  them. 

The  Penalties,  for  Instance,  given  by  this  Act,  are  not  to  be  sued 
for  here;  nor  could  this  Court  decree  them.  And  though  no  in- 
debitatus assumpsit  will  lie,  in  Strictness  of  Law,  for  receiving  of 
Money  paid  upon  an  usurious  Contract ;  yet  that  is  no  Rule  to  this 
Court,  which  will  never  see  a  Creditor  running  away  with  an  exor- 
])itant  Interest  beyond  what  tho  Law  allows,  though  the  Money  has 
1jeen  paid,  without  relieving  the  Party  injured.  The  Case  of  Sir 
Thomas  Meers,  heard  by  the  Lord  Harcourt,  is  an  Authority  in 
Point,  that  this  Court  will  relieve  in  Cases  which  (though  perhaps 
strictly  legal)  bear  hard  upon  one  Party.  The  Case  was  this:  Sir 
Thomas  Meers  had  in  some  Mortgages  inserted  a  Covenant,  That  if 
the  Interest  was  not  paid  punctually  at  the  Day,  it  should  from 
that  Time,  and  so  from  Time  to  Time,  be  turned  into  Principal,  and 
bear  Interest :  L^pon  a  Bill  filed,  the  Lord  Chancellor  relieved  the 
Mortgagors  against  this  Covenant,  as  unjust  and  oppressive.  So 
likewise  is  the  Case  of  Broadway,  which  was  first  heard  at  the  Rolls, 
an-d  then  affirm'd  by  the  Lord  King,  an  express  Authority,  that  in 
Matters  within  the  Jurisdiction  of  this  Court  it  will  relieve,  though 
notliing  appears  which,  strictly  speaking,  may  be  called  illegal. 
The  Reason  is ;  because  all  those  Cases  carry  somewhat  of  Fraud 
witli  them.  I  do  not  mean  such  a  Fraud  as  is  properly  Deceit;  but 
such  Proceedings  as  lay  a  particular  Burden  or  Hardship  upon  any 
Man:  It  being  the  Business  of  this  Court  to  relieve  against  all  Of- 
fences against  the  Law  of  Nature  and  Reason:  And  if  it  be  so  in 
Cases  which,  strictly  speaking,  may  be  called  legal,  how  much  more 
shall  it  be  so,  where  the  Covenant  or  Agreement  is  against  an  ex- 
press Law  (as  in  this  Case)  against  tlie  Statute  of  Fsury,  thongli 
the  Party  may  have  submitted  for  a  Time  to  tlie  Terms  imposed  on 
him?  The  Payment  of  the  Money  will  not  alter  the  Case  in  a  Court 
of  Equity;  for,  it  ought  not  to  have  been  paid:  And  the  ]\Iaxim  of. 


sKc.  11.]  iLLi:t;AK  oiu.itiATioxs.  2'^;{ 

\'ulcn(i  nan  fit  Injuria  will  hold  as  well  in  all  Cases  of  hard  IJur- 
-ains,  a^'ainst  whiih  tlu;  Court  rdii'vcs,  as  in  this.  It  is  only  the 
Corruption  of  the  Person  luakin;,'  such  Har-^Mins  that  is  to  l)e  fon- 
ridered  :  It  is  that  only  which  the  ^<(ah^l('  has  in  View  ;  and  'tis  that 
..nly  which  intitles  the  Party  oppressed  to  Kclicf.  This  answers  the 
Ohjection  that  was  made  hy  the  Defendant's  Counsel,  of  the  Bank- 
rupts heing  I'drlitijics  Criminis:  for,  they  are  oppressed,  and  their 
N'eccssitics  ohliged  them  to  submit  to  those  Terms.  Nor  can  it  ho 
-aid  in  any  Ca.se  of  Oppression,  that  the  Party  oj)pres.sed  is  Pur- 
lirriis  Criminis;  since  it  is  that  very  Hardship  which  he  labours 
under,  and  which  is  imposed  on  him  l)y  another,  that  makes  the 
Crime.  Tlu'  Case  of  Camesters,  to  which  this  has  been  compared,  is 
no  way  parallel;  for,  there  both  Parties  are  Criminal:  And  if  two 
I'ersons  will  sit  down,  and  endeavour  to  ruin  one  anotiier,  and  one 
pays  the  ;M()ney,  if  after  Payment  he  cannot  recover  it  at  Law,  I  do 
not  see  that  a  Court  of  Kcpiity  has  anythin*^  to  do  but  to  stand 
Xcutcr;  there  being  in  that  Ca-se  no  Oppression  upon  one  Party,  as 
ihere  is  in  this.'  Another  Dilliculty  was  made  as  to  the  Kefunding: 
liut  is  not  that  a  common  Direction  in  all  Cases  where  Securities 
are  sought  to  be  redeemed,  that  if  the  Party  has  been  over-paid,  lie 
-liall  refund?  Must  he  kceji  Money  that  he  has  no  Higlit  to,  meerly 
iiecause  he  got  it  into  his  Hands?  1  do  not  determine  how  it  would 
be  if  all  the  Securities  were  delivered  uj);  that  is  not  now  before 
mc :  I  only  determine  what  is  now  before  the  Court ;  and  is  the  com- 
iiK.ii  Direction  in  all  Cases  where  Securities  are  sought  to  be  re- 
ileemed. 

And  so  affirmed  the  Decrrr,  d'-r. 


Stat.  9  Anne,  c.  H. — .1/j  net  for  lite  better  preventimj  r.rcrssire 
and  dei'utful  (/amin;/. — Wliereas  the  laws  now  in  force  for  prevent- 
in(f  the  mischiefs  irhich  maif  happen  hi/  (jamimj,  hath  not  hem 
found  sufficient  for  that  purpose :  therefore  for  the  further  prevent- 
ing of  iill  excessive  aiul  deceitful  gaming.  b(>  it  enacted  by  the 
Queen's  most  excellent  majesty,  by  and  with  the  advice  and  eon- 
>cnt  of  the  lords  spiritual  and  temporal,  ami  commons,  in  this 
pn'<fiit   parliaini'iit  ii>sciiii>lrd.  ami  l>y  authority  of  the  same.  That 

'"III  ca^cs  wlicrc  !i;,'nriiiciit-  i>r  ntlu-r  trnnsuctionn  lUi'  rr|uiilinlo«l  oii 
iifrDiiiit  <if  tlicir  Immiij:  nviiiii-l  |'iil>lir  puiiiv.  tile  finMun.-^luin  c  tliat  tin*  n-lirf 
i<  aski'd  hy  n  pmty  \\\u>  i-.  prrliiipH.  pnittrrfts  rnniiiiis  is  not  in  «i|iiity 
(iiatcriiil.  Tin-  rca-on  i->  tlial  tlic  piililir  iiitorrst  in|iiin<-i  tliiit  rrlii'f  slionM 
Ix"  yivi'ii.  ami  it  is  >;i\i'ii  t<>  tit-  puldii'  tlinni^'li  llu'  party  (Story.  Kt|..  S 
:i()Si.'— /'. ,    Kn-'Ii-li.  Cli.  .1..  in  Hir,ithirit  v.  h'oi/ns.  ■^•-  Ark.  TTiS   (1878). 


224  THE    OBLIGATIOX    SECUKED.  [CIIAI'.  HI. 

from  and  after  the  first  day  of  Maij,  one  thousand  seven  hundred 
and  eleven,  all  notes,  bills,  bonds,  judgments,  mortgages,  or  other 
securities  or  conveyances  whatsoever,  given,  granted,  drawn,  or 
entred  into,  or  executed  by  any  person  or  persons  whatsoever, 
where  the  whole  or  any  part  of  the  consideration  of  such  convey- 
ances or  securities,  shall  be  for  any  money  or  other  valuable  thing 
Avhatsoever,  won  hy  gaming  or  playing  at  cards,  dice,  tables,  tennis, 
howls,  or  other  game  or  games  whatsoever,  or  by  betting  on  the 
sides  or  hands  of  such  as  do  game  at  any  of  the  games  aforesaid, 
or  for  the  reimbursing  or  repaying  any  money  knowingly  lent,  or 
advanced  for  such  gaming  or  betting,  as  aforesaid,  or  lent  or  ad- 
vanced at  the  time  and  place  of  such  play,  to  any  person  or  persons 
so  gaming  or  betting,  as  aforesaid,  or  that  shall,  during  such  play, 
so  play  or  bett,  shall  be  utterly  void,  frustrate,  and  of  none  effect, 
to  all  intents  and  purposes  whatsoever ;  any  statute,  law,  or  usage 
to  the  contrary  thereof  in  any  wise  notwithstanding;  and  that 
where  such  mortgages,  securities,  or  other  conveyances,  shall  be  of 
lands,  tenements,  or  hereditaments,  or  shall  he  such  as  incumber 
or  affect  the  same,  such  mortgages,  securities,  or  other  convey- 
ances, shall  enure  and  be  to  and  for  the  sole  use  and  benefit  of,  and 
shall  devolve  upon  such  person  or  persons  as  should  or  might  have, 
or  be  entitled  to  such  lands,  tenements,  or  hereditaments,  in  case 
the  said  grantor  or  grantors  thereof,  or  the  person  or  persons  so 
incumbring  the  same,  had  been  naturally  dead,  and  as  if  such 
mortgages,  securities,  or  other  conveyances,  had  been  made  to  such 
person  or  persons  so  to  be  entitled  after  the  decease  of  the  person 
or  persons  so  incumbring  the  same ;  and  that  all  grants  or  convey- 
ances to  be  made  for  the  preventing  of  such  lands,  tenements,  or 
hereditaments,  from  coming  to  or  devolving  npon  such  person  or 
persons  hereby  intended  to  enjoy  the  same,  as  aforesaid,  shall  \)v 
deemed  fraudulent  and  void,  and  of  none  effect,  to  all  intents  and 
purposes  whatsoever. 


FANNING  V.  DUNHAM. 

Court  of  Chancery  of  New  York,  1831. 

(5  Johns.  Ch.  123.) 

The  bill,  filed  August  2,  1813,  stated,  that  on  the  2Gth  of  Octo- 
ber, 1811,  the  plaintiff  and  defendant,  who  had  dealings  togethci- 
in  the  exchange  of  promissory  notes,  &c.,  entered  into  a  written 
agreement,  which  recited  that  the  defendant  had  advanced  to  the 
plaintiff,    at    sundry    times,    his  promissory    notes  in    exchange, 


SKC.   11.)  r\.\MN(i    (.    IJIMIA.M.  225 

iimouiiting  lo  188,11;  I  dollars  and  bS  cunts,  und  for  winch  the  dt- 
ffiidant  was  entitled  to  a  coininission  of  two  and  an  linlf  per  cent. : 
and  a  further  advance  of  "JiKOOO  dollars,  in  exchan^'c  (d"  notes,  wu> 
af,'reed  upon,  in  four  notes,  i)aval)lc  in  •■*,  ;},  1,  and  ."»  months,  with 
the  privilege  of  one  renewal;  and  also,  the  further  advance  of 
v'o.OOO  dollars,  in  the  notes  of  the  defendant,  payahle  at  (i,  T,  8. 
and  5)  months,  with  notes  of  the  jjlaintill  in  exclianfje,  suhjeet  to  a 
commission  of  two  and  an  half  jxt  cent.,  as  well  as  the  said  re- 
newals; and  thereupon  the  i)laintiir,  in  consideration  of  the  above 
advantages,  assigned  to  the  defendant  all  his  right  to  the  ship 
iJordeaux  and  cargo,  the  ship  Tea  Plant  and  cargo,  and  the 
schooner  Brothers  and  her  cargo,  which  three  vessels  were  then  on 
foreign  voyages,  and  it  was  agreed  that  the  jdaintifl's  interest  in 
the  said  vessels  and  cargoes  should  he  sold  by  the  defendant  at 
auction,  on  their  arrival;  and  if  the  commissions  of  two  and  an 
lialf  per  cent,  on  the  said  sums,  should  he  erpial  in  amount  to  the 
several  sums  above  stated,  then  no  other  charge,  more  than  the  de- 
fendant's interest  at  seven  per  cent.,  and  all  necessary  charges,  as 
auction  duty,  storage,  &c.,  should  be  made  to  the  defendant ;  but 
if  the  goods  did  not  amount  to  that  sum,  or  not  arriving,  then  the 
plaintiff  guaranteed  to  the  defendant  his  full  commissions  on  anv 
ueficiency  that  should  so  occur;  and  the  defendant  was  to  have  full 
power  to  take  possession  of  the  interest  of  the  plaintiff  on  the  ar- 
rival of  the  vessels,  and  to  dispose  of  the  same  or  hold  it,  at  his 
discretion,  accounting  to  the  ])laintiff  for  the  surplus,  first  deduct- 
ing his  own  demand,  due  by  that  or  any  former  agreement. 

That  in  the  spring  and  summer  of  181-2,  the  plaintiff,  finding  il 
necessary  to  raise  money,  applied  to  the  defendant,  who,  from  tinu' 
to  time,  advanced  the  plaintiff  his  notes,  in  exchange  for  the  plain- 
tiff's notes,  and  his  endorsements  on  the  plaintiff's  notes,  amount- 
ing to  l()3,(;r8  dollars  and  IC  cents.  And  it  was  agreed  be- 
tween them,  that  the  jdaintiff  should  pay  to  the  defen.laiit 
a  commi.>;sion  of  two  and  an  half  per  cent,  on  the  aniouui 
of  all  such  notes  and  endorsements;  viz.,  the  plaintiff  was  to  |)ul 
iuto  the  hands  of  the  defendant  (an  auctioneer),  goods  to  be  sold 
at  auction  by  the  defendant,  and  out  of  the  proceeds  lie  was  to  re- 
lain  the  commission  of  two  and  an  half  per  cent,  on  the  amount  of 
all  such  notes  and  endorsements  by  him  advanced,  over  and  abo\r 
the  usual  connnissions,  expenses,  and  charges,  upon  such  .<ale> 
made  at  auction,  if  such  ])rocee(ls  on  sales  should  be  sullicient  f..r 
the  j)urpose;  and  if  not,  the  balance  or  deficiency  should  be  mad.- 
«ip  and  paid  by  the  plaintiff  to  the  defendant.  That  as  a  condiiion 
of  this  last  agreement,  the  jdaintifT.  ui)on  receiving  the  notes  an>l 
endorsements  of  the  defendant,  always  gave  his  owu  note^  to  tJie 

defendant,  in  exchange  for  the  amount  of  bis  notes  and  end."o.- 
1.1 


226  THE    OBLIGATIOX    SECURED.  [CIIAI'.  lU. 

monts.  payable  respective!}-,  in  each  instance,  one  day  before  the 
day  on  which  the  notes  of  the  defendant,  or  the  notes  of  the  plain- 
tiff, endorsed  by  him,  were  payable. 

That  on  the  9th  of  March,  1812,  to  secure  to  the  defendant  pay- 
ment of  his  notes  and  endorsements  and  his  commission  thereon, 
the  plaintiff  assigned  to  him  one  hundred  shares  in  the  West  Ches- 
ter Manufacturing  Society;  and  on  the  27th  of  April,  1812,  for  the 
same  purpose,  the  plaintiff  gave  to  the  defendant  a  bond  condi- 
tioned to  pay  100,000  dollars,  with  a  warrant  of  attorney  to  con- 
fess judgment  thereon ;  but  no  judgment  was  to  be  entered,  until 
there  was  a  default  of  the  notes  or  endorsements ;  and  on  the 
13th  of  May,  1812,  the  plaintiff,  for  the  same  purpose,  gave  to 
the  defendant  another  bond  conditioned  to  pay  30.000  dollars,  and 
also  a  mortgage  by  him  and  his  wife  on  lands  at  New  Rochelle 
and  Pelham,  in  the  county  of  West  Chester. 

That  on  the  27th  of  August,  1812,  the  defendant  gave  to  the 
])laintiff  a  declaration  or  deed  of  trust,  reciting  that  the  plaintiff 
was  indebted  to  him  in  the  sum  of  43,818  dollars  and  30  cents,  in 
promissory  notes  therein  specified,  and  for  securing  the  amount  of 
those  notes,  and  such  other  moneys  as  the  plaintiff  owed,  or  might 
owe  to  him  by  the  renewal  of  the  said  notes,  or  otherwise,  the  de- 
fendant held  the  said  bond  and  mortgage,  tbe  one  hundred  manu- 
facturing shares,  the  ship  called  the  Zephyr,  one-third  of  the  ship 
Tea  Plant,  and  the  said  bond  and  warrant  of  attorney ;  and  that 
when  the  notes  and  other  moneys  were  paid  the  bond  and  mortgage 
sliould  be  cancelled,  and  the  other  property  given  up  or  re-assigned 
to  the  plaintiff.  To  this  deed  was  annexed  a  schedule  of  the  notes. 
That  the  last  mentioned  writing  was  given  in  lieu  of,  or  as  a  sub- 
stitute for,  the  agreement  of  the  26th  of  October,  1811.  The  bill 
set  forth  the  exchange  of  several  notes  between  the  parties,  and  that 
tlie  plaintiff  gave  the  defendant  a  note  for  229  dollars  and  47 
cents,  with  an  endorser,  for  the  commissions,  or  premium  thereon. 
It  then  set  forth  other  exchanges  of  notes,  and  that  the  defendant's 
notes  were  less  than  the  plaintiff's,  by  the  amount  of  the  commis- 
sion of  two  and  an  half  per  cent.  That  other  exchanges  of  notes 
took  place;  and  that  on  the  21st  of  August,  1812,  the  plaintiff 
gave  to  the  defendant  six  promissory  notes,  with  an  endorser, 
amounting  to  6898  dollars  and  20  cents,  all  of  which  were  exclu- 
sively given  for  premiums  or  commissions  on  tbe  exchanges  of 
notes,  as  stated  in  tlie  l)ill,  that  sum  being  the  balance,  after  credit- 
ing the  amount  of  sales  of  the  goods  of  the  plaintiff  at  auction. 
Tbat  several  of  the  notes  mentioned  in  the  schedule,  besides  one 
of  Ibc  premium  notes  for  1149  dollars  and  70  cents,  were  paid  by 
Ibc  ])laintiff,  when  they  fell  due.  Tbe  ])ill  charged  iliat  tlie  de- 
fendant had  no  other  notes  or  demands  against  tbe  plaintiff,  but 


:     .   ll.J  I'AXNINU    r.    IJIMIAM.  227 

Muh  as  won'  sju'cidcd  in  the  silicdulc.  takin;;  oul  sinli  as  were  ho- 
forr  sjx'cifu'd  as  paid  ;  and  Ihat  all  tlic  notes  miiainin;,'  unj)aid  wero 
usurious  and  roid  in  law;  and  that  the  bond  and  warrant  of  attor- 
nrv,  tlif  bond  and  niortj^a^'c.  the  assij^nnicnts  of  ships  and  shares 
held  as  security  for  the  payment  of  those  noti's,  were  also  void  in 
law.  That  on  the  iSth  <d'  I)eceiMl)er,  ISl,'?,  before  any  of  the  notes 
U'eaiue  due  and  reniaineil  unjiaid.  liie  defendant  fraudulently  en 
lered  up  a  jud<,Mnent  on  the  said  bond  and  warrant  of  attorney,  in 
thu  Suprome  Court,  and  issued  an  execution  thereon  to  the  sheriff 
<\{  the  city  of  Xew  "\'ork.  with  a  direction  thereon  endorsed,  to  levy 
in.-'tOrt  dollars  of  debt,  and  the  costs.  That  in  January  term,  ISl."?, 
of  the  Supreme  Court,  the  jdaintiir  applied  lo  tliat  Ccuirt,  who  or- 
<lered  the  execution  to  be  set  aside,  and  awarded  a  fei<^ned  issue 
b«'tween  the  parties,  to  try  whether  the  bond  and  warrant  of  attor- 
ney, and  the  notes  for  which  they  were  <riven  as  collateral  security. 
Were  not  founded  on  usurious  contracts  or  con-iderations.  That 
the  plaintiir  caused  the  fei^Micd  issue  to  be  made  up.  and  <rave 
notice  of  the  trial  thereof  at  the  Kings  Circuit,  in  June,  isi;?,  but 
the  trial  was  put  olf  by  the  defendant.  That  the  defendant,  in 
February,  1S1.'5,  fraudulently  advertised  the  mortgaged  priMuises 
for  sale  at  auction,  by  virtue  of  tlu'  power  contained  in  the  mort- 
gage. That  he  also  advertised  and  sold  at  auction,  one-third  of  the 
phij)  Tea  I'lant,  so  assigned  ns  security,  and  fraudulently  niul  by 
force  dispossessed  the  ]daintifr.  The  bill  ])raye(l  for  an  injunction 
against  the  defendant  from  ])roceeding  at  law  on  the  mortgage,  or 
Mling  under  it,  and  from  sending  the  Tea  Plant  to  sea,  assigning 
the  notes  and  other  securities,  S:c.,  &c.,  and  for  general  relief. 

The  feigned  issue  having  been  tried,  and  a  verdict  found  for  the 
plaintifT,  he  fded  a  siip/ilcnicnfal  bill,  on  the  ."ith  of  Ajiril,  ISIO, 
elating  the  substance  of  the  original  bill,  and  that  aftcM-  the  feigned 
.issue  was  made,  but  before  it  was  tried,  this  Court,  on  the  Tth  of 
neeember,  181.'],  ordered  the  injunction,  so  far  as  it  prohibited  the 
<lefendant  from  selling  the  mortgaged  premises,  to  be  dissolved, 
unless  the  plaintiir  should,  within  eight  days,  bring  the  monev  due 
on  the  mortgage  into  Court;  and  that  on  tb(>  ICth  of  neeendu-r. 
1813,  the  plaintifT  appealed  from  that  order,  to  the  Court  for  the 
Correction  of  I-'rrors;  but  it  was,  afterwanls,  agreed  between  the 
parties,  that  j)roce(>(lings  on  the  appeal  should  be  suspendi'd  until 
after  a  decision  on  the  feigned  issue.  That  the  feigned  issue  was 
settled,  under  the  directions  of  the  Supreme  Court,  and  the  plead- 
ings were  set  forth  in  the  bill,  at  length.  That  the  feigned  issu.' 
wns  tried  before  Mr.  Chief  Justice  Thompson,  at  the  sittings,  in 
June,  ISIT),  when  the  jury  found  all  the  issues  in  favor  of  the 
plaintifT;  and  the  bill  set  out  the  imstra.  at  length,  by  which  it  ap- 
'■•ared   that    the  jurv   found   that    the  said   bond   and   warrant    of 


228  THE   OBLIGATION    SECURED.  [cuAr.  lii- 

attonioy  were  made  and  executed  i;pon  an  usurious  consideration  : 
that  the  said  bond  and  warrant  were  made  as  collateral  security, 
for  certain  promissory  notes  made  by  the  plaintiff  to  the  defend- 
ant, upon  usurious  considerations,  or  upon  other  engagements  and 
transactions  between  the  parties  upon  usurious  considerations,  and 
that  the  said  promissory  notes,  for  which  the  bond  and  warrant  of 
attorney  were  given  as  collateral  security,  were  respectively  made 
and  delivered  upon  usurious  considerations.     That  to  maintain  the 
feigned  issue,  the  plaintiff  gave  in  evidence  the  bond  and  warrant 
of  attorney,  the  judgment  entered  thereon,  the  instrument  exc- 
lutcd  by  the  defendant,  August  2rth,  1812,  and  the  schedule  (A.) 
thereto  annexed,  the  answer  of  the  defendant  to  the  original  bill, 
and  the  cross  examination  of  the    defendant's    witnesses.     That 
after  the  verdict,  the  defendant  made  a  case,  on  which  to  move  foi- 
a  new  trial  of  the  feigned  issue ;  that  a  motion  for  a  new  trial  wa-^ 
accordingly  made  and  argued  in   October  term,   1817,  and  that 
Court,  in  January  term  following,  unanimously  refused  to  grant  a 
new  trial.     That  before  the  case  was  settled,  an  agreement,  dated 
7th  of  May,  1816,  was  entered  into  between  the  counsel  of  the  par- 
ties respectively,  that  the  defendant  might  have  a  bill  of  exception-; 
prepared  and  signed  and  sealed,  in  the  same  manner,  as  if  it  had 
Ijeen  tendered  at  the  trial  of  the  feigned  issue,  to  the  end  that  a 
Avrit  of  error  might  be  brought,  if  either  party  thought  proper,  and 
that  the.  decision  Avhicli  should  be  pronounced  on  such  bill  of  excep- 
tions, should  be  final  and  conclusive  upon  all  matters  put  at  issue- 
l)y  such  feigned  issue  between  the  parties.     That  although  the  Su- 
preme   Court    decided   against   the   defendant,   he   never   thought 
proper  to  take  a  bill  of  exceptions  under  the  said  agreement,  and 
bring  a  writ  of  error;  but  has  expressly  declined  doing  so.     That 
the  writing  of  the  27th  of  August,  1812,  and  the  schedule  A.  an- 
nexed thereto,  and  the  bond  and  warrant  of  attorney,  are  the  sanio 
as  are  set  forth  in  the  original  bill.     That  according  to  the  agree- 
ment of  the  7th  of  May,  1816,  the  verdict  and  judgment  on  the. 
feigned  issue,  as  no  writ  of  error  has  been  brought,  conclusively 
establish  the  fact,  that  the  said  promissory  notes  and  other  securi- 
ties, held  by  the  defendant,  are  usurious  and  void ;  notwithstanding 
which  the  defendant  still  holds  the  notes  and  securities,  and  refuse- 
to  give  them  up,  but  declares  his  determination  to  enforce  the  pay- 
ment of  the  moneys  for  which  the  notes,  &c.,  were  given.     That  on 
the  31st  of  Octol)er,  1818,  the  Supreme  Court,  by  an  order,  re- 
scinded the  order  for  a  feigned  issue,  and  all  proceedings  thereon, 
and  directed  all  further  proceedings  on  the  judgment  against  the 
])laintiffs  to  be  stayed,  until  the  further  order  of  the  Court.     That 
in  January,  1819,  the  Supn^ue  Court  allowed  the  defendant  io 
lake  out  execution  on  tlie  judgment. 


ii.ii.l  FA.\MN(i    r.    DIMIAM.  229 

That  till'  appeal  from  tlif  nnUr  u>  (li>solv('  tho  injunction  liad 
liccn  dismissed  lor  waiil  of  prosecution,  'riic  supplemental  bill 
j)raye(l  a  similar  injunction  to  tlie  one  orijrinally  <:rMntc(|.  \-c.,  ;in<l 
for  i^eneral  relief,  \'c.' 

December  1,  1820. — The  cause  was  tlii>  day  brought  to  a  hearing 
on  the  pleadings  and  proofs. 

/»*('_'///N  and  Wells  for  the  j)lainliir. 

7'.  .1.  I'Jmmct  for  the  defendant. 

Tin:  C'li.vN'cKi.Lou  [Kkxt|.  1.  The  first  and  great  point  in  this 
t  a.-o  is,  wliotluT  the  charge  of  a  commission  of  two  and  a  half  per 

Mt.  uniformly  made  by  the  defendant,  upon  the  advance  or  cn- 

'isement  of  negotiable  notes  to  and  for  the  ]daintilT,  wa.s  usu- 
rious.- 

2.  The  ne.xt,  an«l  the  more  endiarrassing  point,  is  as  to  the 
nature  and  extent  of  the  relief. 

If  the  defendant  was  endeavoring  to  enforce  any  of  his  securi- 
•  s  in  this  Court,  and  the  present  plaintilf  had  set  up  and  made 
out  the  usury,  by  way  of  defense,  the  remedy  would  have  been  obvi- 
ous. The  securities  would  have  been  declared  void,  and  ordered  to 
be  delivered  up  and  cancelled.  But  the  defendant  has  not  resorted 
to  this  Court.  He  has  causi-d  a  judgment  to  be  entered  up  at  law, 
\ipon  the  warrant  of  attorney  given  by  the  i)laintitT;  and  the  Su- 
preme Court  have  ultimately  refused  to  afford  any  relief  to  thr 
plaintiff  against  that  judgment,  though  that  Court  awarded  a 
feigned  issue,  and  had  the  usury  in  the  bond  upon  which  the  judg- 
ment was  entered,  established  by  the  verdict  of  a  jury.  The  de- 
fendant has  also  proceeded  to  foreclose  the  mortgage,  not  by  the  aid 
of  this  Court,  but  by  advertising  under  a  power  contained  in  the 
mortgage,  and  it  is  the  })resent  plaintiff  who  is  comjielled  to  come 
here  and  ask  for  relief,  which  he  cannot  obtain  elsewhere,  against 
the  judgment  at  law  and  other  legal  securities  infected  with  usury, 
by  means  of  the  original  transactions  and  responsibilities  which 
they  were  intended  to  cover. 

The  (luestion  now  is,  uj)on  what  terms  he  can  have  relii'f  ? 

The  feigned  issue,  which  was  awarded  by  the  Supreme  Court, 
upon  the  judgnu'ut  in  thi.s  ca.se,  was  granted  while  I  had  the  honor 
to  preside  in  that  Court ;  and  that  course  was  then  understood  to 
1m>  the  jiractice  of  the  Court,  when  a  judgment  entered  by  confes- 
sion was  alleged  to  be  affected  with  usury.  And  I  shoidd  have 
supposed,  that  if  the  usury  had  been  found  by  the  jury  (as  it  was 
in  that  case,  and  ujion  the  evidence  now  before  me),  that  the  Court 
would  have  administered  the  same  (Mpiitable  relief  that  is  usuallv 

'  Thf  Htutcinrnt   of  facts  fiiis  hwn  iililirrviatfil. 

'  Tli«»  ilisiiission  of  tliis  j)oiMt  is  omittiMl.  Tfic  It-ariUMl  iliiuitoll.n  rr.ulios 
t1u«  conclusion  that   the  char<jo  was  ii-^nrious. 


^30  THE    OBLIGATIOX    SECUUED.  [ciiAr.  ill. 

granted  here,  or  else  have  vacated  the  -warrant  of  attorney,  and  s^et 
jiside  the  judgment,  and  allowed  the  party  to  come  in  and  plead  th(^ 
usury.  But  from  the  subsequent  proceedings,  I  am  led  to  infer, 
that  the  practice  on  this  subject  has  been  changed  since  I  left  that 
Court,  and  that  all  summary  interference  at  hnv,  with  judgments 
npon  confession,  charged  with  usury,  is  now  denied. 

The  history  of  the  practice  of  the  Courts  of  law,  shows  the  em- 
barrassments attending  the  subject,  and  the  difficulty  of  applying 
a  legal  remedy,  consistently  with  the  rules  of  law.    .    ,    .^ 

With  respect  to  the  relief  that  can  be  afforded  here,  I  take  the 
rule  to  be,  that  a  plaintiff  who  comes  to  a  Court  of  Equity  for  relief 
against  a  judgment  at  law,  or  other  legal  security,  on  the  ground 
of  usury,  cannot  be  relieved,  except  upon  the  reasonable  terras  of 
paying  to  the  defendant  what  is  really  and  bona  fide  due  to  him. 
On  the  other  hand,  if  the  party  claiming  under  such  usurious  judg- 
ment, or  other  security,  resorts  to  this  Court  to  render  his  claim 
available,  and  the  defendant  sets  up  and  establishes  the  charge  of 
usury,  the  Court  will  decide  according  to  the  letter  of  the  statute, 
and  deny  all  assistance,  and  set  aside  every  security  and  instru- 
ment whatsoever,  infected  with  usury.  It  is  perfectly  immaterial, 
in  respect  to  the  application  of  the  principle  to  the  case  of  the 
debtor  who  sues  here,  whether  the  usury  be  confessed  by  the  de- 
fendant in  his  answer,  or  be  made  out  by  proof.  The  plaintiiT 
must  still  consent  to  do  what  is  just  and  equitable  on  his  part,  or 
the  Court  will  not  assist  him,  but  leave  him  to  make  his  defense  at 
law  as  well  as  he  can.  The  case  of  Taylor  v.  Bell,  2  Yern.  171, 
is  a  striking  but  very  harsh  illustration  of  the  rule.  Tlie  plaintiff 
had  given  bonds  with  sureties  for  moneys  borrowed  at  usury,  and  a 
warrant  to  confess  judgment,  and  judgment  was  entered  thereon. 
He  then  brought  his  bill  to  be  relieved  and  for  an  account,  and 
though  the  answer  confessed  the  facts  from  which  the  usury  was 
deduced,  relief  was  denied  and  he  was  ordered  to  pay  principal, 
interest,  and  costs.  So,  in  a  late  case  in  the  Exchequer  (Sky me 
v.  Ryhot,  cited  in  Orde  on  Usury,  113),  where  a  bond  and  warrant 
of  attorney  was  taken  in  an  usurious  transaction,  the  decree  was,  to 
take  an  account  of  the  money  really  paid,  and  that  on  payment 
thereof  the  bond  and  warrant  of  attorney  were  to  be  delivered  up. 
In  Scott  v.  Neshit,  2  Bro.  G41,  2  Cox,  183,  wo  have  this  stnmg 
observation  of  Lord  Thurlow :  "  I  take  it  to  be  an  universal  rule." 
he  observes,  "  that  if  it  be  necessary  for  you  to  come  into  this  Court 
to  displace  a  judgment  at  law,  you  must  do  it  upon  the  equitable 
terms  of  paying  the  principal  money  really  due,  with  lawful  in- 
terest.    I  luive  no  idea  of  displacing  a  judgment  upon  any  other 

'The  exhaustive  examination  of  the  practice  of  the  law  courts  is  omittci- 


sKf.   U.]  TAWINf!    r.    DINIIAM.  •.'".! 

U-rins."      Ilf  (liRcUd,  in  tlml  casi".  that  the  jii(l;,Miiciit  slioiilil  -I.  ii  I 
as  a  security  for  the  money  actually  jiaid,  witli  Icj^al  interest. 

The  equity  cases  speak  one  uniform  lan^^ua^e ;  and  I  do  not  know 
of  a  ease  in  which  relief  has  ever  heen  afforded  to  a  })laintifT,  sick- 
in^  relief  a^'ainst  usury,  hy  hill,  upon  any  other  terms.  It  i«  tin- 
fundamental  doctrine  of  the  Court.  Lord  Ilardwickc,  1  \'(<i\. 
'.ViO,  said  that  in  ease  of  \isury  e(|uity  suffers  the  ))arly  to  tin- 
illicit  contract  to  liave  relief,  hut  whoever  hrin«:s  a  Iiili.  in  case  of 
usury,  must  suhmit  to  ])ay  jtrinciiml  and  interest  diie.  Lord  KIdon. 
3  Ves.  &  Bea.  H,  after  an  interval  of  more  than  sixty  year-,  de- 
ilared  ])recisely  the  same  rule.  At  law,  says  he,  you  must  nuike  out 
the  ehar^'e  of  usury,  and  at  equity  you  cannot  come  for  relief  with- 
out ofTerinfj:  to  pay  what  is  really  due;  and  you  must  either  prove 
the  usury  hy  le<;al  evidence,  or  have  the  confession  of  the  party. 
In  HfKjlfson  V.  Shot  well,  1  Johns.  Ch.  I?(>j).  r)3(;,  the  same  rule  wa< 
followed  in  this  Court,  where  a  jiarty  came  to  he  relieved  a^Min-t 
usury  in  a  mortgaji;e. 

I  have  heen  thus  j)arti(uliir  in  showinjr  the  rule  of  equity  on  tlii- 
subject,  because  the  ])laiiiliir  has  sou;,'lit  l)y  his  hill  to  have  all  the 
securities  taken  by  the  defendant,  and  infected  with  usury,  declared 
void,  and  ordered  to  be  cancelled,  without  offerinf;  to  pay  any- 
thing. His  counsel  have  also  contended,  at  the  hearing,  that  thi' 
rule  in  equity,  wbere  the  defendant  either  confesses  the  usury  or 
it  is  established  by  testimony,  is  the  same  as  it  is  when  iisury  i- 
set  up  as  a  defense  to  a  denumd  in  law  or  ecpiity.  All  that  I  can 
do  in  this  case,  consistently  with  my  view  of  the  established  doctrine 
of  the  Court,  is  to  direct  an  account  to  be  taken  of  the  dealin-:- 
between  the  ])arties,  and  to  hold  the  securities  which  the  defendant 
has  taken  to  be  good  only  for  the  balance  which  may  a])pear  to  lie 
due  to  the  defendant,  after  deducting  all  usurious  e.\ces<  Im  i"\ 
of  his  commissions  and  charges. 

The  objei'tion  that  ])resses  upon  the  subject  is  that  the  .-i.iiui- 
of  \isury  may  be,  in  a  great  degree,  eluded,  by  taking  a  judgnieiii 
bond,  which  precludes  the  deiitor  from  an  opportunity  of  pleading 
the  usury  in  a  court  of  law;  and  if  he  can  only  be  relieved  ujion  the 
]irinciples  of  a  Court  of  l'](piity.  or  by  the  summary  powers  of  a 
Court  of  law,  acting  u|)on  cipiitable  j)rinciples,  the  usiirious  cred- 
itor is  sure  to  preserve  his  j)rinci|tal  sum  and  the  lawful  int«'re<t. 
lUit  this  objection  was  for  a  long  lime  perceived  and  felt  and 
'  iidtired  in  the  Courts  of  law.  liefore  any  renuHly  could  Iw  applied  : 
nd  though  they  interfered,  at  first,  most  elTectually.  by  vacating 
the  warrant  of  attorney,  and  allowing  the  party  to  come  in  an<l 
I>lead.  they  seem  now  to  have  abandoiunl  the  case  to  ecpiitable  re- 
lief, and  to  choose  to  administer  no  otiier.  It  is  the  folly  of  ihe 
party  to  have  precluded  1iim<elf  from  pleading  l»y  confessing  judg- 


2o'i  THE    OBLIGATIOX    SECURED.  [CHAP.  III. 

ment.  Leges  rigilaiitihus  non  donnientihiis  subvenlunt.  At  any 
rate,  though  it  were  even  to  be  regretted  that  Courts  of  law  cannot 
23lace  the  debtor  in  a  condition  to  be  enabled  to  annul  the  contract 
altogether,  under  the  sanction  of  the  statute;  yet  certainly  I  should 
introduce  a  new  principle  into  this  Court,  if  I  was  now  to  under- 
take to  displace  a  judgment  at  law,  upon  any  other  terms  than 
those  I  have  mentioned. 

The  same  objection  and  ditficulty  occur  in  the  case  of  a  mort- 
gage taken  to  secure  an  usurious  loan,  with  a  power  to  sell  an- 
nexed to  it,  by  means  of  which  the  creditor  forecloses  his  mortgage 
by  an  act  in  pais,  without  calling  upon  any  Court  to  assist  him. 
The  debtor  has  no  relief  in  that  case,  but  by  applying  to  this 
Court,  and  then  he  must  comply  with  the  terms  of  paying  what  was 
actually  advanced.  He  deprives  himself,  in  that  case,  by  the  power 
to  sell,  as  he  does  in  the  other  by  his  warrant  of  attorney  to  confess 
judgment,  of  an  opportunity  to  appear  in  the  character  of  defend- 
ant and  plead  the  usury.  These  are  cases  in  which  the  party  by 
his  own  voluntary  act  deprives  himself  of  his  ability  to  inflict  upon 
the  creditor  the  loss  of  his  entire  debt.  Many  other  cases  may  be 
stated  in  which  the  same  result  will  follow.  The  party  is  in  the 
same  situation  if  instead  of  resisting  the  usurious  claim  he  pays  it. 
He  cannot  then  expect  assistance  to  recover  back  more  than  the 
usurious  excess.  If  the  warrant  of  attorney,  or  the  power  to  sell 
were  procured  by  fraud,  or  surprise,  or  accident,  that  would  form 
a  distinct  head  of  relief,  and  in  no  wise  applicable  to  the  case. 
And,  jjcrhaps,  it  is  sufficient  for  the  purposes  of  public  justice  and 
public  policy,  that  the  law  has  enabled  a  debtor  in  every  case  in 
which  he  does  not  of  his  own  accord  deprive  himself  of  the  means, 
to  plead  the  statute  in  discharge  of  his  usurious  contract,  and  of 
his  obligation  to  pay  even  what  was  received,  and  that  in  all  cases 
he  can,  by  paying  the  actual  principal  received  and  the  lawful  in- 
terest, be  relieved  from  the  usurious  exaction. 

The  folloiving  decree  ivas  entered:  "It  is  declared  that  the 
promissory  notes  given  by  the  plaintiff  to  the  defendant,  and  speci- 
fied in  the  writing  in  the  pleadings  mentioned,  of  the  27th  of 
August,  1812,  and  in  schedule  A.  to  the  said  writing  annexed,  and 
which  remain  unpaid,  are  infected  with  usury,  and  thnt  the  prac- 
tice stated  in  the  pleadings  of  asking  and  receiving  a  commission 
of  two  and  a  half  per  cent,  upon  the  exchange  of  notes  between 
the  parties,  or  upon  negotiable  paper  endorsed  by  the  defendant, 
was  usurious  in  every  instance  in  which  such  commission  exceeded 
the  rate  of  seven  dollars  for  the  forbearance  of  100  doHars  for  one 
year,  or  exceeded  that  rule,  for  a  greater  or  less  sum,  for  any  other 
period ;  and  that  the  pretence  set  up  by  the  defendant,  that  the 
said  commissions  were  taken  for  and  on  account  of  expected  de- 


,,11.]  l-ANNINii    C.    ItlMIA.M.  i  .i.\ 

j)()Mi>  of  »^()oils  for  sail'  at  auction,  was  unfoundod  in  point  of  fact. 
Ami  it  is  flirt luT  di'dari-d  to  !)••  the  i'stal)lislu'd  doctrine  and  j)rac- 
ticc  of  (lie  Court,  that  tlu'  plainliir  who  seeks  the  aid  of  the  Court 
to  set  aside  a  juilgnient  at  law,  or  other  legal  security,  on  the 
ground  of  usury,  cannot  he  entitled  to  relief,  whether  the  usury  be 
t'stahlished  hy  proof  or  admitted  hy  the  answer,  except  upon  the 
terms  of  i)ayin^^  the  i»iiu(ipal  and  interest  lawfully  due  thereon, 
after  deducting  every  usurious  excess;  and  that  the  judgement  and 
ili«'  mort^'a<je  and  the  West  Chester  manufacturin<jj  stock,  held  in' 
the  defendant  in  this  case,  and  mentioned  in  the  pleadings,  are  to 
1m'  dci'mcd  and  taken  as  securities  only  for  the  halance  that  may  be 
due  after  such  deduction.  It  is  thereuj)on  ordered,  &c.,  that  it  be 
referred  to  one  of  the  masters  of  the  Court  to  take  and  state  an 
account  of  all  the  loans  or  endorsements  of  notes,  or  advances  in 
<-ash  by  the  defendant,  to  or  on  behalf  of  the  jilaintiff,  and  of  all 
notes  given  by  the  i)laintin'  to  him  in  exchange,  or  for  commissions, 
or  otherwise,  and  stated  or  referred  to  in  the  pleadings  and  proofs, 
from  the  commencement  of  their  dealings  as  therein  stated,  and 
that  on  such  accounting,  the  master  in  no  case  allow  any  commis- 
sions to  the  defendant  beyond  the  lawful  rate  of  interest  declared 
as  aforesaid;  and  that  the  defendant  be  charged  with  all  excess  of 
interest  received  l)y  him,  in  the  shape  of  commissions  or  otherwise, 
during  the  course  of  such  dealings;  and  that  he  also  credit  the 
plaintiff  with  the  amount  for  which  his  share  or  third  part  of  the 
ship  or  vessel  called  the  Tea  Plant  sold  for,  as  admitted  in  the 
pleadings,  and  with  all  other  payments  made  by  the  plaintiff  and 
credited  by  the  defendant,  and  that  he  report  the  balance,  if  any, 
remaining  due  to  the  defi-ndant  upon  such  accounting,  and  that 
interest  be  charged  and  allowed  on  such  accounting,  when  the  same 
would  be  proper,  according  to  law  and  the  usage  of  the  Court. 
And  it  is  further  ordered,  that  the  master  report  to  the  Court  with 
all  convenient  speed,  and  that  the  question  of  costs  and  all  further 
directions  l)e,  in  the  meantime,  reserved."' 

'  Tlii-*  ippio-onts  llio  ponfial  view  (Urncncl-  v.  S'trnrtirout.  2^  111.  2!U 
|IS«i'21:  Siitphrn  v.  fushmtni,  :?->  III.  1S(!  fl.m;41).  For  llio  nilo  a|>i)lip.l  in 
niHos  wlipie  tlio  tiiort<ra;ro«'  i^  dcfcndanf ,  sco  Kuhtier  v.  liuiUr,  11  la.  410 
(18«0):  Viiion  linnh  v.  /f. //.  14  Oh.  St.  200  (18(13)  ;  SinnUr  v.  Oris,rold, 
37  111.  210  (18U5).    Coiiipuic  Uuut  v.  .Acre,  28  Alu.  (.n.  ti.)   580   (18J0). 


^'•-i  THE    OBLIGATION'    SECURED.  [cilAl'.  III. 

WILLIAMS  V.  FITZHUGH. 

Court  of  Appeals  op  Xew  York,  1868. 

(37  N.  Y.  444.) 

The  plaintiff  sought  in  this  action  a  judgment  declaring  certain 
six  notes  (made  by  the  plaintiff  and  given  to  the  appellants'  testa- 
tor, two  dated  April  3,  1854,  for  $5000  each,  and  four  dated  Julj 
0,  and  July  1,  1854,  for  $5000,  $6000,  $6000.  $4000,  respectively), 
amounting  in  the  aggregate  to  $31,000,  and  a  mortgage  upon  land 
in  Ohio,  given  by  the  plaintiff  to  secure  the  payment  of  the  six 
notes,  void  for  usury,  and  adjudging  and  decreeing  that  they  be 
given  up,  cancelled  and  discharged,  and  forbidding  the  prosecution 
of  an  action  already  commenced  in  one  of  the  courts  of  Ohio, 
upon  two  of  those  notes,  or  any  other  action  upon  any  of  the  said 
notes,  or  the  said  mortgage.  The  original  defendant,  Allen  Ay- 
rault,  having  died  pending  the  action,  the  action  was  revived 
against  the  respondents,  his  executors. 

The  action  was  tried  at  Special  Term  in  the  Supreme  Court,  and 
to  sustain  the  action  the  plaintiff  produced  a  record  of  judgment 
which  set  forth  the  alleged  transactions,  in  which  the  notes  were 
given,  and  by  which  one  of  the  notes  dated  in  July  was  adjudged 
void  for  usury,  and  upon  the  evidence  contained  in  the  record  the 
judge,  at  Special  Term,  found  that  all  of  the  six  notes  were  so  void, 
and  a  judgment  was  rendered  declaring  the  notes  and  the  mortgage 
to  be  void  for  usury,  and  requiring  that  the  respondents  deliver 
up  the  notes  and  mortgage  to  the  plaintiff  to  be  cancelled,  and 
execute  a  discharge  of  the  mortgage  in  such  form  that  it  may  be 
recorded  in  Ohio,  so  that  it  may  be  discharged  of  record  and  cease 
to  be  a  lien  upon  the  real  estate  described  in  it,  and  further  enjoin- 
ing the  prosecution  of  an  action  (found  to  be  pending)  on  some  of 
the  notes  in  one  of  the  courts  of  Ohio,  and  awarding  to  the 
plaintiff  his  costs. 

On  appeal  to  the  General  Term,  the  Supreme  Court  modified  the 
judgment  so  as  to  except  from  the  operation  thereof  the  two  notes 
for  $5000  each,  dated  April  3,  1854,  on  the  ground  that  the  before- 
mentioned  record  did  not  necessarily  decide  that  those  two  notes 
were  usurious,  and  they  adjudged  that  in  all  other  respects  the  said 
judgment  be  affirmed.  The  executors  (defendants  below)  appealed 
to  this  court. 

Scott  Lord  for  the  appellants. 

George  F.  Danforth  for  the  respondent. 

Woodruff,  J.     The  principal  question  which  was  discussed  on 


htc.  II. J  wii.i.iAMs  r.   I'lTzm  (ill.  235 

iliis  appeal,  and  whicli  iiuliulcs  lu-arly  all  of  the  sul)OrdinatC'  ques- 
tions raisi'tl,  is,  will  tho  courts  of  this  State  entertain  a  bill  to  de- 
elare  void  aiul  compel  the  cancellation  of  a  niort^i^'c  of  land-  lyin;; 
m  another  State  and  executed  there  in  pursuance  of  a  c(»nlract  en- 
tered into  in  this  State  to  secure  loans  made  and  payable  in  thin 
Stale,  some  of  which  loans  are  usurious  and  void  hy  our  laws? 

This  (piestion  may  he  intclli^^ihly  discussed  hy  itnpiirin<,' — (irst, 
would  such  a  hill  he  entertained  under  the  siimc  (  ircuinstances  if 
the  lands  wire  situated  in  this  State?  second,  how  is  the  question 
alTected  by  tlu-  location  of  the  lands  without  our  jurisdietion?  and, 
third,  should  the  court  require  the  surrender  and  dischar<re  of  such 
a  mort<iap'  without  the  payment  of  tJie  loans  which  are  not  found 
to  be  usurious? 

First,  then,  sup])ose  the  lands  were  situated  in  this  State. 

1st.  It  cannot  he  denied,  indeed  1  do  not  understand  the  counsel 
for  the  ajipellant  to  (picstion,  that  such  a  mort^a^'c  is  void  by  the 
law  of  the  State  of  New  York.  Our  statute  declares  that  "  all 
.  assurances,  conveyances,  all  other  contracts  or  securities 
.  .  .  whereby  there  shall  be  reserved,  or  taken,  or  sccurnl.  or 
agreed  to  be  reserved  or  taken."  any  greater  sum  or  value  for  the 
ioan  or  forbearance  of  money,  than  at  the  rate  of  seven  j)er  cent.  |»er 
annum,  "shall  be  void."  The  proposition  is,  that  a  security  given  to 
secure  the  payment  of  money  is  void  if  it  be  given  to  secure  a  usu- 
rious loan,  and  if  it  be  so  given,  the  fact  that  it  was  also  given  to 
secure  loans  which  were  not  usurious,  will  not  |)reserve  it  from  en- 
tire condemnation.     If  void  in  part,  it  is  void  altogether. 

The  late  learned  Chief  Justice  Jones,  in  The  Fulton  Hank  v.  Ben- 
edict (1  Hall  S.  C.  480,  54<)),  thus  states  the  proposition:  "'  It  is 
well  settled  that  if  any  part  of  the  loan  or  debt  for  which  tln'  note 
or  security  was  given  is  usurious,  the  security  is  void  ;"  referrinir, 
among  other  cases,  to  Jlarrisaii  v.  llnnurJ.  ."i  Taunt.  TSd. 

In  Jack-son  v.  Packard,  (»  W'ciid.  11."),  it  is  held  that  a  iiioii- 
gage,  given  to  secure  a  sum  of  money,  consisting  of  one  loan 
made  prior  thereto,  which  is  usurious,  and  another  which  is  free 
from  usury,  is  void.  '*  If  a  mortgage  or  other  security  is  given  for 
tw(»  Oi-  more  antecedent  loans,  either  of  which  was  infected  with 
usury,  the  whole  .security  is  void."  That  under  the  statute  '*  there 
is  no  siu'h  thing  as  such  an  instrument  being  void  in  jiart  and  good 
for  the  residue;  the  taint  of  usury  destroys  the  whole  securitv." 
The  debt  which  was  free  from  usury  nniy  l)e  recovered,  but  the 
mortgage  is  void  (liia'  v.  WcU'uuj,  .")  Wend.  ri!).')).  And  in  Ham- 
mond V.  Uopjiinij.  i;J  Wend.  oO"),  the  same  doctrine  is  re-a.sserted 
in  reference  to  contracts  generally.  "The  statute  against  usury 
renders  any  contract  infected  with  it.  utterly  void;  but  if  the  usu- 
rious .-security  was  given  in  part  for  a  pre-existing  valid  debt,  that 


236  THE    OBLIGATION    SECURED.  [CIIAP.  III. 

debt  is  not  destroyed  by  the  illegal  security."  These  decisions  have 
stood  as  the  law  of  this  State  for  more  than  thirty  years,  and  I  am 
not  aware  that  their  correctness  has  been  questioned  in  any  of  our 
courts. 

2d.  If,  then,  the  mortgaged  premises  were  in  this  State,  have 
our  courts  jurisdiction  to  decree  that  the  mortgage  be  given  up  and 
cancelled,  and  is  it  error,  upon  the  facts  assumed,  to  do  so?  The 
statute  is : 

"  §  13.  Whenever  any  borrower  of  money  .  .  .  shall  file  a 
bill  in  chancery  for  relief  or  discovery  against  any  violation  of  the 
provisions  of  .  .  .  this  act,  it  shall  not  be  necessary  for  him  to 
pay,  or  offer  to  pay,  any  interest  or  principal  on  the  sum  or  thing 
loaned,  nor  shall  any  court  of  chancery  require  or  compel  the  pay- 
ment ...  of  the  principal  sum,  or  interest  or  any  part 
thereof,  as  a  condition  of  granting  relief. 

"  §  14.  Whenever  it  shall  satisfactorily  appear,  by  the  admission 
of  the  defendant,  or  by  proof,  that  any  .  .  .  assurance,  pledge, 
conveyance,  contract,  security  .  .  .  has  been  taken  or  received 
in  violation  of  the  provisions  of  this  act,  the  Court  of  Chancery 
shall  declare  the  same  to  he  void,  and  enjoin  any  prosecution  there- 
on, and  order  the  same  to  he  surrendered  and  cancelled." 

This  language,  taken  literally,  seemed,  not  only  to  confer  juris- 
diction, but  absolutely  to  require  the  Covirt  of  Chancery  to  decree 
the  surrender  and  cancellation  of  securities  infected  with  usury,  of 
Avhatever  description,  whenever  the  borrower  saAv  fit  to  invoke  the 
interposition  of  the  court,  without  the  aid  of  any  other  ground  for 
coming  into  that  tribunal  than  the  fact  of  usury.  But  the  chan- 
cellor, in  Perrine  v.  Striker,  7  Paige,  598,  held,  that  where  the 
party  had  a  full  and  complete  remedy  at  law,  he  could  not  come 
into  the  Court  of  Chancery  for  relief;  that  this  statute  was  not  in- 
tended "to  comiwl  the  Court  of  Chancery  to  take  jurisdiction  of 
every  question  of  usury,  although  a  perfect  remedy,  both  as  to  dis- 
covery and  relief,  could  be  had  in  a  court  of  law."  Hence,  when  the 
parties  to  a  note  not  negotiable  sought  a  discovery  and  perpetual  in- 
junction against  a  suit  thereon  (although  the  statute  authorized 
the  examination  of  the  plaintiff  in  the  suit  at  law  on  the  trial) 
on  the  ground  that  it  was  usurious,  the  bill  was  dismissed  because 
the  remedy  was  complete  at  law.  But  he  recognized  the  jurisdiction 
and  the  pro])riety  of  its  exercise,  Avhen  there  were  any  special  cir- 
cumstances whicli  made  the  remedy  at  law  ineffectual  or  incom- 
plete. 

In  Morse  v.  Jlovey.  9  Paige,  197,  on  dismissing  the  bill,  the 
chancellor  atlirms  the  decision  in  Perrine  v.  Striker,  and  expounds 
it  more  fully,  thus:  "The  legislature  did  not  intend  to  transfer  ti> 
this  court  concurrent  jurisdiction  with  courts  of  law  in  every  case 


sKr.  II. J  WILLIAMS    /•.    I  I  1/111(111.  V.5/ 

of  a  usurious  contract ;  l)Ut  merely  to  give  to  thi.s  court  tlu-  j)»»wer 
to  exercise  its  jurisdiction  in  those  cases  where  it  was  necessary  to 
■lid  the  defense  of  usury;  or  to  remove  itsnriotts  sciurilica  whirh 
were  a  cloud  iiiion  llir  romphiinnnt's  title  to  real  property,  or  which 
might  be  used  ;it  hiw  to  his  injury  in  such  a  manner  that  lie  could 
not  interpose  a  le<,'al  (lef(>nse  to  a  suit  on  them  in  a  court  of  law. 
Here  the  note  is  ucijoliabU',  so  that  it  may  he  sued  in  the  name  of  a 
lliird  person;  and  if  the  bill  had  contained  the  alIe;:;ition  that  tin- 
usury  could  only  he  proved  by  the  oath  of  the  defendant,  it  might 
possibly  have  presented  a  case  for  the  interference  of  this  court." 

Conceding  th.it  this  relaxation  of  the  stringent  and  imperative 
language  of  the  statute  is  reasonable,  no  constniclion  of  the  statute 
has  gone  further. 

Accordingly,  bills  by  borrowers  to  remove  usurious  ."Securities, 
which  are  a  cloud  upon  the  comi)lainant's  title  to  real  property, 
have  uniformly  been  entertained.  (See  Coh  v.  Saviigc,  10  Paige, 
.'(Hli,  (piestioned,  without  impeaching  the  general  doctrine,  in  Post 
V.  Bank-  of  Utica,  7  Hill,  35)1 ;  Peters  v.  Mortimer,  4  Edw.  Ch.  27!); 
Pearsall  v.  KingsIaiuJ,  3  id.  195;  Dry-Dock  Companij  v.  American 
Life  Insurance  and  Trust  Companij,  3  Comst.  3(51 ;  Schermerhorn 
V.  TaJmnn.  11  X.  Y.  93;  Manice  v.  Dni-Dock  Conij)ani/.  3  Edw. 
1-13.) 

It  is  no  answer  to  such  a  hill  that  the  mortgagor  has  a  good  de- 
fen.'ie  to  a  bill  for  the  foreclosure  of  the  mortgage.  It  is  an  api)ar- 
ent  ineuiiibrance  on  the  land.  Its  invalidity  depends  ui)on  extrinsic 
facts.  The  doctrine  of  Cox  v.  Cliff,  2  X.  Y.  l-.'3,  eited  by  the  ap- 
pellant, that  the  complainant  has  a  perfect  legal  defense  against  it 
(when  a  right  under  it  is  asserted),  "written  down  in  the  title- 
deed,"  has  no  aj)plication  to  it  ;  and  Ward  v.  Deirei/.  Ki  X.  Y.  510, 
was  decided  on  like  grounds.  The  mortgage  is  an  impediment  t<>  a 
sale  of  the  land  for  its  value.  The  mortgagor  is  not  bound  to  wait 
until  the  mortgagee  attempts  a  foreclosure,  not  only  for  these 
reasons,  but  because  in  the  meantime  it  may  become  imi)ossible  to 
prove  his  defense.  If  this  l)e  so,  then,  if  the  lands  mortgaged  wtn> 
situated  in  this  State,  the  mortgage  in  (piestion  was  wholly  void. 
and  there  is  sullicient  ground  for  invoking  the  interposition  of  the 
court  to  deer(>e  that  s\icli  a  mortgage  be  surrendered  antl  cancelled 
or  discharged.  Whether  it  should  iu-  so  di.<charged  without  the  pay- 
ment of  that  ]»ortioii  of  the  debt  which  has  not  been  adjudged  to  be 
usurio\is,  and  which,  for  the  purposes  of  this  a|>pt'al,  is  to  be  deemed 
l)oth  legally  iind  e(|nitably  due.  will  lie  |)resently  considered. 

Second,  how.  then,  is  the  (pieslion  alTected  by  the  circumstance 
that  the  m<H-tgiiged  premi.^es  are  situated  in  the  State  of  Ohio, 
where  the  mortgage  was  executed? 

The  mere  circumstance  thnt   ib<'  bmd   i-;  in  ;in"ilier  Slate  e.in. 


238  THE    OBLIGATION    SECURED.  [cilAP.  III. 

^ipon  no  principle  that  I  can  discover,  furnish  a  reason  for  denying 
the  jurisdiction  of  our  courts,  or  for  questioning  the  propriety  of  its 
exercise.^ 

Third,  does  it  follow  that  the  decree  in  this  action,  so  far  as  it 
directed  the  surrender  and  discharge  of  the  mortgage,  v'as  war- 
ranted by  well-established  rules  of  equity  applicable  to  the  sub- 
ject ? 

It  is  familiar  doctrine  in  courts  of  equity  that  "  he  who  seeks 
equity  must  do  equity,''  and  without  that  the  court  of  equity  will 
not  extend  its  arm  for  the  relief  of  the  suitor.  If  he  can  protect 
himself,  either  in  whole  or  in  part  at  law,  if  he  can  defend  when 
assailed,  very  well;  he  can  decline  any  concession  of  the  equitable 
rights  of  the  adverse  claimant  and  stand  upon  his  legal  position,  it 
may  be  safe,  or  it  may  be  in  peril,  but  if  he  invoke  equitable  inter- 
position he  must  come  with  clean  hands  and  prepared  to  do  what- 
ever in  the  judgment  of  equity  is  fair  and  equitable  to  his  adver- 
sary; else,  the  court  will  not  entertain  him.  but  will  answer,  "  Stand 
upon  your  legal  rights,  or  come  here  and  perform  the  just  condition 
of  equitable  relief." 

It  cannot  be  doubted,  therefore,  that  when  a  party  comes  into  a 
court  of  equity  to  remove  a  cloud  upon  the  title  to  his  land,  he  must 
do  whatever  it  is  equitable  that  he  should  do,  before  the  court  will 
interfere.  In  that  respect  he  stands  in  no  other  or  better  condition 
than  he  who  comes  to  compel  the  specific  performance  of  a  contract 
to  convey :  he  must  come  prepared  to  pay  and  perform  all  that  by 
the  conditions  of  the  contract  he  was  bound  to  pay  or  perform. — or 
than  he  who  comes  to  set  aside  a  conveyance  obtained  from  him 
bv  fraud :  he  must  come  prepared  to  restore  all  that  he  has  received 
as  the  consideration  of  such  conveyance. 

And,  on  precisely  the  same  ground,  it  was  the  well-settled  rule  of 
courts  of  equity  that  he  who  came  into  that  court  to  set  aside  a 
conveyance  or  other  security  as  void,  because  given  to  secure  a 
usurious  loan,  must  come  prepared  to  pay  so  much  as  he  had  in 
fact  received.  He  might  stand  on  his  legal  rights  and  defend  any 
and  every  endeavor  to  compel  him  to  pay,  but  if  he  invoked  the  aid 
of  a  court  of  equity  to  give  him  affirmative  relief  that  court  recog- 
nized his  equitable  obligation  to  refund  what  he  had  received 
{Rogers  v.  Rathhim,  1  Johns.  Ch.  367;  Tupper  v.  Powell,  id.  439; 
Fanning  v.  Dunham,  5  id.  122,  137;  Morgan  v.  Schrrmerhorn.  I 
Paige,  544;  Fulton  Banl-  v.  Beach,  id.  429;  .s\  c.  3  Wend.  573; 
Taylor  et  ux.  v.  Bell  ef  al..  2  Yern.  170;  Whitman  v.  Franci.'>.  8 
Trice,  616). 

On  what  ground  is  the  plaintiff  in  this  case  entitled  to  have  his 
mortgage  set  aside  without  qualification  or  condition? 
'  The  discussion  of  tliis  point  is  omitted. 


11.] 


uii.i.iAM-^   r.   rn/iirciii,  239 


Tlic  notes  wliicli  lie  liad  -:ivtii  to  M'ciirc  a  u.-iiriou.-.  d.ht  aif 
<lfiliin'd  void,  aiul  ordiTrd  «;ivi'ii  ii|i  tn  \>v  lam  riled,  lie  eaniiot  Im* 
|iir»seeute(l  ii]ioii  his  iiiort^'a^'e  ill  aii\  form  ill  llii>  Slate,  heeaux" 
liv  law  il  is  void.  H  lie  lia>  need  of  luitlier  e(|iiilal>k'  interference. 
It  i<  hecause  the  nioriLra<re  i>  an  ajiparent  lien,  a  eloml  niioii  thi-  title 
I'l  his  laiid.-^,  and  he  should  he  relieved  therefrom. 

Whv,  then,  if  lie  a.-ks  further  e(|uitahli'  relief,  and  invokes  tlifi 
iither  interjiosition  of  a  court  <»f  e(|uity  therefor,  should  he  not  do 
.uity?  Why  should  he  not  j)ay  to  the  defendants  what  he  in  fact 
<-eive(l  ? 

The  answer,  and  the  only  an>wir  which  is  or  can  he  su<;<,'e>ted, 
1^  that  our  statute  declares  (Laws  ni  1S;U,  c.  i;?(»,  5;  0,  that 
wiienevi-r  any  horrower  of  money,  floods  or  thin^^s  in  action,  shall 
file  a  bill  in  chancery  for  ri-lief  or  di.-^covery.  or  hoth,  a^^ainst  any 
violation  of  the  provisions  of  the  title  of  the  Statutes,  coneernint; 
ihe  interest  of  money,  "or  of  iliis  act,  it  shall  not  he  necessary  for 
Ijini  to  pay,  or  offer  to  i)ay.  any  interest  or  jtriiicijKiI  on  the  sum  or 
Ihiiiij  liKini'd,  nor  shall  any  court  of  chancery  re(|uire  or  compel  the 
|tayment  or  de])Osit  of  llir  ^irinciixil  sunt  or  interest,  or  any  portion 
thereof,  as  a  condition  (d"  "granting  relief,  or  conii)eIling  or  discover- 
ing to  the  horrower.  in  any  case,  usurious  Joans  forbidden  by  the 
said  title  or  this  act."  This  section  of  the  act  of  ISIU  was  pas.-^ed  to 
«-.\lend  the  i)revious  title,  so  that  it  should  embrace  ca.^Jcs  in  which 
the  court  was  applied  to  for  di.scovery,  as  well  as  cases  in  which 
i<'Iief  alone  was  sought,  and  to  relieve  him  from  paying  any  part 
of  the  princi|»al  or  interest  in  either  case,  and  it  should  therefore 
Ik-  read  and  construed  in  connectif)n  with  sui-li  previous  law,  which 
i^  as  follows  (  1  Kev.  Stat.,  j).  772.  ^  8)  :  "Whenever  any  l)orrower 
of  any  money,  goods  or  things  in  action,  shall  file  a  bill  in  chancery 
for  a  discovery  of  ihe  money,  goods  or  things  in  action  taken  or  re- 
reii'cJ  in  violation  of  either  of  the  foregoing  provisions,  it  shall  not 
Ih*  necessary  for  iiim  to  j)ay,  or  offer  to  i)ay,  any  interest  whatever 
11  the  sum  or  thing  loaned,  nor  shall  any  court  of  e(|uity  re<|uire 
■  r  compel  the  payment  or  deposit  of  the  principal  or  anv  |)art 
thereof,  as  a  condition  of  gianting  relief  to  the  borrower  in  any  ca.'JO 
fa  ustirious  loan,  forliidden  by  this  chapter."  (See  Livingston 
I/arris.  :\  Paige.  ."i^S  ;  same  cas<^  on  appeal.  II  Wend.  :V2\:  see 
III"  history  of  this  legi-lation  in  I'osl  v.  Hani,-  of  I'lica.  2  C'omst. 
•!!»!,  rt  se,).) 

What  in  the.-e  statutes  is  the  princi|)al  >um  nv  interest  which 
ilie  liorrower  shall  not  be  re(|uired  to  pay?  Is  it  not  the  "u-uriou-? 
loan"  and  the  interest  thereon?  Is  it  not  the  money,  goods  or 
things  in  actiiui.  taken  or  received  in  violation  of  the  provision*  of 
the  »et  ?  M(><|  clearly  that,  and  only  that.  It  doe«;  not  eonteni- 
jdate.   it    is  true,  the  existence  of  any  other  equitable  condition. 


240  THE    OBLIGATION    SECURED,  [CHAP.  III. 

but  it  by  no  means  requires  that  any  other  condition  should  be 
waived. 

The  subject  dealt  with  is  a  loan  upon  usury;  it  designs  that 
there  shall  be  no  means,  direct  or  indirect,  in  which  the  payment 
of  such  a  loan,  or  any  interest  thereon,  shall  be  compelled  either  by 
a  court  of  law  or  equity.  And  relief  against  such  payment  accom- 
plishes the  end,  so  far  as  this  statute  directs  relief  to  be  given. 

Hence  the  discovery  spoken  of,  and  authorized  by  the  statute,, 
is  a  discovery  of  the  money,  etc.,  taken  or  received  in  violation 
of  the  statute,  and  not  money  which,  not  being  so  received,  tlie 
borroM'er  is  bound  both  at  law  and  equity  to  repay.  And  it  is  tlic 
principal  or  interest  on  the  sum  loaned,  i.  e.,  loaned  in  violation  of 
the  statute,  the  payment  of  which  cannot  be  required  as  a  condition 
of  relief. 

It  follows  that  where  a  contract  or  obligation  is  given  for  two 
or  more  separate  and  independent  things  or  objects,  having  no 
connection  with  each  other,  and  one  of  those  objects  is  the  security 
of  a  usurious  debt,  although  the  contract  or  obligation  is  altogether 
void  for  reasons  above  given,  and  no  action  at  law  or  elsewhere  could 
be  maintained  thereon,  nevertheless,  if  the  party  comes  into  a  court 
of  equity  to  ask  that  it  be  surrendered,  all  that  the  statutes  of  usury 
have  done  affecting  the  complainant's  right  to  relief,  is  to  forbid 
that  any  payment  on  account  of  such  debt  shall  be  made  a  condition 
of  relief.  As  to  other  conditions,  the  statute  is  silent,  and  the  court 
is  left  to  administer  relief  upon  those  principles  which  govern  the 
subject  generally. 

When,  therefore,  the  plaintiff  asks  that  a  mortgage  be  cancelled 
as  a  cloud  upon  the  title  to  his  lands,  and  that  a  court  of  equity 
shall  so  direct,  in  virtue  of  its  power  and  its  disposition  to  enforce 
his  equitable  rights,  the  court  may  not  require  that  he  pay  a 
usurious  debt,  or  any  part  thereof,  or  any  interest  thereon,  but 
it  may  require  the  performance  of  any  other  duty  which  is  just  to 
the  adverse  party,  unembarrassed  by  the  statutes  in  question. 

In  equity,  the  mortgagor  in  such  case  stands,  in  reference  to  debts 
not  usurious  secured  by  the  mortgage,  in  the  same  attitude  as  a  com- 
plainant seeking  to  redeem.  He  must  pay  what  at  law  and  in 
equity  he  owes.  Nor  is  this  any  departure  from  the  doctrine 
already  stated,  that  the  mortgage,  being  void  in  part,  because  given 
to  secure  a  usurious  debt,  is  void  altngether. 

Upon  that  doctrine,  the  plaintiff,  if  he  see  fit,  may  rely,  and  on 
that  ground  he  may,  if  he  can,  defend  himself  and  the  title  to  his 
lands  whenever  and  wherever  assailed,  but  if  he  asks  afifirmative 
action  and  interference  from  a  court  of  equity  to  set  aside  the  mort- 
gage and  adjudge  its  surrender,  he  must  do  equity  l)y  paying  hi.-: 
just  debt,  not  impeached  for  usury. 


sw.   M.l  HAflfFT    C.    I{(»1,I,.  'M  1 

The  most  that  the  cDurt  Ix-low  should  havo  dono,  was  to  adjud^'c 
that  so  iiuuh  of  the  aj)j)arfnt  d('l)t  as  was  secured  l)y  the  lour  notes 
dated  in  July,  1854,  j)roved  und  adjudged  (by  the  decree  as  mod- 
ified by  the  (leneral  Term  of  the  Supreme  Court)  to  he  usuriou-, 
was  void;  that  the  said  notes  he  surrendered  to  he  cancelled,  and 
that  the  (U-feiidanls  he  enjoined  a^'ain-t  the  prosecution  of  ;iny  >ui! 
upon  those  four  notes. 

The  judgment  should  he  iiioililiril  to  conform  to  these  view- 
without  costs  to  either  party  on  the  apj>eal,  and  the  judgment  ren- 
dered at  the  Sj)ecial  Term,  so  far  as  it  adjudged  or  decreed  the  -ur- 
render  or  discharge  of  the  mortgage  should  he  reversed,  and  so  fjii- 
as  it  awarded  costs  to  the  plaintiff,  should  be  further  reversed  and 
modified  so  that  neither  party  recover  costs  of  the  other  in  this 
action. 

All  the  judges  concurring. 

Judgment  nffirmrd,  iritJi  modification. 


RAGUET  V.  ROLL. 

SUPRKMK   CoiKT   OF   Oil  10.    1830. 
(T  Ohio  Hrp.  lo  I  1 -Jill.) 

This  waf?  an  action  of  ejectment  for  a  lot  of  land  in  the  city  of 
Cincinnati.  On  the  trial,  the  ])laintill'  gave  in  evidence  two  mort- 
gages executed  by  the  defendant  to  him,  for  the  same  lot,  one  dated 
IGth  October,  1820,  the  other  the  2(»th  October  of  the  sanu'  year; 
each  to  secure  the  payment  of  oOU  dollars.  The  defendant,  on  hi- 
part,  adduced  evidence  to  show  that  these  deeds  of  mortgage  were 
given  to  secure  the  ])aynu'nt  of  1000  dollars,  in  consideration  of  thi- 
))laintifr's  agreeing  not  to  ])rosi'cute  the  son  of  the  defendant  for  a 
theft,  with  which  he  had  charged  him. 

(JiMMKE,  J.  delivered  the  opinion  of  the  court. 

This  was  an  ejet  tineiit  on  a  mortgage  executed  by  the  defendant 
to  the  lessor  of  the  ])laintiir.  <<)nditioned  for  the  ))ayiiu'nt  of  lixc 
hundred  ilollars.  'j'he  defense  was,  that  although  this  was  the  con- 
sideration expressed  iti  the  Ai'vA,  yet,  that  the  real  consideration  wa- 
an  agreetnent  on  the  part  of  the  plaintiff  not  to  prosecute  the  .-on 
of  the  defendant  for  a  theft,  and  that  the  mortgage  was  given  to 
secure  the  payment  of  one  thousand  dollars,  as  a  reward  for  that 
])urpos<'.  In  Hiiijurt  v.  Unit,  ante.  \>.  '.*(>!•.  which  was  a  srlrr  fii<  i,i< 
on  the  .>^anie  mortgage,  it  was  lieUl  that  this  defense  might  be  .-et  up 
for  tlie  pur]ios(^  of  avoiding  the  j)avment  of  the  monev  :  and  r  ;- 
10 


242  THE    OBLIGATIOX    SECURED.  [CHAP.  UI. 

now  supposed  that  it  will  be  equally  effectual  in  bar  of  the  action  of 
ejectment.  In  the  act  under  which  the  scire  facias  was  instituted, 
it  is  provided  that  the  defendant  may  jDlead  any  plea  which  would 
be  good  in  avoidance  of  the  land  or  money ;  so  that  the  principles 
decided  in  the  former  case  do  not  necessarily  furnish  a  governing 
rule  for  the  determination  of  this.  The  distinction  between  an 
executed  and  executory  contract,  where  the  consideration  is  unlaw- 
ful, is  a  very  plain  one.  In  the  former  case,  the  Court  will  not 
annul;  in  the  latter,  they  will  not  enforce.  And  this  course,  so 
totally  opposite  in  the  two  cases,  is  intended  to  be  subservient  to  the 
same  end,  the  prevention  of  an  immoral  act.  As  long  as  the  agree- 
ment continues  executory,  there  is  an  incentive  to  the  commission 
of  the  deed ;  but  when  it  is  executed,  no  further  motive  of  this  kind 
exists,  since  the  estate  has  already  vested  or  the  money  actually 
been  paid.  It  may  bo  supposed,  however,  that  although  a  deed 
operates  an  actual  transfer  of  the  title  to  land,  yet,  if  it  is  necessary 
to  institute  an  action  in  order  to  recover  possession,  the  Court  will 
not  enforce  the  right  of  recovery ;  in  other  words,  that  the  principle 
in  pari  delicto^  etc.,  comes  in  conflict  with  the  other  principle  to 
which  I  have  referred,  and  that  it  necessarily  affords  the  governing 
rule  of  determination.  "Where  two  apparently  opposite  principles 
have  been  established,  the  presumption  is  that  they  are  both  in- 
tended to  have  effect,  and  that  the  one  shall  not  annul  or  neutralize 
the  operation  of  the  other.  The  rule  in  pari  delicto,  etc.,  then,  will 
be  found  to  be  universally  applicable  to  executory  agreements  only. 
Thus  in  Hawes  v.  Leader,  Cro.  Jac.  270,  the  intestate  of  the  defend- 
ant granted  by  deed  to  the  plaintiff  all  his  goods ;  the  real  purpose 
was  to  defraud  creditors;  the  grantee  brought  an  action  to  recover 
them,  and  obtained  judgment.  So  in  Starl-e's  Ex.  v.  Littlepage, 
4  Randolph,  308,  which  was  an  action  of  detinue  to  recover  personal 
property  transferred  by  a  fraudulent  bill  of  sale  by  the  defendant 
to  the  plaintiff's  intestate,  the  contract  was  enforced,  and  the  plain- 
tiff recovered.  The  rule,  then,  does  not  apply  when  the  policy  of 
the  law  requires  that  a  fraudulent  or  vicious  conveyance  should  be 
enforced ;  and  such  is  declared  to  be  the  law  by  Coke,  in  his  "  Com- 
mentary on  Littleton,"  and  by  Powell,  in  his  "  Treatise  on  Con- 
tracts." But  there  are  exceptions  to  the  rule  in  pari  delicto,  etc., 
even  in  its  application  to  executory  agreements.  Watts  v.  BrooTcs, 
3  Ves.  G12,  is  an  instance  of  this,  where  the  plaintiff  and  defendant, 
having  entered  into  a  contract  to  be  jointly  concerned  in  ship  insur- 
ances, in  violation  of  the  Stat.  6  G.  1st,  although  the  Court  would 
not  execute  the  contract,  it  Avould  not  exclude  the  result  of  it  in  'de- 
creeing a  general  account.  And  in  Osborne  v.  Williams,  18  \'es. 
379,  the  exception  was  pushed  still  farther;  it  was  held  that  the 
rule,  "  in  pari  delicto  melior  est  conditio  possidentis,"  "  preventing 


k.c.  II.]  icA(;ri:r   /■.   koi.i,.  213 

.-nil,**  is  not   universal;  and  a  direct  deeree  was  made  in   favor  of 
the  plaint ilV,   althotifjh   the  agreement    was   a    fraud   on   the  post- 

•licc. 
If  till-  (U'cd  ill  this  in-taiuc  were  an  absolute  eonvevanee,  there 

■  iild  he  no  doubt,  tlifii.  of  the  right  of  the  plaintilF  to  recover. 
I  lu'  real  dilliculty  arises  out  of  the  double  character  of  the  instru- 
Micnt,  which  is  evidence  of  a  del»t  hereafter  to  be  paid,  and  at  the 

lilt'  time,  o])erates  an  actual  Iransfi'r  cf  the  land  to  the  mortgagee. 
Although  a  strong  disposition  existed  once  to  treat  a  mortgage  as  a 
mere  ehose  in  action,  and  although  individual  judge.s  were  heard 
to  declare  that  the  money  was  the  jirincijial.  and  the  hind  only  the 
incident,  and  that  whatever  would  carry  the  money,  would  convey 
the  land;  yet  such  is  not  now  sujiposed  to  be  the  law.  .\  mortgage 
i-  in  reality  a  conditional  fee,  which  is  as  large  an  estate  as  a  fee 

iiiple,  though  it  may  not  be  so  durable  .\nd  the  case  comes  then 
within  the  princijile  that  when  a  conveyance  has  actually  been 
I'xecuted  on  an  unlawful  coii-idcration,  the  Court  will  not  merely 
not  annul  it,  they  will  even  ])ermit  it  to  lie  enforced.  The  cases 
put  by  elementary  writers  are  all  of  them  conveyances  on  condition. 
Thus,  if  a  feofTment  be  madi'  to  one  man.  on  condition  that  he 
shall  kill  another,  it  is  said  to  be  good  and  \inavoidabh'.  But  in  the 
ca>e  of  a  mortgage,  it  may  be  said  that  there  are  two  conditions, 

■:>■  to  be  performed  by  the  grantor,  the  other  by  the  grantee;  the 
nMiiH'r  is  to  pay  the  one  thousand  dollars,  the  latter  is  to  suppress 
41  criminal  i)rosecution.  This  is  the  apjiarent.  but  it  is  not  the  real 
nature  of  the  transaction;  and  it  is  in  consequence  of  this  false  ap- 
pi'arance,  that  the  (piestion  seems  to  be  surrounded  with  an  un- 
usual degree  of  difficulty.  A  mortgage  is  in  reality  an  actual  pay- 
ment of  the  debt,  as  well  as  an  actual  transfer  of  the  land;  al- 
though, in  conse(iuence  of  the  land  being  sometimes  greater  in 
value  than  the  debt,  (in  ((juih/  was  sui)])osed  to  arise  in  favor  of  the 
mortgagor,  which  was  called  his  right  of  redemption,  and  which  is 
now  extended  to  every  ea.se  of  a  conveyance  iiy  wav  of  mortiiaire. 
It  IS  a  mere  e(|uity,  then,  an  (.'([uity  which  is  not  recognized  bv  a 
court  of  law,  but  only  by  a  court  of  chancery;  an  ecpiity  which, 
proceeding  on  the  ground  that  the  debt  has  already  been  i)aid  in 
one  way,  enables  the  grantor,  on  certain  terms,  to  pay  it  in  another. 
There  is,  then,  no  real  dilliculty  in  the  ca.se,  however  intricate  the 
questions  preseiite<l  may  at  first  sight  appear  to  be.  The  testimony 
ofTered  to  impeach  the  deed   was   improperly  admitted,  and  there 

:us(   therefore  be  ;i    new   trial.' 

'  Com  pan*  Ui7/iii//i.v  v.  F.nijiUnrrht.  :\~,  Oh.  St.  ^M^^  (1881),  accord: 
f'nrrr  V.    U"i7s.,/i.    Ill    Pa.   St.    II    (ISS.')),  vnitni. 


244  THE    OBLIGATION    fSECURED.  [CHAP.  Ill, 


COWLES  V.  RAGUET. 

Supreme  Court  of  Ohio,  1846. 

(14  Ohio  Rep.  38.) 

This  is  a  Bill  in  Chancery,  reserved  in  Hamilton  Coimty,  and 
comes  before  the  Court  by  appeal  from  the  Superior  Court  of  Cin- 
cinnati. 

The  original  bill  was  filed  on  the  ITtli  of  February,  1841,  in 
which  the  complainant  states  that  in  the  year  1839,  he  purchased 
a  certain  lot  in  Cincinnati,  under  a  decree  of  said  Superior  Court, 
upon  a  bill  by  him  filed,  to  foreclose  a  mortgage  on  the  same  lot, 
executed  by  Peter  Roll,  one  of  the  defendants,  in  1835.  That  the 
money  by  him  bid  for  said  lot  exceeded,  by  about  fifteen  hundred 
dollars,  the  amount  of  the  decree.  That  this  surplus  is  claimed  by 
Roll  the  mortgagor,  by  the  defendant  Mc]\Iicken,  in  consequence  of 
an  assignment  to  him  of  an  older  mortgage  on  the  same  land,  given 
by  Roll  to  the  defendant  Raguet,  and  by  the  other  defendants  claim- 
ing to  be  judgment  creditors  of  Raguet,  and,  as  such,  to  have  a 
lien  upon  the  land  mortgaged. 

The  prayer  of  the  bill  is,  that  the  defendants  may  be  com- 
pelled to  interplead;  and  in  the  event  that  the  court  shall  be  of 
opinion  that  the  mortgage  of  Raguet  is  a  lien  upon  the  land,  then 
that  the  complainant  may  be  permitted  to  redeem. 

The  facts  of  the  case  as  they  appear  from  the  bill,  answers, 
exhibits  and  testimony,  are  substantially  these :  In  the  summer 
of  1826,  the  defendant  made  to  Raguet  two  promissory  notes  for 
five  hundred  dollars  each,  and,  to  secure  the  payment,  executed  two 
mortgages  on  the  premises  in  controversy.  The  consideration  for 
these  notes  is  said  to  have  been,  in  part  at  least,  an  engagement, 
on  the  part  of  Raguet,  not  to  prosecute  the  son  of  Roll,  who  had 
been  by  him  accused  of  larceny. 

On  the  27th  of  November,  1832,  Raguet,  being  in  failing  circum- 
stances, made  a  general  assignment  to  the  defendant  McMicken, 
for  the  use  and  benefit  of  his  creditors.  In  this  assignment  was  in- 
cluded choscs  in  action,  as  Avell  as  all  mortgages  or  judgments,  and 
the  "  claim  against  Peter  Roll,"  tlien  in  controversy. 

Afterwards  Raguet  commenced  an  action  of  ejectment  for  the  lot 
in  controversy,  upon  his  mortgage,  and  at  the  December  term  of] 
this  Court,  1836,  a  judgment  was  rendered  in  his  favor.  Mc- 
Micken  as  the  assignee  of  Raguet,  subsequently  obtained  posses- 
sion of  a  portion  of  the  mortgaged  premises,  and  enjoyed  the  same 
for  some  twelve  or  eighteen  months,  or  more. 


I 


hKf.   II.] 


t"o\VLi:s  c.  UAiairr.  24.'!) 


The  (.k'lVmlaiU.>  Wood  and  Aljbot,  at  the  February  Icnn  of  Uk- 
Court  of  C'ouiinon  Pleas  of  Ilaniilloii  Couiily,  1833,  recovered  a 
jud',Miient  aj,'aiii>l  lia<,MU-t,  wliiili  was  levied  iipon  the  interest  of 
|{a;,niet  in  the  inort^'a^cd  premises  on  the  tilth  «d"  April,  ISlO. 

The  defendants,  lirown,  Chase  and  Company,  recovered  a  like 
j.nl^'ment  a^Minst  Ra^au't  at  the  August  term  of  the  same  Court, 
1833.  and  took  out  exeeution,  which  was  levied  on  Ww  same  interest, 
oil  the  tiTth  (d"  Ajiril,  IS  In. 

In  18;}."),  Roll  executed  a  niorlga^^e  on  liie  same  iircmises  to  thr 
<Miiiplainant  Cowles,  which  was  suhse(|ut'iitly  foreclosed,  and  the 
jireniises  sold  as  stated  in  the  hill. 

In  February,  1841,  the  property  was  al.-^o  sold  on  a  vendi.  issued 
upon  the  jud-fnu'iit  of  l^rown,  Chast'  &  Co.,  and  sale  confirmed. 

Hitchcock,  .1.  The  facts  and  circumstances  connected  with  thi> 
«ase  are  not  now  to  the  Court,  at  le«st  those  whicli  may  he  con- 
sidered as  the  leading  ones.  They  have  been  repeatedly  presented 
to  us,  have  been  as  often  passed  ujion,  but  the  controversy  does  not 
4i«!  yet  seem  to  have  been  clo.se<l. 

Before  proc-eeding  to  the  con>idciiitioii  of  the  jtarlicular  (jues- 
tions  arising  in  this  case,  it  nuiy  be  wi-ll  to  ascertain  what  has  been 
the  jirevious  action  of  the  Court.  Previous  t»t  the  December  term. 
1831.  Haguet  commenced  a  suit  against  Roll,  upon  the  notes  se- 
cured by  the  mortgage,  referred  to  in  the  statement  of  the  ease. 
This  suit  was  commenced  in  the  Court  of  Common  Pleas  of  Hamil- 
ton County.  The  defendant  ])leaded  in  bar,  that  before  and  at  the 
lime  of  the  commencement,  Charles  Uoll,  the  son  of  the  defendant, 
was  susj)ected  and  accused  by  Kaguet  of  having  stolen  his  goods 
and  chattels  in  Cincinnati;  that  Kaguet  was  about  to  institute  a 
criminal  ])rosecution  against  Charles,  for  the  theft,  and  that  tlic 
consideration  for  wliich  the  note  was  given,  was  a  ])romise  or  en- 
gagement on  the  part  of  Kaguet  that  he  would  refrain  and  desist 
from  instituting  such  criminal  prosciution.  To  this  ])lea  tiiere 
was  a  general  demurrer.  The  Court  of  Common  Pleas  sustained 
the  demurrer  and  rendered  a  judgment  ag;iinst  poll  for  the  amount 
of  the  notes. 

Po  reverse  this  judgment,  a  writ  of  error  was  sued  out,  and  the 

e  came  on  for  hearing  at  the  aforesaid  December  term  of  this 

iirt,  1831.  ]^\  the  decision  of  the  Court,  the  judgnu>nt  of  the 
I  ourt  of  Common  Pleas  was  reversed,  upon  the  principK'  that 
whenever  an  agrcenu'ut  ap|)ears  to  be  illegal,  immoral,  or  against 
public  policy,  a  court  of  justice  lcave>  I  he  parties  as  it  finds  them. 
If  the  agreement  be  executed,  tin-  Court  will  not  rescind  it;  if 
•<»xecutory,  tlu>  Court  will  not  aid  in  its  execution.  This  case  is 
reported  at  length,  .')  Ohio  Pep.   100. 

Hague!  then  commenced  :i  suit,  by  scirr  fiii-i(t>:.  upon  the  mart- 


246  THE    OBLIGATION    SECURED.  [cilAl-.  IIU 

gage,  under  the  law  llien  in  force,  to  enforce  payment  by  the  sale 
of  the  mortgaged  premises.  A  plea  substantially  the  same  as  that 
interposed  in  the  action  upon  the  notes,  was  tiled ;  and,  upon  trial, 
the  Jury  found  the  facts  as  stated  in  the  plea.  A  motion  was  made 
for  a  new  trial,  which  the  Court  overruled,  sustaining  the  decision 
in  the  former  case  (7  Ohio  Rep.  TG,  1). 

Raguet  then  commenced  an  action  of  ejectment  upon  the  mort- 
gage, and  this  case  came  before  this  Court  at  the  December  term, 
1836.  Roll  attempted  to  set  up  the  same  defense  as  in  the  former 
cases,  but  it  was  not  allowed  hy  the  Court ;  the  Court  holding  that 
a  mortgage  was  not  an  executory,  but  an  executed  contract;  and 
that,  as  the  Court  would  not  aid  in  carrying  into  effect  a  contract 
of  the  former  character,  so  neither  would  it  aid  in  avoiding  or  re- 
scinding a  contract  of  the  latter  character  (7  Ohio  Rep.  70,  p.  2). 

What  then  is  the  situation,  at  this  time,  of  the  original  parties 
to  this  contract  ?  The  fee  of  the  land  is  vested  in  Raguet  or  those 
claiming  under  him;  and,  by  execution  upon  the  judgment  in  eject- 
ment, he  may  at  any  moment  be  put  into  the  possession.  This 
judgment  cannot  be  enjoined,  because,  by  ordering  an  injunction, 
the  Court  would  be  doing,  indirectly,  what  it  has  refused  to  di> 
directly.  It  would  in  effect  amount  to  the  recision  by  a  judicial 
tribunal  of  an  executed  contract,  the  consideration  of  which  was 
against  public  policy,  and  which  would  be  contrary  to  the  opinion 
of  the  Court,  as  expressed  in  the  case  already  cited  from  -1  Ohio 
Reports. 

Now  what  is  the  case  before  the  Court  ?  The  interest  of  Roll  in 
the  lot  of  ground,  was  transferred  to  the  complainant  by  judicial 
sale  in  1839.  He  has  in  his  hands  about  fifteen  hundred  dollars, 
which  belongs  to  Roll,  unless  the  same  is  necessary  to  satisfy  prior 
incumbrances.  The  complainant  prays  the  Court,  in  the  event  t};t> 
mortgage  of  Raguet  is  held  to  be  an  incumbrance  upon  the  land. 
to  allow  him  to  redeem ;  and  he  prays  further  that  the  funds  now  in 
his  hands  may  be  applied  to  that  purpose. 

The  Court  have  already  decided,  not  only  that  the  mortgage  is 
an  incumbrance,  but  have  sustained  an  action  of  ejectment  in  favor 
of  the  mortgagee,  for  the  recovery  of  the  possession  of  the  mort- 
gaged premises;  and,  as  already  remarked,  the  mortgagee  may,  at 
any  moment,  through  the  instrumentality  of  the  proper  writ  of  ex- 
ecution, acquire  the  i)osscssion.  The  legal  title  is  vested  in  the  mort- 
gagee ;  but  the  deed  under  which  he  claims,  and  l)y  virtue  of  which 
the  title  is  vested  in  him,  is  subject  to  a  condition  that  the  same 
shall  be  void,  upon  the  payment  of  a  certain  sum  of  money  by  the 
mortgagor.  Now  there  is  nothing  in  this  condition  requiring 
of  the  mortgagor  to  perform  an  impossible,  immoral,  or  illegal 
act.     If  such  were  the  fact,  the  condition  would  be  void  and  the 


SKC.  II.J  fOWLKS    r.    KAlilKT.  '-i  1 '' 

(Iwd  absoluU'.     iiul  it  is  not  .so.     It  i.s  a  .simpk-  fonditinn   f..r  thr 
l)aynient  of  money. 

Hilt  it  may  Ik'  said  that  the  ori^'inal  {onsidiTation  for  the  proiiiisi- 
to  pay  this  money  was  an  ilk'^^d  considi-ration.  lit-  it  so.  Still 
the  jJiTson  to  whom  the  promise  was  made,  cannot  he  jiermitted  to 
^.et  tliis  np  to  destroy  the  effect  of  a  condition  inserted  in  the  deed, 
executed  to  secure  (he  performance  of  that  promise.  When  the 
ni()rt<:a;.,M't'  ^vas  proseeutin<f  an  ejectment  upon  liis  dt-ed,  we  would 
not  and  did  not  permit  the  mortj^'a^'or  to  avoid  that  deed  hy  provinjir 
that  the  consideration  was  illegal.  And  now,  when  the  mortgagor 
tomes  to  redeem,  shall  we  permit  tiie  mortgagee  to  defeat  that 
inndition,  hy  ])roving  tiiat  the  consideration  for  the  promise  set 
ft)rth  tlu'rein,  was  illegal?  This  would  not  seem  to  comport  with 
even-handed  justice.  It  would  have  heen  honest  in  Roll  to  have 
performed  this  condition  by  the  payment  of  the  money.  It  would 
i>e  honest  in  the  complainant  to  pay  it ;  and  we  think  he  has  a  right 
to  do  it,  and  iherehy  redeem  the  land  from  the  effect  of  the  mort- 

But,  in  this  case,  the  mortgagee  docs  not  object  to  the  redemp- 
tion. The  objection  comes,  so  far  as  there  is  any,  from  the  mort- 
gagor himself.  He  claims  to  be  discharged  from  the  ))erformance 
of  the  condition,  and  still  to  retain  the  land.  He  seeks  to  induce 
this  Court  to  do,  indirectly,  what  it  would  not  do  directly.  In  this 
aspect  of  the  case,  it  is  nothing  more  nor  less  than  an  attempt  to 
obtain  an  injunction  against  the  judgment  in  ejectment,  'i'liis 
cannot  be  done.  The  mortgagor  has  conveyed  this  land  by  a  deed 
duly  executed,  subject  nevertheless  to  a  condition.  If  he  would 
retain  the  land,  he  must  perform  that  condition. 

But  it  is  insisted  by  the  counsel  of  Roll,  that,  admitting  the 
right  of  the  comj)lainant  to  redi'cm,  still,  that  the  surplus  money 
in  his  hands  caniu)t  be  apj)lied  to  this  object,  because,  as  they  say. 
he  purchased  the  land  subject  to  the  mortgage  of  Kaguet.  The 
fact  apjiears  to  be  this:  in  the  decree  in  the  case  of  Cowles  against 
Uoll  aiul  others,  under  which  the  com])lainant  purchased,  the  Court, 
although  they  ordered  a  sale,  did  not  undertake  to  decide  the 
\alidity  of  Kaguet's  mortgage.  Of  course  that  sale  must  be  subject 
to  this  incumbrance.  But  still  the  land  could  not  be,  and  was  not 
-'•Id  for  afly  less  sum.  The  law  re(|uired  that  it  should  be  sold 
for  at  least  two-thirds  of  the  apj)rais('d  value.  It  was  so  sold.  The 
land  itself  for  its  fidl  value;  not  the  land  ri'duced  in  j)rice  in 
eonsequence  of  Kaguet's  mortgage.  I'nder  the.se  cireumstanees,  it 
-e<'ms  e(|uital)le  to  the  Court  that  this  surj)lus  should  lie  a))plieil 
irst  to  remove  the  iiieunibranee  of  the  mortgage  now  in  contro- 
versy.     If  anything  remains,  it  must  be  jiaid  to  Roll. 

The  ne.xt  (piestion   is.  as  to  which  of  the  defentlants  is  «Mititled 


048  THE    OBLIGATIOX    SECURED.  [CIIAP.  III. 

to  tlK-  money  to  be  paid  for  the  redemption  of  this  mortgage.  Mc- 
Micken  claims  as  the  assignee  of  Raguet,  by  deed  executed  in  1832; 
Wood  and  Abbott,  and  Brown,  Chase  &  Co.,  as  judgment  creditors 
of  Eaguet,  under  judgments  rendered  in  1833,  and  levied  on  his 
interest  in  the  mortgage  premises  in  1840. 

From  a  careful  examination  of  the  deed  of  assignment,  we  are 
■clearly  of  opinion  that  the  interest  of  Raguet,  by  that  deed,  was 
vested  in  McMicken ;  and  such  being  the  opinion  of  the  Court,  it  is 
unnecessary  to  enquire  as  to  the  claims  of  the  other  defendants. 


McQUADE  V.  ROSECRANS. 

Supreme  Court  of  Ohio,  1881. 
(3G  Oh.  St.  443.) 

Error  to  the  District  Court  of  Scioto  Coimty. 

The  action  below  was  brought  by  Sylvester  II.  Rosecrans  against 
Elizabeth  McQuado  and  John  McQuade,  administrator  de  honii< 
-non  of  Hugh  Reiley,  to  foreclose  two  mortgages  executed  by  said 
Reiley  and  his  wife  Elizabeth,  now  the  plaintiff  Elizabeth  Mc- 
<,)uade,  to  secure  the  payment  of  certain  promissory  notes,  amount- 
ing in  the  aggregate  to  $1600,  executed  by  Hugh  Reiley  and  de- 
li\^ered  to  Emanuel  Thinpoint,  the  defendant's  testator,  in  the  years 
1857  and  1858.  Said  Elizabeth  was  sole  heir  of  the  said  Ilugh 
Reiley.  The  answer  averred,  among  other  things,  that  at  the  time 
said  Hugh  Reiley  executed  the  said  notes  and  mortgages,  he  was 
in  embarrassed  circumstances,  and  involved  in  debt  beyond  his 
means  to  pay,  without  resort  to  the  real  estate  mortgaged,  and  that 
said  mortgages  were  executed  by  said  Reiley  and  received  by  said 
Thinpoint  in  double  the  amount  actually  loaned,  for  the  purpose 
of  placing  the  property  mortgaged  beyond  the  reach  of  the  creditors 
ot  Reiley.  The  reply  admitted  that  the  consideration  of  said  notes 
secured  by  said  mortgages  to  the  amount  of  $800  was  never  paid 
to  said  Reiley  by  said  Thinpoint,  but  was  a  trust  fund  created  by 
said  Reiley  in  favor  of  said  Elizabeth,  who  after  the  death  of  said 
Hugh  Reiley  and  before  said  suit  was  commenced,  intermarried 
with  John  McQuade.  The  reply  denied  that  said  conveyances  were 
made  with  intent  to  defraud  the  creditors  of  said  Hugh  Reiley. 
On  the  trial  in  the  district  court,  to  which  the  cause  had  been  ap- 
]i('aled.  the  plaintiffs  in  error  called  as  a  witness  Cornelius  ^McCoy. 
M-ho  stated  that  he  was  acquainted  with  Hugh  Reiley  in  his  life- 
time, the  former  husband  of  the  said  Elizabeth  ^[cQuade,  and  conn- 


KKf.  11.1  M' t/i  \iii:  r.  ijosiKiiANs.  249 

I  lor  (lc|'cii(liiiit>  tlici-ciii  itr<i|t«>uii<lc(l  Id  till-  \viliic»  tlif  lollowiii;,' 
(|iicslioii,  viz. : 

"  What,  if  anytliin<j:.  do  ycui  know  a.^  tn  tin-  |M-(Uiiiarv  cinuiii- 
.iiiccs  (»f  Ilii^Hi  Kcik'V,  prior  lo  liis  di-atli!'" 

Tt)  which  <nicstion  tlir  phiintill',  liy  his  coiinx'l.  uhji-cU-d,  aiitl  the 
■  uirt  su.slaiiU'd  said  ohjcctinii.  and  the  \vitiir->  ua>  not  |>crniitti'(l 
i  answer  said  (jiR'>tion. 

Coun.sol  for  (U-fciuhmts  tlicii  propox'd  and  olVcicd  lo  jjiovc  \i\ 
lid  witJK's^s,  and  otht'r  wiliu'sst's,  that  at  tht'  tinu'  of  the  execution 
of  said  notes  and  in()rt^a<res  siu-d  ujion,  the  saint'  were  given  <'or 
just  douhle  the  amount  of  money  actually  h)anfd.  That  the  said 
llujrh  HeiU'v  was  heing  sued  hv  various  creditors  and  was  in  em- 
l)arras.sed  circumstances  and  wholly  insolvent,  which  facts  were 
well  known  to  itoth  said  Hugh  Kciley  and  the  said  Mmanuel  Thin- 
]»oint,  and  that  the  ohject  on  the  i)art  of  hoth  said  Reiley  and 
'riiinjioint  in  taking  the  notes  and  mortgages  for  doulile  the  amount 
loaned,  was  to  cover  up  and  protect  said  real  estate  so  mortgaged 
from  htMng  levied  on  and  sohl  in  payment  of  the  debts  due  to  said 
creditors;  that,  in  fact,  the  giving  and  taking  of  the  said  notes 
and  mortgages  did  operate  as  a  fraud  on  said  creditors;  but  the 
court  ruled  that  said  evidence  and  each  part  thereof  was  incom- 
]>etent ;  that  the  contract,  as  between  the  said  -Hmanuel  Thinpoiut 
and  Hugh  Kciley  must  be  regarded  as  executed,  and  that  the  de- 
fendant, J''li/.abeth  IJeiley,  was  not  in  a  position  to  raise  the  cjues- 
lion  of  fraud  upon  the  creditors  of  the  said  Hugh  Reiley,  and  there- 
fore excluded  the  tc>stimony  offered.  Judgment  having  been  given 
for  the  plaint itT  below,  the  exclusion  of  said  t<'stimony  is  here  as- 
.*:igned  as  error. 

IJoYNTON,  ('.  .1.  W'c  think  the  court  erred  in  excluding  the  evi- 
dence offered  to  show  tliat  the  object  of  the  mortgagor  in  giving 
the  mortgages  sued  on  to  secure  double  the  am<nint  of  money  bor- 
rowed, and  of  the  mortgagee  in  receiving  the  sanu'.  was  to  defraud 
the  creditors  of  the  mortgagor.  Section  97  of  the  crimes  act  (1 
S.  &  C.  429)  makes  it  a  penal  offen.se,  i)unishal)le  by  line  and  im- 
pri.sonment,  for  any  person  to  make  any  grant  or  convc\vance,  with 
intent  to  defraud  his  creditors  of  their  just   demands. 

'i'he  object  of  the  testimony  offered  and  rejected  was  to  show  that 
a  j)art  of  the  consideration  of  each  of  the  notes  the  mortgages  were 
given  to  secure  was  illegal,  and  c()iise(|uently  that  the  mortgages 
were  void.  If  a  part  of  the  consideration  of  each  note  was  illegal, 
the  effect  W(uild  be  the  same  as  if  the  entire  c-onsideration  were 
illegal,  and  such  effect  would  be  to  render  the  nu>rtgages  void.  If 
any  distinct  note  that  either  mortgage  was  given  in  ]>art  to  secure, 
was  not  tainted  with  the  fraudulent  pur|H>sc>  to  defraud  the  nuiker's 
creditors,  no  doubt  e<juily  would  follow  the  law  and  enforce  to  that 


250  THE    OBLIGATION    SECURED.  [ciIAP.  III. 

extent  the  mortgage  security ;  but  where  a  part  of  the  considera- 
tion, whether  large  or  small,  is  affected  with  the  fraud,  the  case 
falls  within  the  operation  of  the  principle  stated  and  affirmed  in 
Widoe  V.  Webb,  20  Ohio  St.  431.  Hence,  the  testimony  offered 
was  clearly  competent,  unless  the  view  is  correct  which  the  dis- 
trict court  seems  to  have  taken,  namely,  that  the  contract  evidenced 
by  the  mortgages  was  fully  executed  between  the  parties.  That 
such  is  not  the  character  of  the  contract  in  the  view  of  a  court  of 
equity,  is  apparent  from  a  moment's  reflection.  In  equity  a  mort- 
gage is  but  a  chose  in  action,  given  to  secure  the  performance  of 
some  act,  usually  the  payment  of  money. 

Where  anything  remains  to  be  done  to  carry  into  effect  the  inten- 
tion of  the  parties,  and  which  can  only  be  accomplished  through 
the  aid  of  a  court  of  equity  where  one  of  the  parties  refuses  to 
perform  the  stipulation  which  he  has  agreed  to  perform,  the  con- 
tract is  executory.  A  mortgage  being  conditioned  for  the  pay- 
ment of  a  sum  of  money,  or  the  performance  of  some  other  act, 
if  the  money  is  not  paid  or  the  act  performed,  and  the  equity  of  re- 
demption is  sought  to  be  foreclosed,  the  active  aid  of  a  court  of 
equity  is  required.  The  payment  of  the  mortgage  debt,  or  the  per- 
formance of  the  condition,  whatever  it  may  be,  can  be  secured  in 
no  other  way. 

And  this  aid  is  always,  and  uniformly,  denied,  when  sought  to 
enforce  a  contract  the  consideration  of  which  is  illegal.  In  such 
case  the  maxim  applies,  in  pari  delicto  potior  est  conditio  defcn- 
dentis,  not  because  the  defendant's  rights  are  superior  to  the  plain- 
tiff's, but  coming  into  court  with  unclean  hands  it  refuses  to  exer- 
cise its  powers  in  his  behalf.  The  case  of  Raguet  v.  Roll,  7  Ohio, 
77,  was  a  scire  facias  on  a  mortgage  to  charge  lands  with  execu- 
tion. The  mortgage  was  given  to  secure  the  payment  of  the  sum 
of  $500,  the  consideration  of  an  agreement  to  suppress  and  prevent 
a  criminal  prosecution.  The  relief  sought  was  denied,  and  ex- 
pressly upon  the  ground  that  the  consideration  of  the  mortgage 
was  tainted  with  illegality.  That  case,  in  principle,  is  not  dis- 
tinguishable from  this,  and  is  decisive  of  the  question  now  under 
discussion.  The  remaining  point  is,  that  because  Mrs.  McQuade 
signed  the  mortgages,  she  cannot  allege  that  the  consideration  of 
the  same  was  illegal  either  in  whole  or  in  part.  This  question  wa;^ 
settled  in  Goudij  v.  Gebhart,  1  Oliio  St.  2(52,  and  was  also  directly 
involved  in  Raguet  v.  Roll.  The  rule  is,  that  in  so  far  as  the  con- 
tract is  executory,  the  defendant,  although  in  pari  delicto,  or  any 
one  acquiring  an  interest  in  the  property  affected  by  the  contract 
sought  to  be  enforced,  may  set  up  the  illegality  of  its  considera- 
tion in  defense.  No  one  is  allowed  to  set  up  his  own  fraud  or 
criminality  to  defeat  an  innocent  party,  but  where  both  parties 


SEC.   II.]  STIM.M.VN     r.     I.OONKY.  g')! 

are  participcs  criminis,  liic  fraiitl  may  Ix'  sot  up  and  proved  In* 
either  party,  wlien  the  iine.xefiilcd  portion  of  tlie  contract  is  so\ifrht 
to  be  enforced  apainsl  liini. 

J iidt/mrnt   rcnrscd  niid  ((itisr   ri'iiKiinlrd. 


STILLM.VN    \.   L()().\i:V. 

Supreme  Coiht  of  Tennessee,  18GG. 

(3  Cold.  20.) 

At  the  March  Term,  18G5,  of  the  Common  Law  and  Chancery 
Court  at  Memphis,  plaintiff's  bill  was  dismissed.  -ludi:*'  Smith, 
presiding.     Complainant  ap])cal('d. 

Shackelford,  J.,  delivered  the  oj)inion  of  the  Court. 

Tiiis  bill  was  filed  on  the  Chancery  side  of  the  Common  Law 
and  Chancery  Court  at  Memphis,  to  foreclose  a  mortgage  executed 
by  the  defendant,  on  three  lots  in  the  City  of  Memphis,  which  liad 
been  duly  registered  to  secure  the  payment  of  two  notes,  of  $'J5U0 
each,  dated  July  22,  18G2,  due  in  twelve  and  twenty-four  months 
from  date,  payable  at  the  L'nion  Rank,  indorsed  by  Stillman  & 
Beach.  The  answer  of  the  defendant  and  the  proof  shows  the  con- 
sideration for  which  the  notes  were  executed  was  Confederate 
Treasury  notes.  The  Chancellor  dismissed  the  bill ;  from  which 
the  comj)lainant  has  apjiealcd. 

It  is  a  well-settled  |)rinciple  in  executing  contracts,  if  (he  con- 
pideration  is  illegal  and  against  public  policy,  the  Court  would  not 
lend  its  active  aid  to  enforce  it.  No  rule  of  law  is  more  clearly 
defined  and  settled  than  this,  in  the  American  and  English  .luris- 
{.rudence  (3  Head.  297  and  723;  G  Bing.  171 ;  10  Ring.  110).  This 
Court  held  in  the  case  of  Overall  v.  Wright,  deceased,  at  Nashville, 
l>ecemb(T  Term,  18(5.5,  in  manuscrij)t,  that  an  agreement  to  credit 
a  payment  in  Confederate'  Treasury  notes,  for  which  Mr.  Wun/. 
had  given  his  receipt,  and  on  (he  trial  sought  to  have  credi(ed  on 
the  note,  was  no  payment;  that  Confederate  Treasury  notes  were 
issued  for  an  unlawful  purpose,  and  in  violation  of  (he  laws  of  tlie 
State  and  Consti(u(ion  of  (he  rni(ed  S(a(es,  and  (ha(  all  contrac(s 
founded  upon  (hem  were  illegal,  and  could  not  i)e  enfon-ed  through 
(he  Courts,  in  (he  case  of  ('riii<i  v.  The  Stale  of  Missuitri,  the 
Supreme  Court  of  the  Cnitcd  Sta(('s  held  a  promis,<ory  note  given 
for  cert ilicates  issu(>d  at  (he  Loan  Ollice  of  Chari(on.  Missouri,  pay- 
al>le  to  the  State  of  Mi.>is()uri.  under  the  .\ct  of  (he  L<>gisla(ure 
establishing  Loan  Ollices.  was  void  (  I  I'e(ers,  110).  the  .Vet  being  in 
conllicf  Willi  111,.  Constitulion  of  the  United  States. 


252  THE    OBLTGATIOX    SECURED.  [CHAP.  III. 

In  the  case  under  consideration,  the  notes  were  issued  by  an  un- 
lawful confederation  of  States,  whose  declared  purpose  was  to  over- 
throw the  Constitution.  The  enforcement  of  all  such  contracts  is 
against  public  policy.  The  party  seeking  the  aid  of  the  Court  will 
be  repelled.  The  defendant,  not  out  of  any  favor  to  him,  but  be- 
cause he  is  such,  can  allege  and  show  the  illegality  of  the  contract. 
That  being  made  apparent,  the  legal  consequences  follow. 

There  is  no  error  in  the  decree  of  the  Chancellor,  and  the  same 
is  affirmed.^ 


McLAUGHLIX  v.  COSGEOVE. 

Supreme  Judicial  Court  op  Massachusetts,  1868. 

{99  Mass.  4.) 

Writ  of  entry  by  the  heir  of  a  mortgagor  of  land  against  the 
mortgagee  in  possession  after  foreclosure.  In  the  Superior  Court, 
on  agreed  facts  which  are  stated  in  the  opinion,  Eeed,  J.  directed 
a  verdict  for  the  tenant,  and  reported  the  case. 

J.  C  Kimball  for  the  demandant. 

T.  H.  Sweetscr  (G.  Stevens  with  him)  for  the  tenant. 

Chapman,  J.  The  demandant  admits  that  her  ancestor,  Daniel 
McLaughlin,  gave  the  tenant  two  mortgages  of  the  demanded 
premises;  one  dated  April  25,  1855,  and  the  other  dated  February 
12,  1858;  that  the  tenant  entered  for  foreclosure  on  the  Gth  of 
March.  1SG3;  and  that  the  foreclosure  was  completed  prior  to  the 
commencement  of  this  action.  But  it  appears  that  these  mort- 
gages were  made  to  secure  the  payment  of  notes  which  were  given 
in  payment  for  intoxicating  liquors  illegally  sold  by  the  tenant  to 
the  mortgagor.  By  the  statute  then  existing,  these  notes  Avere  void ; 
and  it  is  admitted  that,  if  tlie  mortgage  had  not  been  foreclosed, 
this  action  could  not  be  maintained.  For,  as  a  security  for  a  debt 
made  illegal  by  statute,  the  mortgage  could  not  be  enforced  against 
the  demandant,  who  is  the  heir  of  the  mortgagor.  It  is  necessar}', 
then,  to  consider  the  effect  of  the  foreclosure. 

A  deed  of  mortgage  conveys  to  the  mortgagee  the  legal  title  to 
the  land,  subject  to  a  condition.  If  the  condition  be  performed  ac- 
cording to  its  terms,  the  title  of  the  mortgagee  is  thereby  defeated. 
If  not  performed  at  the  day,  the  legal  estate  remains  in  the  mort- 
gagee, and  an  equitable  riglit  to  redeem  by  payment  at  a  later  day 
is  all  that  remains  in  the  mortgagor,  unless  he  can  show  that  the 

'Accord,  Drexler  v.  TyrreU,  15  Nev.  114  (ISSO)  :  Peed  v.  MvKer,  42  I  a. 
089    (1870). 


Ik 


.-.i:<-.  11.)  ATWool)    r.    II-^K.  2">3 

(on.-idi'iiition  \va>  illc^'al,  in  wliuli  lax-  lie  may  defeat  the  iii<ui;.'a^<; 
alto^'etlier.  But  if  the  j,'rantee  enters  for  l)reaeli  of  the  ((tiKlitioii, 
an<l  keeps  |)ossession  till  the  ri;;ht  to  redeem  is  foreelosed.  he  then 
has  an  ahsolute  title;  and  the  value  of  the  land  is  a|ti)lie<l,  hy  opera- 
tion of  law,  to  the  i)aynient  of  the  <lei)t  seeured  hy  the  inorl^ra^je. 

In  a  ease  like  the  i)resent,  it  is  as  if  the  niort«ra;r<»r  had  purchased 
the  li(jUors,  and  paid  for  them  hy  an  ahsoliile  conveyinu-e  of  the 
land.  If,  then,  the  demandant  ean  recover,  it  must  lie  on  the 
ground  that  the  property  given  in  payment  for  liquors  illegally  sold 
ean  he  recovered  hack.  But  such  is  not  the  law.  I'ayments  nuido 
for  into.xicating  li(piors  in  money,  lahor  or  |)ersonal  |)roperty.  may 
he  recovered  hack  (lien.  Sts.  c.  St!,  >;  (11  ;  Wahiii  v.  Kcrhij,  nulr.  1  ). 
But  the  statute  does  not  extend  to  payments  made  in  real  estate. 
The  demandant  has  lost  her  claim  to  the  land  hy  not  hringing 
her  actiou  till  after  the  mortgage  wa<  foreclosed.' 

Judgment  for  (lie  tenant  on  the  vcrdicl. 


ATWOOD  V.  FISK. 
Supreme  Judici.vl  Coi-kt  of  M.vssaciiusetts,  1869. 

(101    Mass.  MW.) 

Two  hills  in  equity  to  compel  the  surrender  or  cancellation  of 
two  overdue  promissory  notes,  dated  in  hStjl,  and  signed  hy  the 
jilaintifFs  respectively,  with  Jose))h  Atwood,  each  note  for  the  pay- 
ment hy  the  promisors,  jointly  and  severally,  to  the  order  of  the 
defendants,  of  $i;{l(),  in  equal  semi-annual  instalments  of  ^CT, 
with  interest;  and  of  two  mortgages  of  real  estate,  containing  the 
\isual  j)ower  of  sale  clauses,  given  hy  the  plaint ilTs.  respectively,  to 
the  defendants,  to  secure  the  ])ayment  of  the  notes.  The  ground 
on  which  the  hills  were  sought  to  he  maintaiiK'd  was,  that  th'- 
consideration  of  the  notes  and  mortgages  was  a  jjromisi'  of  tlie  d<- 
fendants  to  the  plaintifTs,  to  forhear  to  prosirute  Joseph  .\twood. 
who  was  a  hookkeeper  in  the  employ  of  the  d(>fendants.  for  em- 
l)ezzling  money  of  his  emj)loyers ;  that  therefore  the  instrument- 
W(>re  null  and  void  ;  hut  that,  so  long  as  they  remained  (Mitstand- 
ing,  they  constituted  a  chmd  on  the  title  of  the  piaintilTs  in  tlie 
real  estate,  and  might  he  used  to  the  injury  of  the  plaintifTs  at  soni^' 
future  time  when  evidence  of  the  illegality  of  their  eonsid«'rati«'n 
should  he  lost.     The  answers  deniecl  the  piaintilTs'  nllegation<  con- 

^Arconl.  Sninpl,-  v.  Itanirs,  H   How.    if.  S.  Slip.  ((.»    70    ilS.'i^t. 


254  THE    OBLIGATION    PEC  FRED.  [CIIAP.  III. 

eerning  the  consideration  for  the  instruments,  and  alleged  a  lawful 
consideration  therefor.  Issue  was  Joined  on  the  answers,  and  the 
cases  were  reserved  by  Colt,  J.,  on  the  bills,  answers  and  evidence, 
for  the  determination  of  the  full  Court. 

Ames,  J.  A  note,  given  in  consideration  of  a  composition  of 
felony,  or  of  a  promise  not  to  prosecute  for  a  crime  of  a  lower 
degree  than  a  felony,  is  illegal,  and  cannot  be  enforced  by  the  prom- 
isee against  the  promisor.  And  it  makes  no  difference  that,  of 
various  elements  making  up  the  entire  consideration,  a  part,  and 
even  the  larger  part,  was  legal  and  valid.  If  part  of  the  considera- 
tion was  illegal,  the  effect  upon  the  note  would  be  the  same  as  if 
the  whole  were  illegal.  Tlie  plaintiffs  insist  that  the  notes  referred 
to  in  their  bills  of  complaint  fall  within  this  rule  of  law. 

But  it  has  also  long  been  settled  that  the  law  will  not  aid  cither 
party  to  an  illegal  contract  to  enforce  it  against  the  other,  neither 
will  it  relieve  a  party  to  such  a  contract  who  has  actually  fulfilled 
it,  and  who  seeks  to  reclaim  his  money  or  whatever  article  of  prop- 
erty he  may  have  applied  to  such  a  purpose.  The  meaning  of 
the  familiar  maxim,  in  pari  delicto  potior  est  conditio  defendentis, 
is  simply  that  the  law  leaves  the  parties  exactly  where  they  stand ; 
not  that  it  prefers  the  defendant  to  the  plaintiff,  but  that  it  will 
not  recognize  a  right  of  action,  founded  on  the  illegal  contract,  in 
favor  of  either  party  against  the  other.  They  must  settle  their 
own  questions  in  such  cases  without  the  aid  of  the  courts.  In  the 
somewhat  quaint  language  of  Lord  Chief  Justice  Wilmot  in  Collins 
V.  Blantern,  2  Wils.  350,  "  all  writers  upon  our  law  agree  in  this ; 
no  polluted  hand  shall  touch  the  pure  fountains  of  justice.  Who- 
ever is  a  party  to  an  unlawful  contract,  if  he  hath  once  paid  the 
money  stipulated  to  be  paid  in  pursuance  thereof,  he  shall  not  have 
the  help  of  a  court  to  fetch  it  back  again ;  you  shall  not  have  a  right 
of  action  when  you  come  into  a  court  of  justice  in  this  unclean 
manner  to  recover  it  back.  Prociil,  o  procul  este,  profani!"  In 
this  respect  the  rule  in  equity  is  the  same  as  at  law.  Equity  fol- 
lows the  rule  of  the  law,  and  will  not  interfere  for  the  benefit  of 
one  such  party  against  a  particeps  crimtnis.  The  suppression  of 
illegal  contracts  is  far  more  likely  in  general  to  be  accomplished, 
by  leaving  the  parties  without  remedy  against  each  other.  And  so 
the  modern  doctrine  is  estal)lislied,  that  relief  is  not  granted  where 
])oth  parties  are  truly  in  jxtri  delicto  CI  Story  Eq.  §  298;  Claridge 
v.  JToare,  14  Yes.  59). 

There  is  no  reason  why  e(|uity  should  !)e  able  to  grant  relief  upon 
])rincii)1es  different  from  those  recognized  in  courts  of  law.  If  the 
plaintiffs  were  occu])ying  the  position  of  defendants,  and  if  tlu; 
oases  before  us  were  actions  l)rouglit  to  recover  tlie  amount  of  the 
notes  in  question.   Ihey   could    avail    themselves    of    the    maxim 


,Kr.  II.]  ATUOOI)    V.    riSK. 


255 


:il)<)V('  referred  to  l)y  way  of  defense.      Hut  they  do  not  .stand  in  that 
position.     'I'hey  are  tlieni.«<elves  invoking;  the  aid  of  the  court  in  it- 

Hiitv  j\irisdi(li()ii.  to  relieve  them  from  a  contraet  which  they  al- 
|.  jr,.  to  he  iile^Ml.  They  are  aetor.s.  or  phiintifTs,  and  apparently 
are  in  a  j)osition  in  which  the  ma.xim  in  ([ue.stion  can  l)e  invoked 

iid  relied  \i\um  on  the  other  side.  If  the  notes  were  founded  on 
u  ille^'al  consideration,  why  should  the  court  lend  its  process  to  aid 

Mc  party  to  the  i!le«2;ality,  rather  than  the  other?  What  superior 
*'({uities,  in  that  view  of  the  case,  have  these  plaintitTs  over  the  de- 
fendants? We  see  no  such  incfiuality  in  position,  or  ahu.se  of  ad- 
vantages, as  to  entitle  them  to  the  aid  of  the  court  on  the  ground 
^if  puhlic  policy.  If  there  has  heen  a  comj)osition  of  a  felony,  or 
a  suppression  of  a  criminal  pro.secution,  the  plaintiffs  were  parties 
to  it  as  well  as  the  defendants,  and  it  may  perhaps  he  argued  that 
the  j)laintitrs  have  had  the  henedt  of  the  alleged  corrupt  agreement, 
and  are  merely  seeking  to  he  relieved  from  its  inconveniences. 
Thev  are  seeking  not  to  get  hack  money  paid  under  an  illegal  con- 
tract, hut  to  recall  notes  and  securities  which  they  have  given 
under  such  a  contract,  a  distinction  which  is  too  slight  to  make 
much  ilifference  in  the  suhstantial  equities  of  the  case  (Worcestrr 
V.  Eaton.  11  Mass.  375). 

We  see  no  occasion  for  the  interference  of  the  court,  as  prayed 
for,  upon  any  view  of  the  ca.se.  If  the  hookkeepcr  emhezzled  the 
funds  of  his  I'juployers,  he  not  only  committed  a  crime,  hut  he  also 
incurred  a  deht.     This  deht  he  was  legally  and  morally  hound  to 

■ay.  and  the  defendants  had  a  right  to  make  use  of  all  lawful  and 
projur  m(>ans  to  enforce  its  payment  or  to  ohtain  security.  The 
rule  of  the  common  law,  that  all  civil  remedies  in  favor  of  a  party 
inj\ired  hy  a  felony  are  either  merged  in  the  higher  ofTense  against 
Muhlic  justice,  or  suspended  until  after  the  termination  of  a  crim- 

i>al  prosecution  against  the  offender,  is  no  part  of  the  law  of 
Massachusetts  (Tiosfon  tf-  Worrcsfrr  Railroad  Co.  v.  Dana.  1  dray. 
"■?).  The  fact  that  the  di'ht  grew  out  of  a  hreach  of  trust,  and  had 
its  origin  in  fraud  and  criminality,  is  not  a  reason,  as  a  mattiT  i>f 
'aw,  f(»r  hestowing  ui)on  the  dehtor  any  peculiar  privileges  or  ex- 

Miptifuis.  If  tl«>  su|)|)ression  of  a  criminal  prosecution  was  one  of 
the  (•on<i(lcratious  for  the  contracts  made  and  securities  given  hy 
the  plaint  ill's,  they  can  avail  them.<elves  of  that  fact  as  a  defense 
in  any  suit  at  law  against  them  u|)on  such  contracts.  They  are 
•n  no  danger  of  losing  the  henefit  of  that  defen.se  in  consequence 

■f  any  transfer  of  the  ])n\,-<  to  a  third  pi>rson.  Some  of  tin-  in- 
stalments were  overilue  and  unpaid,  and  for  that  reason  n«^  indor-^ec 
■  ould  so  hold  them  as  to  de|»rive  the  plaintiffs  of  their  <lefenee.  A- 
to  the  PTcrcise  hy  the  mort'ragees  of  the  power  of  sale  given  hy  the 
tonus  of  the  mortgage^,  it  cannot  he  dilVieult  for  the  ]>laintifTs  to  see 


256  THE    OBLIGATION    SECURED.  [CHAP.  III. 

that  any  purchaser  at  such  sale  should  bo  fully  notitied  (if  notice 
should  be  thought  necessary)  of  all  grounds  of  objection  to  the 
notes  and  mortgages,  and  of  their  intention  to  contest  any  title 
which  such  purchaser  shall  venture  to  buy  at  the  sale.  It  is  well 
settled  that  all  defenses  (except  the  statute  of  limitations)  that 
can  be  made  against  the  notes,  can  also  be  made  against  the  mort- 
gages (Vintoji  V.  King,  4  Allen,  562). 

Whether  the  evidence  reported  can  be  said  to  prove  the  alleged 
illegality  in  the  contract  is  a  question  which  we  have  not  found  it 
necessary  to  decide,  or  even  to  consider.  In  any  view  that  can  be 
taken  of  that  question,  the  plaintiffs  are  not  in  a  position  to  claim 
the  equitable  relief  prayed  for;  and  therefore,  in  each  case,  the 
Bill  is  dismissed,  with  costs  for  the  defendants.^ 


SHAW  V.  CARPENTER. 

Supreme  Court  of  Vermont.     [In  Chancery.]     1881. 

(54  Vt.  155.) 

Petition  to  foreclose  a  mortgage.  Heard  on  petition,  answer, 
general  replication,  and  the  report  of  a  special  master,  at  the  Sep- 
tember term,  1880,  Chittenden  County,  Taft,  Chancellor.  The  court 
ordered,  pro  forma,  that  a  decree  of  foreclosure  be  rendered 
against  the  defendants,  for  $51.71." 

The  opinion  of  the  court  was  delivered  by 

RoYCE,  Ch.  J.  This  cause  was  heard  upon  the  report  of  a  special 
master  appointed  to  ascertain  and  report  the  amount  due  on  the 
mortgage  described  in  the  petition. 

It  appears  from  the  report  that  on  the  24th  day  of  July,  1872, 
one  Benjamin  D.  Peterson,  who  was  then  engaged  in  the  business  of 
bottling  cider,  soda,  and  mineral  waters,  at  the  city  of  Burlington, 
sold  the  good  will  of  the  business  and  all  his  stock — tools,  bottles, 
machinery,  and  fixtures,  then  in  use  by  him  in  said  business,  as 
specified  in  certain  inventories,  which  were  signed  by  the  said  Peter- 
son, to  the  defendant  Carpenter. 

Upon  said  inventories  the  various  articles  sold  were  separately 
carried  out,  with  a  separate  price  for  each  item.  The  footings  of 
the  separate  pages  were  brought  forward  upon  the  last  page,  where 
the  aggregate  correctly  appeared  of  the  sum  $3221.81.     To  this 

^Accord,  Pattersoti  v.  Donner,  48  Cal.  369  (1874)  ;  Albcrtson  v.  Lough- 
lin,  173  Pa.  St.  529   (189G). 

*  The  report  of  the  master  is  omitted. 


HKf.  11.]  SIIAW    C.    CAKrKNTKU.  '2'>7 

uiiiuunt  an  item  of  $110  was  aiKlcd,  wliitli  was  iiiLlinlr<l  in  tin-  nolo 
first  due.  It  is  not  found  what  the  consideration  for  tliat  item  wa.s. 
The  good  will  of  the  business  was  included  in  the  sale,  and  was  not 
estimated  in  the  inventory.  It  is  j)rohaljle  that  it  may  have  been 
cstinnited  l»y  the  parties  at  that  time.  For  the  amount  so  ascertained 
the  defendant  Carpenter  executed  four  promissory  notes  payable  to 
said  Peterson,  or  order,  and  secured  the  same  by  the  mort;;a^'e 
sought  to  be  foreclosed.  Said  notes  have  all  been  paid,  but  the  last, 
which  was  for  $S()0 ;  and  that  fell  due  on  the  2Uh  of  July,  187(;. 
The  interest  on  that  note  was  paid  to  tiie  ::21th  of  July,  18T(>. 

On  the  2Sth  day  of  October,  1872,  and  before  the  maturity  of  any 
-•1  said  notes,  Peterson  sold  them  and  the  mortgage  for  an  adequate 
consideration  to  the  petitioner,  the  petitioner  then  believing  the 
notes  to  be  based  on  a  valid  and  legal  consideration,  and  not  su.s- 
pecting  that  any  illegal  element  entered  into  the  consideration. 

Of  the  property  sold  by  Peterson  to  Carpenter,  and  which  formed 
a  i)art  of  tiie  consideration  of  said  notes,  the  master  has  found  there 
Were  the  following  goods,  in  kind  and  amount :  Lager  beer,  $'33.94  ; 
cider,  $122  ;  ale,  $209. ;?8  ;  porter,  $(1.72  ;  alcohol,  $2.25. 

The  defendant  Carpenter  claims  that  if  any  ])art  of  the  consid- 
eration for  the  notes  was  illegal,  they  are  void;  that  no  recovery 
could  be  had  upon  them  :  and  that  a  court  of  e([uity  cannot  grant 
any  relief  to  the  petitioner. 

The  first  in(iuiry  is,  was  the  sale  of  any  of  the  articles  above  enu- 
merated prohil)ited  by  law?  It  is  found  that  the  lager  beer  was  not 
an  into.xicating  drink,  and  its  sale  was  not  then  prohibited,  the  act 
forbidding  its  sale  having  been  passed  in  1878.  The  sale  of  the 
cider  was  not  illegal,  unless  the  place  where  it  was  sold  was  a  place 
of  ))ublie  resort.' 

The  sale  of  tlie  ale,  porter,  and  alcohol  being  illegal,  the  consid- 
eration for  the  notes,  as  far  as  the  value  of  those  articles  went  to 
make  up  the  amount  for  which  the  notes  were  given,  was  an  illegal 
consideration. 

The  important  question  in  the  case  is,  as  to  the  effect  that  such 
partial  illegality  of  consideration  is  to  have  upon  the  rights  of  the 
parties.  litihinson  v.  Bland.  <iJntinislr(i(n.r  of  Sir  John  Jllnnil. 
2  Burr.  1077,  has  always  been  regarded  as  a  leading  ca.se:  and  opin- 
ions were  given  in  it  by  Lord  Mansfield  and  Justices  Denison  and 
Wilniot.  Th»'  declaration  contained  three  counts;  the  first,  upon  a 
l>ill  of  exchange;  the  second,  for  money  lent  and  advancvd ;  and  the 
third,  for  nionrv  hail  ami  receiv(>(l.  A  verdict  was  found  for  thr 
plaintiff  for  l'(i72.  tlic  amo'int  of  the  hill  of  exchange.     It  wa>:  found 

'Tin-  tli.siMi-Hiuii  i(f  iliis  <|iicsti()n  i-^  nmittfil.  tlio  «oiu'lusion  rcaclu-d  btiiiif 
that  lli(>  .snle  of  (lie  rider  wax  not   illegal. 
17 


'2o8  THE    OBLIGATIOX    SECURED.  [CIIAP.  III. 

lliat  the  consideration  for  the  bill  of  exchange  was  £300,  lent  by  the 
})laintiff  to  Sir  John  Bland  at  the  time  and  place  of  play;  and  £372 
were  lost  at  the  same  time  and  place  by  Sir  John  Bland  to  the 
plaintiff  at  play.  It  was  held  that  the  £372,  part  of  the  considera- 
tion for  the  bill,  being  for  money  lost  at  play,  could  not  be  recov- 
t'red,  all  such  securities  being  void  under  the  statute;  and  that  a 
])art  of  the  consideration  for  the  bill  being  illegal,  no  recovery  could 
he  had  under  the  first  count ;  that  the  plaintiff  was  entitled  to  the 
£300  lent,  and  was  allowed  to  recover  it,  under  the  count  for 
inoney  lent  and  advanced. 

Judge  Denison  says  there  is  a  distinction  between  the  contract 
and  security.  If  part  of  the  contract  arises  upon  a  good  considera- 
tion, and  part  of  it  upon  a  bad  one,  it  is  divisible.  But  it  is  other- 
Avise  as  to  the  security.  That,  being  entire,  is  bad  for  the  whole. 
Judge  Wilmot :  "  As  to  contracts  being  good  and  the  security  void, 
— the  contracts  may  certainly  be  good,  though  the  security  be 
void." 

The  same  principle  as  to  such  a  security  being  void  was  enun- 
ciated in  Scott  V.  Gilmore,  3  Taunt.  226.  See  also  Yundt  v.  Roh- 
crts,  5  Serg.  and  Kawle,  139;  Phillips  v.  Cocl-aync,  3  Campbell, 
119;  Edgell  v.  Stanford,  6  Yt.  551.  These  two  first  cases  have 
oftenest  been  quoted  as  authority  for  the  rule  that  has  generally 
prevailed  in  the  English  and  American  courts,  that  where  a  part  of 
the  consideration  for  a  security  is  illegal  the  whole  security  is  void. 
The  cases  referred  to  by  counsel  for  defendant  were  all  cases 
where  attempts  were  made  to  enforce  such  securities,  and  the  cases 
of  Hineshurgh  v.  Sumner,  9  Yt.  23,  and  Woodruff  v.  Himnan,  11 
Yt.  592,  were  of  the  same  kind.  In  none  of  these  cases  was  the  court 
called  upon  to  decide  what  the  effect  of  holding  the  security  void 
would  be  upon  the  original  contract,  where  that  was  bad,  in  part, 
upon  a  good  and  legal  consideration. 

In  Carlton  v.  TfooJ.s,  28  N.  H.  290,  the  question  was  presented. 
The  declaration,  in  that  case,  contained  counts  upon  several  promis- 
sory notes,  and  a  count  for  goods  sold  and  delivered.  The  plaintiff 
agreed  to  sell  the  defendant  a  stock  of  goods  and  groceries  at  cost 
and  freight.  A  schedule  of  the  articles  was  made,  and  the  cost  of 
each.  The  sum  total  of  the  cost  of  all  the  articles  was  divided  into 
several  parts,  and  the  notes  declared  upon  were  given  for  the  same. 
Among  the  articles  so  sold  were  some  spirituous  liquors  illegally 
sold,  the  price  of  which  formed  a  part  of  the  consideration  for  the 
notes.  A  verdict  was  taken  for  the  plaintiff,  for  the  cost  of  the  goods 
remaining  unpaid,  except  the  spirituous  liquors;  and  judgment 
was  to  1)0  rendered  on  the  verdict,  or  it  was  to  be  set  aside,  as  the 
opinion  of  the  court  should  l)e.  It  was  held  that  the  counts  upon 
the  notes  were  not  maintainable;  that  the  consideration  of  the  sev- 


bk« .  II.]  SHAW   r.  cAiU'KN  ri:u.  259 

<'ial  notes  was,  in  part,  illegal,  antl,  tlit-irfun-,  no  recovery  could  bo 
liail  upon  them;  that  the  legal  ell'eet  ol"  the  contract  was,  that  each 
article  was  to  he  valucil  separately,  and  that  the  sale  and  delivery 
of  each  article  formed  the  consideration  for  the  promise  to  pay  for 
it;  that  the  contract  was  di^isihle;  and,  while  the  sej)arate  value  of 
the  articles  sold  could  he  ascertained,  as  fixed  hy  the  parties,  the 
princi|de  is  not  readily  seen,  which  would  defeat  the  right  of  recov- 
ery for  the  stii)ulatcd  price  of  that  portion,  the  sale  of  which  was 
legal;  and  judgment  was  rendered  on  the  verdict.  The  same  was 
substantially  held  in  Wnlkrr  v.  Lnvrll,  in  the  same  volume,  138. 
The  law  does  not  favor  any  party  in  evading  payment,  while  he  re- 
tains the  consideration. 

The  notes  which  were  given  for  the  good  will  and  ])roperty  sold 
to  Carpenter  were  all  infected  with  illegality,  and  the  defense  of 
illegality  attached  to  all  of  them  ;  so  that,  if  what  is  now  claimed  as 
a  defense  can  be  allowed,  if  proceedings  had  been  instituted  to  com- 
p«'l  i»ayment  before  anything  had  been  paid,  the  entire  claim  could 
have  been  defeated,  notwithstanding  Carpenter  had  received,  and 
was  in  the  enjoyment  of  the  property,  uj)on  th(>  ground  that  the  por- 
tion of  the  property  above  enumerated  was  illegally  sold.  It  has 
somewhere  been  said,  that  the  declaring  such  a  security  void  was  to 
be  regarded  as  a  punishment  of  the  party  for  having  made  an  ille- 
gal contract.  The  loss  of  the  i)roperty  illegally  sold  would  generally 
Im'  considered  a  sullicient  jjunishment,  certainly,  when  the  sale  was 
only  tnahiin  prohibit  urn,  and  no  wrongful  intention  appears.  But  a 
court  of  equity  could  never  hold  that  one  might  be  deprived  of  his 
entire  fortune,  because,  in  the  consideration  agreed  to  be  paid  for  it, 
there  was  intermingled  some  article  the  sale  of  which  was  pro- 
hibited. We  regard  the  case  of  Carlton  v.  Woods,  supra,  as  sound 
law  and  well  sustained  by  authority.  Its  application  works  out  just 
and  e<iuitable  results,  and  we  shall  apply  the  principles  there  enun- 
ciated in  the  decision  of  this  case. 

Peterson  could  have  recovered  against  Carj)enter  in  an  action  of 
assum|)sit,  for  all  that  was  .>;old  to  him,  except  the  ale,  porter,  and 
alcohol.  The  mortgage  would  be  treated  as  .security  for  the  debt 
due  from  Carpenter,  on  account  of  the  property  legally  sold  to  him. 
Peterson  might  have  foreclosed  the  mortgage,  and  thus  have  coni- 
{H'lled  j)ayment  of  the  debt. 

The  petitioner,  by  his  jmrchase  of  the  notes  and  mortgage,  ac- 
quired all  the  rights,  legal  and  eipiitable,  of  Peterson.  He  could 
maintain  a  suit  at  law  for  his  own  benefit,  in  the  nanu'  of  Peterson, 
or  a  petition  in  e(|uity.  as  assignee  of  the  mortgage,  to  foreclose  it. 
And  in  the  disposition  of  such  a  petition  it  is  the  duty  of  a 
court  of  equity,  which  has  been  said  to  be  the  groat  sanctuary  of 
plain  dealing  and  honesty,  to  compel  the  paynu^nt  of  that  portion  of 


26U  THE    OBLIOATIOX    SECURED.  [c'li.\p.  m. 

the  debt  that  was  secured  by  it,  that  was  legally  and  fairly  con- 
tracted. 

The  decree  of  the  Court  of  Chancery  is  reversed  and  cause  re- 
manded, with  mandate  that  a  decree  be  entered  for  the  petitioner 
for  the  amount  due  on  the  note  for  $800  described  in  the  petition^ 
with  interest  after  deducting  therefrom  the  sums  of  $209.38,  $6.72^ 
and  $3.25,  being  for  the  ale,  porter,  and  alcohol  illegally  sold, — as 
of  the  date  of  the  note.  If  the  amount  due  cannot  be  ascertained 
from  the  computations  made  by  the  master,  it  is  to  be  ascertained 
in  such  manner  as  the  court  may  direct. 

Dissenting  opinion  was  delivered  by 

Ross,  J.  I  am  unable  to  concur  in  the  decision  of  the  court  in 
this  case.  On  the  facts  found  by  the  master,  it  may  be  question- 
able whether  the  sale  of  the  cider  was  illegal,  within  the  exact 
terms  and  language  of  the  statute.  However,  when  a  man  estab- 
lishes a  business  for  the  bottling  and  sale  of  cider  and  other  fer- 
mented drinks  in  a  city  like  Burlington,  has  a  warehouse  for  stor- 
ing, manufacturing,  bottling,  and  vending  the  same,  and  keeps  an 
office,  he  so  far  makes  the  place  of  his  business  a  place  of  public- 
resort  for  the  sale  of  cider,  although  the  vending  is  carried  on  by 
solicitation  of  orders  at  the  houses  and  places  of  business  of  his  cus- 
tomers, and  the  delivery  of  the  bottled  cider  is  at  the  latter  places,, 
that  in  my  opinion,  it  comes  within  the  spirit  and  scope  of  the  stat- 
ute, and  without  any  forced  construction,  within  its  language. 
But  I  do  not  regard  this  point  very  material;  and  should  not  on 
this  ground  have  placed  my  dissent  upon  record.  A  part  of  the 
consideration  of  the  note  being  illegal,  the  note  is  void  and  no- 
action  can  be  maintained  thereon  to  enforce  its  collection.  To  the 
cases  cited  by  the  court,  in  the  main  opinion,  may  be  added  Cohh 
v.  Cowdery  et  al.,  40  Vt.  25;  Bowcn  v.  Bucl\  28  Vt.  308.  In  Colh 
V.  Cowdery,  supra,  the  distinction  is  taken  between  a  consideration, 
in  part  void,  and  a  consideration  in  part  illegal.  The  note  failing, 
what  is  there  left  for  the  mortgage  to  stand  upon  ?  The  mortgage 
is  but  an  incident  to  the  debt  it  secures.  On  the  authorities  cited 
by  the  court  in  support  of  its  decision,  as  well  as  all  the  reasoning, 
partial  illegality  of  consideration  avoids  all  securities.  The  note 
was  a  security,  or  evidence  of  the  debt,  of  a  higher  nature  than  the 
original  contract.  The  latter  was  merged  in  the  note.  The  note 
in  suit,  and  all  the  notes  secured  by  the  mortgage,  were  tainted  by 
illegal  consideration  entering  into  them.  Each  note  being  an  entire 
contract  of  itself,  no  division  of  the  legal  from  the  illegal  part  of 
the  consideration  could  be  effected.  Courts  established  for  the  en- 
forcement of  law  will  not  give  aid  or  countenance  to  anything  il- 
legal ;  nor,  where  the  illegal  is  commingled  with  the  legal,  will  they 
aid  in  separating,  or  purging  the  former  from  the  latter.     Their 


sKc.  II.]  till  AW   c.  (  ai!1'i;nti:k.  t.*'il 

|»roi»(.T  I'uiKiion  is  to  ostablisli  and  ciifurct'  tliu  Ic^'ul  and  lo  coiKlfimi 
and  punish  the  illegal.  Where  a  part,  however  small,  of  the  consid- 
eration of  an  t-ntire  contract  is  illegal,  the  whole  contract  is  tainted, 
and  eourts  will  not  compel  its  performance.  Collins  v.  lilaidcnt, 
2  Wils.  ;{41.  is  a  leading  case  on  this  subject,  in  whieh  the  Lord 
Cliief  Justicf  Wilmot  uses  the  (|uaint  hut  forcible,  and  often  quoted 
language:  "  You  shall  not  slliiulalc  for  iniiiuilij:  all  writers  upon 
our  law  agree  in  this,  no  polluted  hand  shall  touch  the  pure  foun- 
tains of  justice;  whoever  is  a  j)arty  to  an  unlawful  contract,  if  he 
iiath  once  paid  the  money  stipulated  to  be  paid  in  pursuance 
thereof,  lie  shall  not  have  the  help  of  a  court  to  fetch  it  back  again ; 
you  shall  not  have  a  right  of  action  when  you  come  into  a 
court  of  justice  in  this  unclean  manner  to  recover  it  back.  Procul! 
0  procul  cslc.  profiini."  The  mortgage  is  an  entire  contract.  Its 
consideration  was  the  notes,  the  payment  of  which  was  therein 
secured  ;  every  one  of  which  was  tainted  with  an  illegal  considera- 
tion in  jiart.  It  was  not  given  to  secure  the  performance  by  Car- 
penter of  Ids  contract  with  Peterson,  of  July  2-i,  IST*^,  by  which 
lie  purchased  his  business  and  stock  in  trade,  but  was  given  solely 
to  secure  the  payment  of  the  notes  which  wvw  executed  in  payment 
of  that  purchase.  If  the  action  were  upon  the  notes,  it  is  conceded 
that  no  recovery  could  l)e  had  ;  becau.sc  every  one  of  them  is  tainted 
with  illegal  consideration.  The  illegal  could  not  be  separated  from 
the  legal  portion  of  the  consideration:  and  an  enforcement  of  the 
collection  of  the  notes  would  l)e  the  enforcement  of  an  illegal  con- 
tract. How  does  it  ditTer  when  the  mortgage,  whicli  is  but  an  in- 
cident to  the  notes,  is  allowed  to  be  foreclosed  ?  Is  it  not  an  enforce- 
ment of  an  illegal  contract?  To  foreclo.se  the  mortgage  for  the 
legal  part  of  the  consideration,  must  not  tlie  illegal  portion  be 
ascertained  and  rejected;  which  the  majority  hold  could  not 
bo  done,  if  the  action  were  upon  the  notes?  What  is  the  fore- 
closure but  an  action  ujjon  the  notes  described  in  its  con- 
dition? and  to  ascertain  the  legal  part  of  the  consideration  of  the 
mortgage  must  not  the  notes  be  treated  as  divi>;ible?  I  can  isee  no 
other  means  of  separating  the  legal  from  the  illegal  part  of  its  con- 
sideration. In  Vinhtu  V.  Kiutj.  4  Allen.  TjC*.?,  Metealf,  J.,  says:  "  In 
an  action  brought  by  a  mortgagee  against  his  mortgagor,  on  a  mort- 
gage given  to  secure  payment  of  a  note,  the  defendant  may  slunv 
the  same  matters  in  defense  (the  Statute  of  Limitations  «>xcepted. 
19  Pick.  W.\:y)  whii  h  he  might  show  in  defen.se  of  an  action  on  the 
note."  I  am  not  aware  of  any  «'Xception  to  the  rule  thus  stated,  nor 
of  any  case  to  the  contrary.  I  am  not  unaware  that  Mr.  Jones  in 
his  work  on  mortgages,  §  (»20.  says:  "  The  mortgage  may  be  upheld 
for  sudi  part  of  the  consideration  as  was  frrr  from  thi'  in'ini  of  ilh'- 
tjnliiy  when  the  consideration  is  made  up  of  several  distinct  tran.^ao- 


262  THE    OBLIGATIOX    SECURED.  [CHAI>.  lit 

tionsj  some  of  which  are  legal,  and  others  are  not,  and  the  one  can 
be  separated  with  certainty  from  the  other."  The  cases  he  cites 
support  this  doctrine:  Feldman  v.  Gamhel.  26  N.  J.  Eq.  494; 
Williams  v.  Fitzhugh,  37  N.  Y.  444;  McCraney  v.  Alden,  46  Barb. 
(N.  Y.)  272;  Cooh  v.  Barms,  36  N.  Y.  520. 

It  may  well  be  admitted  that  a  mortgage  given  to  secure  the  pay- 
ment of  several  notes,  or  debts,  a  part  of  which  arose  out  of  wholly 
legal  transactions,  and  a  part  of  which  were  tainted  with  illegalitv, 
could  be  enforced  to  compel  the  payment  of  the  former  alone.  In 
such  a  case  the  orator  would  not  have  to  show  in  evidence,  nor  rely 
upon  anything  illegal,  in  maintaining  his  suit.  In  the  language  of 
Gibbs,  Ch.  J.,  in  Simpson  v.  BIoss,  7  Taunt.  246,  in  speaking  of 
Faikney  v.  Reynous,  4  Burr.  2069,  and  Petrie  v.  Hannay,  3  Term 
Eep.  418 :  "  The  ground  of  their  decision  was,  that  the  plaintiffs 
required  no  aid  from  the  illegal  transaction  to  establish  their  case." 
This,  as  I  understand,  is  the  test  most  frequently  applied  in  this 
class  of  cases.  If  the  plaintiff  can  show  a  good  cause  of  action,  in- 
dependent of,  and  without  bringing  into  the  case  anything  illegal, 
either  by  way  of  proof  or  otherwise,  he  may  maintain  his  action 
therefor.  If,  on  the  other  hand,  he  derives  any  aid  from  the  illegal 
part  of  the  transaction,  by  being  obliged  to  show  it  to  make  out  the 
legal  part,  or  otherwise,  he  must  fail.  The  court  will  not  allow  the 
unclean  thing  within  the  temple  of  justice.  In  the  foreclosure  of 
his  mortgage  the  orator  was  bound  to  show  in  proof  his  notes,  every 
one  of  which  was  tainted  with  illegality ;  and  for  that  reason  the 
notes  all  fall,  and  the  mortgage  given  to  secure  them  alone,  falls 
with  them.  This  point  my  brethren  have  not  deemed  worthy  of  their 
attention,  nor  alluded  to.  But  if  I  am  in  error  on  this  point,  I  can- 
not concur  with  my  associates  in  holding  that  the  original  con- 
tract is  divisible.  It  is  in  writing,  and  amenable  to  the  rules  of 
evidence  which  forbid  varying,  lessening  or  enlarging  such  contracts 
by  parol  testimony.  It  is  in  the  following  language :  "  In  consid- 
eration of  three  thousand  three  hundred  thirty-seven  dollars  and 
eighty-one  cents  received  of  John  W.  Carpenter,  I,  Benjamin  D. 
Peterson  do  hereby  sell,  transfer  and  assign  unto  said  Carpenter  the 
good  will  of  a  certain  business  for  bottling  cider,  soda  and  mineral 
waters,  now  carried  on  by  me  in  Burlington,  together  with  all  the 
stock,  tools,  bottles,  machinery  and  fixtures,  now  in  use  in  said 
business,  as  specified  in  certain  inventories  hereto  attached,  and  I 
agree  to  deliver  to  said  Carpenter  the  gross  amount  of  property  de- 
scribed in  said  inventories,  which  said  inventories  are  signed  with 
my  name."  The  inventories  are  referred  to  and  made  a  part  of  the 
contract  to  show  what  personal  prop(>rty  was  to  pass  witli  the  good 
Avill  of  the  business.  They  are  not  referred  to  for  the  price  of  the 
several  articles  included.     The  master  has  found  that  the  aggrc- 


MtC.   II.]  SHAW     (.    t  AKI'KNTEK.  203 

pitc  of  tlio  prices  thero  rarricd  out,  did  not  amount  to  tlic  sum 
iiaimtl  in  the  contract,  and  for  wliidi  tlu'  notes  were  givi-n,  into 
$11(1.  IIciicc,  if  the  prices  carried  out  on  the  inventories  are  to 
he  ri'gardeil  as  a  ])arl  of  the  contract,  they  do  not  show  that  the 
articles  were  severally  sold  for  the  price  set  against  them,  l)Ut  the 
reverse.  The  contract  is  to  he  construed  as  a  whole.  Thus  con- 
stnied,  it  is  an  entire,  indivisil)le  contract.  It  was  a  sale  of  a 
husiness,  as  a  ^'oin<,'  coiicenu  iiu  hitling  the  good  will,  stock  in 
trade,  machiiu'ry  and  lixturcs.  It  is  not  to  he  inferred,  or  in- 
tended, that  Peterson  would  have  sold  the  good  will  of  the  busi- 
ness, without  selling  the  stoik  in  trade,  machinery  and  fixtures,  nor 
that  Carpenter  would  have  purchased  the  latter  without  the  former. 
It  was  not  the  sale  of  the  good  will  as  one  separate  transaction,  of 
each  hottle,  barrel,  and  fixture  as  another  separate  transaction,  and 
so  divisible.  But  one  consideration  is  named  or  paid;  and  but  one 
thing  is  sold — the  business,  including  the  stock,  (Src,  and  goo*!  will, 
as  a  going  concern.  As  said  by  Devens,  J.,  in  Vounij  «.l*  Conant 
Mfg.  Co.  v.  ]V(ik-('fu'hI,  121  Mass.  !)1  :  "  If  but  one  consideration  is 
)»aid  for  all  the  articles  sold,  so  that  it  is  not  possible  to  determine 
the  amount  of  consideration  ])aid  for  each,  the  contract  is  entire 
(Miiirr  V.  Jinidlri/.  "22  Pick.  4.57).  So  if  the  purcha.<e  is  of  goods  as  a 
particular  lot,  even  if  thi'  y>rkv  is  to  be  ascertaine(l  l)y  the  in:mber 
of  pounds  in  the  lot,  or  inimber  of  barrels  in  which  the  goods  are 
packed,  the  contract  is  also  held  entire  (Clarl-  v.  Baler.  5  Met.  4.52  ; 
Morse  V.  Brarkrtt.  !)8  :Mass.  20,5;  Man.^ficJd  v.  Triij,),  11:3  Ma.ss. 
;?.50).  While  in  the  cases  last  referred  to,  it  could  b',>  ascertained 
what  was  the  amount  of  consideration  paid  for  each  pound,  or 
barrel,  yet  the  articles  having  been  sold  as  one  lot,  it  was  to  be  in- 
ferred that  one  pouiul  or  barrel  would  not  have  been  sold  unless  all 
were  sold.**  On  thesi'  prinei|»les,  if  the  mortgage  can  be  upheld  as  a 
security  for  the  jiayment  of  the  consideration  of  the  original  con- 
tract, as  well  as  the  notes  given  in  jiayment  therefor,  the  considera- 
tion of  the  contract  is  entire,  indivisible,  and  tainted  with  illegality, 
and  for  that  reason  void,  and  should  not  be  enforced.  To  my  mind, 
the  ea.<es  principally  relied  upon  by  my  associates  are  not  authority 
for  their  decision.  In  Uohinsun  v.  lUniul.  2  Purr.  1077,  the  transac- 
tions were  separate  and  distinct.  One  was  l)orrowing  three  hundred 
pounds;  the  other  losing  three  hundred  sevtMity-two  pounds  in  gam- 
ing. While  the  bill  of  exchange  given  for  the  two  was  held  to  In- 
void  because  tainted  with  in  part  illegal  consideration,  the  |)laintilT 
was  allowed  to  recover  on  I  he  count  for  money  loaned,  for  the  thrn' 
hundred  ])ounds  borrowed  by  the  intestate.  The  plaintilT  could 
establish  this  |)art  of  his  claim  without  the  aid  of  the  other,  in  any 
manner.  The  remark  of  .?\istice  Oenison.  made  in  that  case: 
"There  i-;  a  distinction  between  the  contract  and  the  s-- '"•>■'!'      Tf 


2(j4:  the  obligation  secured.  [chap,  iii^ 

part  of  the  contract  arises  upon  a  good  consideration,  and  part  upon 
a  bad  one,  it  is  divisible.  But  it  is  otherwise  as  to  the  security ;  that 
being  entire,  is  bad  for  the  whole,"  is  not  to  be  pressed  beyond  the 
case  in  hand,  and  given  universal  application.  His  language,  as  to 
its  being  ''  divisible/'  was  true  as  applied  to  the  facts  of  that  case. 
The  law  was  more  accurately  expressed  by  Mr.  Justice  Wilmot : 
"  Here  are  two  sums  demanded,  which  are  blended  together  in  one 
bill  of  exchange ;  but  are  divisible  in  their  nature,  as  to  the  money 
lent.  The  cases  that  have  been  cited  are  in  point,  that  it  is  recover- 
able." Carleton  v.  Woods,  28  N.  H.  290,  comes  nearer  to  supporting 
the  decision  of  the  majority  of  the  court,  but  in  my  judgment,  is 
distinguishable  from  the  case  at  bar.  It  is  there  distinctly  held 
that  if  the  contract  is  entire,  and  part  of  the  consideration  is  illegal, 
the  contract  is  void;  but  that  where  an  entire  stock  of  goods  is  sold, 
at  one  and  the  same  time,  but  each  article  for  a  separate  and  distinct 
agreed  value,  the  contract  is  not  to  be  regarded  as  entire  and  in- 
divisible. The  sale  was  for  cost  and  freight,  and  Woods,  J.,  says: 
"  We  are  unable  to  see  how  this  case  differs  from  the  case  of  a  sale 
by  a  merchant  of  various  goods  to  his  customers,  at  one  and  the 
same  time,  for  separate  values,  stated  at  the  time,  which,  when 
computed,  would,  of  course,  amount  to  a  certain  sum  in  the  aggre- 
gate."' It  was  on  this  theory  that  the  court  held,  that,  although 
the  notes  could  not  be  maintained,  because  a  part  of  the  consid- 
eration was  for  spirituous  liquors  illegally  sold,  yet,  on  the  general 
counts  in  assumpsit,  for  goods  sold  and  delivered,  the  plaintiff 
might  recover  for  the  goods  sold,  as  the  court  held,  independently 
of,  and  as  transactions  separate  from,  the  purchase  of  the  liquors. 
To  say  the  least,  this  was  pressing  the  doctrine  of  devisability  of  a 
contract  to  the  extreme  verge,  and  I  am  unwilling  to  go  further. 
There  may  have  been  more  in  the  case  than  appears  in  the  report, 
justifying  the  holding  of  the  court.  On  the  facts  stated,  I  think  the 
authority  is  clearly  against  that  contract  being  divisible.  That 
case,  however,  lacks  the  element  of  being  the  sale  of  a  going 
l)usiness,  including  the  good  will,  and  does  not  appear  to  have  been 
reduced  to  writing.  In  my  judgment,  the  decree  of  the  Court  of 
Chancery  should  be  reversed,  and  the  cause  remanded,  with  a 
mandate  to  enter  a  decree  dismissing  the  bill  with  costs. 

Taft,  J.,  desires  me  to  say  that  he  concurs  in  the  views  I  have 
expressed,  except  in  regard  to  the  sale  of  the  cider  being  illegal,  on 
whicli  point  he  concurs  in  the  views  of  the  majority  of  the  court. 


.-^hc.  III.]  1'i;tiii»()m:   c.  «;i;isw()LD.  205 

ClIAl'TFJI     III.    {Conlininul). 

Section  Hi.     I"i  irui:  Adv.vncks. 

I'Kiril'.oNK  V.  (IIMSWULI). 

SuPREMK  Corirr  of  Ekroks  of  C'onxecticut,  1822. 

(4  Conn.    158.) 

This  was  a  hill  in  chanivrv  ti)  foivclosc  tho  equity  of  rodomp- 
tion  of  the  dcfciulants  in  certain  mortgaged  premises.  The  bill 
stated,  that  on  the  3d  day  of  July,  1815,  Giles  Griswold,  for  the 
consideration  of  4000  dollars,  conveyed  to  the  plaintiff's  testator 
three  pieces  of  land  in  Burlin<rton,  hy  a  deed  containing  the  usual 
covenants  of  seisin  and  warranty,  to  which  there  was  a  condition 
annexed,  that  if  the  said  Giles  Griswold,  his  executors,  &c.,  should 
pjiy  said  grantee  one  note  of  even  date  therewith,  executed  to  said 
grantee,  for  4000  dollars,  payahle  in  six  months,  at  the  Hartford 
hank,  and  all  other  nofcs  the  said  grantee  might  indorse,  or  give, 
for  said  Griswold,  at  the  bank  or  elsewhere,  and  all  receipts  said 
Pettil)one,  deceased,  might  hold  against  the  said  Griswold,  then" 
paid  deed  to  be  void;  that  before  the  execution  of  this  deed,  the 
])laintiff's  testator,  with  Griswold,  executed,  for  Griswold's  benefit, 
two  joint  notes,  one  to  Seth  Cowles,  dated  the  lOth  of  April,  1814, 
for  \.MM  dollars,  07  cents,  payable  in  six  years  from  the  date  there- 
of, with  interest  annually,  and  one  to  Elijah  Cowles  &  Co.  of  the 
paine  date,  for  200  dollars,  05  cents,  payal)le  in  six  years,  with  in- 
terest annually;  for  which  Griswold  gave  his  receipt  to  the  j)lain- 
tiff's  testator,  and  agreed  to  exoneratt»  and  indemnify  him  against 
all  claims  and  demands  on  account  of  said  notes;  that  on  tiie  10th 
of  September,  1815,  Griswold  also  received  of  the  plaintiff's  testator 
sundry  notes  of  hand,  amounting  11  18  dollars,  G'i  cents,  dated  the 
2\'i{  of  February,  1815.  for  which  (Jriswold  gave  his  receipt,  pron>- 
jfing  to  account  with  the  plaintiff's  testator  on  said  joint  note  to 
Klijah  Cowles  &  C<i. ;  that  the  mortgaged  premises  have  been  levied 
upon,  by  several  credit'irs  of  Griswold.  and  set  off  to  them,  respec- 
tively, on  execution;  that  (iriswold  had  not  j)aid  and  indeninined 
the  plaintiff's  testator  for  all  the  notes  that  he  had  indorscil  or 
Jliven  for  him  :  nor  bad  (iriswold  |)aid  all  the  receipt.'?  the  plaintiff's 
'"■'tator  belli   against    him.   Iml   the  notes  given  by  the  plaintiff's 


2()6  THE    OBLIGATION    SECURED.  [ciiAr.  ill. 

testator  to  Setli  Cowles  and  Elijah  Cowles  &  Co.  remain  entirely 
unpaid  by  Griswold,  but  have  been  principally  satisfied  by  the  plain- 
tiff's testator,  and  his  estate  is  liable  for  the  residue,  Griswold  bein^i; 
a  bankrupt;  nor  had  Griswold  ever  paid  and  satisfied  his  receipt 
of  the  9th  of  September,  according  to  the  tenor  thereof,  l)ut  the 
plaintiff  now  holds  the  same  unsatisfied.  There  were  other  aver- 
ments, on  which  no  question  arose. 

To  this  bill  the  defendants  demurred ;  and  the  case  was  reserved 
for  the  advice  of  all  the  judges. 

HoSMER,  Ch.  J.  The  plaintiff  has  brought  his  bill  to  foreclose 
a  mortgage,  the  condition  of  which  is,  to  secure  to  the  mortgagee 
the  payment  of  a  note  accurately  described,  which,  it  is  presumed, 
has  been  paid,  as  there  is  no  allegation  of  non-payment ;  and  like- 
wise to  secure,  "  all  other  notes  the  said  grantee  might  indorse  for 
or  give  for  said  Griswold,  at  the  bank  or  elsewhere,  and  all  re- 
ceipts said  Pcttibone,  deceased,  might  hold  against  said  Griswold.'^ 
The  land  mortgaged  has  been  levied  on,  by  executions  against  the 
mortgagor;  and  the  controversy  is  between  the  mortgagee  and  the 
execution  creditors. 

The  notes  of  hand  given  to  Seth  Cowles  and  Elijah  Cowles  and 
Co.  were  in  existence  at  the  date  of  the  mortgage,  and  are  not  in- 
cluded in  the  condition.  They  might  and  ought  to  have  been  de- 
scribed, or  embraced,  by  some  intelligible  description  of  them.  But 
the  expression,  "  all  notes  the  said  grantee  might  indorse  for  or 
give  for  said  Griswold,"  manifestly  refers  to  future  contracts,  and 
not  to  notes  then  existing.  The  receipt  of  the  19th  of  September. 
1815,  renders  it  necessary  to  proceed  further  in  the  discussion  of 
this  case,  or  the  preceding  observations  would  be  conclusive  on  the 
whole  controversy. 

On  the  extent  to  which  a  mortgage  may  be  taken,  I  shall  not 
express  a  definite  opinion,  as  the  exigencies  of  the  case  do  not  re- 
quire it.  It  undoubtedly  may  be  for  existing  debts,  existing  lia- 
bilities and,  perhaps,  for  debts  to  be  contracted  in  future.  But 
the  manner  in  which  it  may  be  done,  forms  an  important  consid- 
eration. It  is  the  policy  of  our  laws,  and  experience  has  demon- 
strated the  wisdom  of  it,  that  the  titles  to  real  estate  should  be  regis- 
tered for  the  benefit,  not  of  the  parties,  but  of  creditors  and  all 
others  interested.  "  All  grants  and  mortgages  of  houses  and  lands 
shall  be  recorded  at  length  by  the  town  clerk;  and  no  deed  shall 
be  accounted  good  and  effectual  to  hold  such  houses  and  laud- 
against  any  other  person  or  persons  but  the  grantor  or  grantors 
and  their  heirs  only,  unless  recorded  as  aforesaid"  (Stat.  302, 
§  9).  It  is  the  object  of  this  law  to  prevent  fraud  and  give  security 
and  stability  to  title.  It  results,  unquestionably,  that  the  condi- 
tion of  a  mortgage  deed  must  give  reasonable  notice  of  the  incum- 


stem.)  n;ii  iin)\  i;   ;.  ciii^u  old.  2''.". 

braiu-cs  on  llu'  land  ni(>rlj,M^'(.'d.  A  tivililur  i<  not  oljligcd  by  law 
Ui  niaki.'  iiHjuirv  in  /"//■>>•  cnnccrnin;:  tin-  liens  on  the  proprrty  of  lii-; 
debtor:  but  on  api)li(ati()n  ti>  liic  n-coid  he  may  acfjuirc  all  tin- 
information  wliiili  his  intcn>t  dcinand.-.  At  least,  he  must  ha\e 
the  power  of  knowing  from  liiis  >oiiree  the  sui»jeet  matter  of  tlic 
niort^ra-^e,  that  his  invest i<,Mt ion  may  be  ;:ui(led  by  soniethin;; 
which  will  terminate  in  u  eerlain  result.  And  what  is  not  of  le-s 
importance,  the  ineumbraiuc  on  the  property  must  be  so  defined  a- 
to  prevent  the  substitution  of  everything  which  a  fraudulent  <,'ran- 
ttir  may  devise  to  shield  him.«;elf  from  the  demantls  of  Ids  credi- 
tors. 

The  eonditinn  of  the  deed  under  diM-us>ion,  is  dan^'crously  in- 
definite and  is  at  war  witli  the  policy  of  the  recording  system. 
It  endiraees  all  futun'  notes  and  receipts  without  the  desifination 
of  any,  and  bailies  the  inquiry  of  creditors  and  others  relative  tn 
the  condition  of  the  mort^a^U'd  estate.  A  condition  to  a  deed  ma<le 
to  secure  all  future  sujiplies,  debts  and  liabilities,  of  every  possildi-' 
nature  and  description,  would  not  bo  more  la.\  and  indefinite.  Tin; 
creditor  could  know  nothing  from  an  examination  of  the  rei-ord, 
and  must  be  cast  on  his  debtor  for  information,  the  very  ])erson 
who  would  bo  least  inclined  to  jjive  it:  and  successive  oblifjation^, 
lictitious  or  actual,  mifilit  be  made  to  lock  iip  his  land,  in  defiance 
of  every  claim  against  him. 

I  am  well  aware  that  absolute  certainty  is  not  always  to  be  ex- 
pected from  an  examination  of  the  records  of  land  titles;  but  there 
always  may  and  ought  to  be  a  certain  object  after  which  suitable 
inquiries  may  be  made.  A  mortgage  may  be  given  to  indemnify 
a  person  from  damages  arising  by  rea.son  of  his  having  become  the 
surety  of  another  in  the  ofliee  of  sheriff  or  collector:  or  as  admin- 
istrator on  an  estate.  In  all  these  cases  an  in(|uiring  creditor 
cannot  know  from  the  town  record  the  precise  incumbrance:  bu: 
he  has  notice  of  certain  definite  facts,  which  point  to  and  guide 
him  in  the  necessary  investigation  on  the  sid)jeit.  Cases  of  this 
description  must  not  be  confounded  with  conditions  to  deeds,  which 
neither  communicate  any  certain  information  nor  designate  nnv 
track  in  pursuance  of  which  information  may  be  obtained. 

The  other  Judges  were  of  the  same  opinion. 

Juiltfnirtil  It)  he  rnfrrfd  for  ilrfrmlnnfs.^ 

\rcord.  \orlh  v.  Hrltlrn,  1 .{  Cnmi.  .ITti  (iSJd);  Itnnnhnll  v.  Fl<,>„l.  (I 
I'onn.  (JS  (  1S74)  :  Stearns  v.  I'ortrr,  •»»>  Conn.  A\.l  {  1S7S»  ;  ddtbrr  v.  Umru. 
«  Watts.  (Pa.)  ^^l  (1H37).  s,,nhlr:  IhiUork  v.  H>itt,nhnus,».  lOS  III.  28 
(1883).    Couijiare  Bill  v.  rUniim/s  Ksrs.,  IJ  N.  .1.  i:.|.  1.  4'.>U  (  1858.  IS.'jO). 


268  THE   OBLIGATIOX    SECURED.  [CHAP.  III. 


STOUGHTOX  V.  PASCO. 

Supreme  Court  of  Errors  of  Connecticut,  1825. 

(5  Conn.  442.) 

This  was  a  bill  in  chancery,  brought  by  Stoughton,  to  redeem 
mortgaged  premises. 

The  plaintiff  and  Jonathan  Pasco  were  trustees  of  the  goods  and 
effects  of  one  Stephen  Heath,  deceased,  for  the  benefit  of  cei^tain 
legatees,  according  to  his  last  will  and  testament.  The  amount  of 
the  property  in  the  hands  of  the  trustees,  in  February,  1812,  which 
had  been  inventoried,  was,  at  the  inventory  price,  6501  dollars,  28 
cents,  and  of  property  not  inventoried,  302  dollars,  50  cents.  On 
the  8th  of  February,  1823,  Jonathan  Pasco,  as  trustee  as  aforesaid, 
was  justly  indebted  to  the  plaintiff  in  a  large  sum,  the  amount  of 
which  was,  at  that  time,  unascertained.  To  secure  such  sum,  on 
the  day  last-mentioned,  he  executed  a  mortgage  deed  of  the  prem- 
ises to  the  plaintiff,  which  was  duly  recorded,  with  a  condition 
pul)joined  in  these  words :  "  If  said  Pasco  shall  pay  to  said  Stough- 
tonall  monies  in  his  hands  belongingto  the  estate  of  Stephen  Heath, 
deceased;  and  also  deliver  to  said  Stoughton  all  notes  and  other 
securities  for  money  belonging  to  said  estate  in  his  hands;  and 
shall,  in  all  respects,  render  to  said  Stoughton  a  true  account  of  all 
monies  and  securities  for  the  payment  of  money  belonging  to  said 
estate,  within  twenty  days  from  this  date ;  and  shall  pay  to  said 
Stoughton  his  the  said  Pasco's  note  of  hand,  payable  to  said 
Stoughton,  for  the  sum  of  210  dollars,  on  demand,  with  interest, 
dated  March  5th,  1814;  then  this  deed  to  be  void,"  &c.  The  court 
found,  that  there  was  due  to  the  plaintiff  from  said  Pasco  for 
monies  and  effects  in  his  hands  of  the  estate  of  Stephen  Heath,  de- 
ceased, intended  to  have  been  secured  by  said  mortgage  deed,  the 
sum  of  3137  dollars,  85  cents;  besides  the  amount  of  the  note  men- 
tioned in  the  mortgage.  By  subsequent  deeds,  dated  the  8th  and 
22d  of  February,  1823,  and  duly  recorded,  Jonathan  Pasco  mort- 
gaged the  premises  to  Ashna  Pasco,  after  a  computation  between 
the  said  Jonathan  and  the  plaintiff,  ascertaining  the  debt  due  to 
the  latter.  Before  the  execution  of  these  mortgages,  and  before  the 
del)ts  secured  by  them  had. accrued.  Ashna  Pasco  had  notice,  l).v 
information  from  Jonathan,  of  such  computation  and  settle- 
ment, and  that  the  sum  due  to  the  plaintiff  was  more  than  2800 
dollars. 

Jonathan  and  Aslma  Pasco  were  made  parties  defendants  to  the 


tihi'.  111.]  STOlMill  TON     r.    I'ASCO.  2G!i 

hill.  As  a<;ain.<l  .loimtliaii  llic  »<»urt  clccivrd  a  ri)rc(lo>iin',  l»u(  •)••- 
niftl  the  ri'lii'f  soii^Mit  aj,Mins(  Ashna.  coiisidfrin;,'  tlu'  inorlgagc  in 
qiK'stion  to  he  void  in  ivlalion  (o  liini.  To  review  this  determina- 
tion, the  plaintiir  jjroeured  the  reeord  to  he  transmitted  to  this 
Court,  pursuant  to  the  statute. 

lIosMKU,  Ch.  J.  The  <reiieral  (|iiestion  in  this  ease  is  wla-llifr 
the  mort<:a<,'e  made  hy  Jonathan  I'asco  to  the  j)laintiir  is  void  in 
respeet  of  Ashna  Paseo,  a  suhsc(iueiit  mort;,'agee,  exeept  as  rejranls 
n  small  deht  l)y  promissory  note. 

The  ohjeetion  made,  on  the  defendant's  part,  to  the  granting  of 
the  j)rayer  of  the  plaintiff's  hill,  is  founded  on  the  law  requiring 
the  reeording  of  deeds.  It  is  insisted  that  the  j)oliey  of  the  re- 
cording system  Mill  be  violated  hy  giving  validity  to  a  mortgagi', 
containing,  as  the  one  in  question  is  supposed  to  do,  no  reason- 
able certainty  in  the  deserij)tion  of  the  del)t  intended  to  be  se- 
cured. The  determination  of  this  Court  in  Prttiboiw  v.  fjrlsirnlil, 
4  Conn.  Kej).  loS,  is  prineii)al]y  relied  on  ;  and  is  claimed  to  sustain 
the  defendant's  objection.  • 

There  are  two  questions  eml)ra(ed  in  the  present  case.  The  first 
is,  whether  the  demand  of  Stoughton  is  of  such  a  nature  as  to 
autliorize  the  mortgage  security;  and  tiie  second  is,  whether  it  is 
described  with  such  reasonable  certainty  that,  in  respect  of  it,  a  sub- 
sequent mortgagee  is  legally  affected  with  notice. 

1.  In  Pctlibune  v.  Grisirohl.  before  cited,  it  was  said,  that  a 
mortgage  may  be  taken  "  for  existing  debts,  existing  liabilities,  and 
perhaps  for  d(0)ts  to  be  contracted  in  future."  The  court  has 
found,  that  Jonathan  Pasco  was  justly  indebted  to  the  plaintiff,  as 
trustee  on  Heath's  estate,  in  the  sum  of  31:57  dollars.  S.j  cents;  ami 
that  this  sum  was  intended  to  l)e  secured  by  the  mortgage  deed  to 
Stoughton.  The  ])recise  sum  of  money  due  to  the  jilaintilf  had  not 
hiH'ii  ascertained  at  the  date  of  the  mortgage;  and  hence  the  phrase- 
ology of  the  condition,  that  if  Jonathan  Pasco  should  ])ay  \'> 
Stoughton  all  the  monies,  and  deliver  to  him  all  the  .securities  for 
money  in  his  hands,  belonging  to  Heafirs  estate,  and  render  a  tru.« 
account,  file  deed  should  be  void.  That  Jonathan  Pasco  was  under 
a  legal  obligation  to  do  what  he  stipulated,  and  that,  as  to  him, 
Stoughton  had  a  just  demand,  to  the  extent  of  the  stipulation, 
must  be  implied  by  every  one  wlio  reads  the  above  condition.  It 
would  not  enter  into  the  imagination  of  .niy  one  tliat  the  mortgage 
was  for  a  sum  of  money  not  due;  and  that,  contrary  to  common 
sense  and  universal  usage,  Pa.sco  had  made  a  pledge  of  his  estate 
to  secure  to  the  plaintilT  a  mere  gratuity.  But  this  ])oint  n<H'd  be 
pursued  no  further,  as  the  court,  in  tlie  decree  parsed,  considered 
the  mortgage  valid  as  between  the  parties. 

?•  The  question  remains  whether  the  demand  of  the  plaintilT  is 


270  THE    OBLTG.VTIOX    SECURED.  [cilAP.  III. 

described  in  the  mortgage,  with  such  reasonable  certainty,  as  from 
the  record  to  affect  a  subsequent  mortgagee  with  notice. 

Xow,  what  would  such  person  understand  from  reading  the  afore- 
said condition?  On  the  principle  of  constructive  notice  of  the 
record,  the  subsequent  mortgagee  must  be  supposed  to  have  read  t\\? 
deed  with  its  condition;  and  hence  the  propriety  of  the  proposed 
.-•uestion.  On  such  perusal,  he  must  be  presumed  to  know  that  the 
mortgage  was  for  a  debt  in  some  manner  resulting  from  the  trust 
<'state  in  the  mortgagors  hands,  due  to  the  co-trustee,  the  plain- 
tiff ;  that  the  precise  amount,  at  the  date  of  the  mortgage,  was  not 
ascertained ;  that  it  embraced  all  the  monies  and  securities  of 
Heath,  in  the  hands  of  Pasco;  and  that  this  person  had  bound  him- 
self to  render  a  true  account  of  his  indebtedness.  In  addition  to 
this,  let  it  be  remembered  that  Ashna  Pasco,  previous  to  the  de- 
livery of  either  deed  to  him.  had  information  from  his  mortgagor 
that  the  account  between  Jonathan  Pasco  and  Stoughton  had  been 
adjusted,  and  that  the  sum  now  claimed  as  a  debt  was  acknowl- 
edged to  be  due. 

That  the  condition  of  a  mortgage  deed  must  give  reasonable 
notice  of  the  incumbrance  on  the  land  mortgaged,  is  an  established 
principle.  This  is  the  undoubted  criterion,  by  which,  in  respect  of 
third  persons,  the  validity  of  the  mortgage  is  to  be  tested.  What, 
then,  is  reasonable  notice?  Is  it  requisite  that  the  condition 
phould  be  so  completely  certain,  in  every  particular,  as  to  preclude 
the  necessity  of  all  extraneous  enquiry?  Certainly  not.  It  was 
adjudged  in  Pettihonc  v.  Grisicold,  before  cited,  that  a  mortgage  to 
indemnify  a  surety  for  the  official  good  conduct  of  another  is  valid 
universally ;  and  yet  the  event  on  which  an  indebtedness  may  arise, 
as  well  as  the  amount,  are  utterly  unforeseen  and  contingent. 
Without  a  specification  of  either  of  these  facts,  there  exists  that 
reasonable  notice  which,  in  favor  of  those  who  are  not  parties  to 
the  mortgage,  the  laAV  demands.  The  object  of  the  recording  law 
is  to  prevent  fraud  on  purchasers  and  creditors;  and  such  facts 
must  be  reasonably  notified  as  are  sufficient  for  this  purpose ;  but, 
as  has  been  shewn,  notice  perfect  and  complete,  without  any  en- 
(piiry  dehors  the  record,  is  not  required. 

One  head  of  presumptive  notice  is  this :  that  the  law  imputes  to 
the  purchaser  the  knowledge  of  a  fact,  of  which  the  exercise  of 
common  prudence  and  ordinary  diligence  must  have  apprized  him. 
Hence  it  has  become  a  principle  in  a  court  of  equity,  that  the  no- 
tice which  presents  a  certain  object,  concerning  which  successful 
enquiries  without  unreasonable  inconvenience  may  bo  made,  is 
sufficient.  In  Peters  v.  Goodrich,  3  Conn.  Rep.  150.  the  above 
principle  was  recognized  and  applied.  Curtis  executed  a  mortgage 
(\<'('(]  to  Goodrich,  which  was  dulv  recorded,  with  condition  to  in- 


VI,.  111.]  sror(;iiinN    r.   i'A?>t  <».  iiTl 

<h  iiiiiilv  liiiii  ;ii;iiiii.-l  a  piuiiu.-.-ury  nolo,  of  wliicll  tlic  lillliT  was 
all  iiulorsir.  'I'o  loivtloso  tlu'  i-ijuily  of  rt'di-iiiptioii,  n  bill  Wiis 
lirou^'lit  hy  Ciooilruli,  from  wliicli  i(  ajjia'and  that  tlir  niort;,M<,'c 
was  variant  from  tlu'  note,  bolli  in  iv.<i>i'<l  of  its  date  and  of  tlio 
jKTson  to  whom  it  was  payaltlc  Thu  dt'feiulant,  who  was  a  subso- 
(jurnt  mort^M^'c't'.  obji'itt'cl  a;xain>t  tiic  correct  ion  of  tlicsc  mistakes, 
\ij)on  the  si)ecitic  ground  that  tui-  description  in  the  mort^M^'e  deed 
must  be  j)recisely  adhered  to,  j)ursuant  to  the  supjjfjsed  policy  of 
the  recording  system.  In  the  deiivi-ry  of  their  opinion  the  court 
■observed,  that  "as  between  the  jiarties,  it  is  un([ucstionably  clear, 
that  the  misconct'|)tion  of  the  date  of  the  note  ami  of  tlu;  prom- 
isiee  admitted  of  correction,  on  the  common  principles  ajtplied  in 
chancery  in  similar  cases;  and  the  second  mortgagee  liad  such  con- 
structive notice  of  the  fact  from  the  recorded  deed  as  i)laced  hini 
in  no  better  condition  than  the  mortgagor.  Whatever  is  suflicient 
to  })ut  a  ]ierson  on  inquiry  is  consitU'red  in  ctiuity  to  convey  notice; 
for  the  law  im])utes  to  a  person  the  knowledge  of  a  fact  of  which 
the  exercise  of  coinninn  ])rudence  and  ordinary  diligence  must 
have  apprized  him.  Had  the  second  mortgagee  applied  to  (Jood- 
rich  for  information,  as  it  was  his  intention  {o  rejiresent  the  facts 
■correctly,  relative  to  the  mistakes,  he  would  have  had  n  communi- 
cation of  all  the  knowledge  he  now  possesses." 

Tlie  same  principle  was  recognized  by  the  c-ourt  in  I'ettibonc  v. 
'irisuuhl,  before  cited.  After  having  di'dared  it  to  be  the  policy 
of  our  law  that  the  title  to  real  estate  should  In-  registered  for  the 
benefit  of  creditors  and  all  others  interested,  it  was  observ<'d  by  the 
'  ourt :  "  That  it  is  the  object  of  this  law  "  (the  act  recpiiring  deeds 
'  be  recorded)  ''to  ])revent  fraud,  and  give  security  and  stability 
to  title.  It  results,  unquestionably,  that  the  condition  of  a  mort- 
gage deed  liiust  give  reasonable  notice  of  the  incumbrances  on  the 
land  mortgaged.  A  creditor  is  not  oI)liged  by  law  to  make  en(|uiry 
hi  puis  concerning  the  liens  on  the  projierty  of  his  debtor;  but  on 
application  to  the  record,  he  may  acquire  all  the  information  which 
his  interest  demands;  at  least,  he  nnist  have  the  j)ower  of  knowing 
from  this  source  the  subject  matter  of  the  mortgage,  that  his  in- 
vestigation may  be  guided  by  something  which  will  terminate  in  a 
certain  result.  And  what  is  not  of  less  importance,  the  incum- 
brance on  the  jiroperly  must  hv  so  delined  as  to  j)rev«'nt  the  substi- 
tution of  everything  which  a  fraudulent  grantor  may  dt-vise  to 
f^hiold  himself  from  the  demands  of  his  creilitors."  in  the  argu- 
ment of  this  case  it  has  been  supposi-d  that  the  court,  in  I'ltti- 
honc  V.  Grisiriilil.  hail  rcHjuired  perfect  and  complete  certainty  in 
the  condition  of  a  mortgage,  so  far  as  relates  to  ."strangers  to  the 
transaction,  and  to  s\ich  a  degree  as  to  j)reclude  the  neeessitv  of  anv 
further  eiKjuiry,     T^ut   fbi-  rrror  i<  most  obvious  and  r''<nH.il  I'u- 


272  THE    OBLIGATION    SECURED.  [CHAP.  IH. 

tirely  from  the  construction  of  a  single  sentence  in  the  oi^inion 
expressed,  disjoined  from  all  other  parts  of  it;  as  if  it  had  been  de- 
clared in  the  form  of  an  axiom,  and  were  insulated  and  alone. 
I  readily  admit  that  the  paragraph  immediately  succeeding  the 
rule  relative  to  notice,  was  not  expressed  with  a  precision  that  defie* 
all  criticism.  Instead  of  the  expression  "  concerning  the  liens," 
more  correctly  it  should  have  been  "  concerning  the  existence  of  the 
liens."  It  was  expected,  however,  to  receive  its  construction  as 
being  the  part  of  an  entire  subject,  each  sentence  contributing 
something  to  the  precise  development  of  the  court's  opinion ;  in 
pursuance  of  the  maxim.  Ex  antecedentibus  ct  consequent  thus  ft 
optima  inter pretatio.  More  especially  may  it  be  demanded,  that 
it  be  read  with  this  qualification :  "  at  least,  he  must  have  the 
power  of  knowing  from  this  source,"  i.  e.,  from  the  condition  of  the 
deed,  "the  subject  matter  of  the  mortgage,  that  his  investigation 
may  be  guided  by  something  which  will  terminate  in  a  certain  re- 
sult." It  is  extremely  obvious  that  the  case  of  Petiihone  v.  Gris- 
wold  was  not  affected  by  the  preceding  principles;  and  this  may 
account  for  their  being  perhaps  more  loosely  expressed  than  they 
would  have  been,  had  a  close  application  of  them  been  required. 
The  mortgage  in  that  case  embraced  all  future  notes  and  receipts^ 
without  the  designation  of  any,  and  supplied  neither  information, 
nor  the  probable  means  of  successful  enquirj/;  and,  as  there  was  no 
imaginable  check  on  the  substitution  of  notes  and  receipts  at  pleas- 
ure, and  without  limitation  of  time,  the  policy  of  the  recording 
system,  if  such  mortgage  were  valid,  would  effectually  be  defeated. 
A  condition  to  a  deed  made  to  secure  all  future  supplies,  debts  and 
liabilities,  would  not  be  more  dangerously  lax  and  indefinite. 

The  principle  contended  for  by  the  defendants  is  refuted  by  the 
case  of  Peters  v.  Goodrich,  by  the  expressions  already  recited  from 
Pettibone  v.  Grisivold,  and  by  other  parts  of  the  same  case.  The 
latter  case  requires  that  the  record  should  contain  sufficient  infor- 
mation relative  to  the  subject  matter  of  a  mortgage  to  direct  the 
enquirer  to  the  necessary  intelligence,  and  to  prevent  a  debtor,  by 
extreme  indefinitcness  and  generality,  from  the  substitution  of  every 
possible  demand  at  his  pleasure.  "I  am  well  aware"  (said  the 
Judge,  when  delivering  the  opinion  of  the  court)  "that  absolute 
certainty  is  not  to  be  expected  from  an  examination  of  the  records 
of  land  titles;  but  there  always  may  and  ought  to  be  a  certain 
object  after  which  suitable  enquiries  may  be  made.  iV  mortgage 
may  be  given  to  indemnify  a  person  from  damages  arising  by  rea- 
son of  his  having  become  the  surety  of  another,  in  the  office  of 
sheriff  or  collector,  or  as  administrator  on  an  estate.  In  all  these 
cases  an  encpiiring  creditor  cannot  know  from  the  record  the  pre- 
cise incumbrance ;  but  he  has  notice  of  certain  definite  facts,  which 


-.I.e.  111.]  SToiiill  li»N    r.    I'Asro.  273 

ixtint  (o  and  <jiii(lc  hint  in  llu-  iR-tvssarv  invi-sii^Mlion  on  the  sul)- 
jcet.  Casi'.s  of  tliis  il('scTij)tion  must  not  be  cDufounded  with  lun- 
ditions  to  dirds  which  neither  coniniunicate  any  eertain  infonna- 
tion  nor  dcsitjnotc  anij  track,  in  pursuance  of  wliicli  information 
may  be  obtained." 

In  the  transaction  of  business,  the  exi^'eneies  of  it  not  unfre- 
([Uently  retiuire  that  tlie  conditions  of  mortgage  deeds  shouhl  he  a-4 
uncertain  as  the  one  undt-r  discussion;  and  such  mortgages  arc 
unquestionably  legal.  Both  j)rivatc  justice  and  the  convenience 
of  the  public  demand  that  they  should  be  considered  valid.  The 
case  of  mortgagt's  for  the  indemnity  of  sureties,  has  already  been 
mentioned.  A  mortgage  to  secure  an  unliquidated  book  debt,  or 
the  fidelity  of  a  factor  or  bailiff,  whose  business  it  is  to  receive 
money  and  ])ay  it  over,  undoubtedly  would  be  good ;  and  yet  there 
is  nothing  eertain  here  but  the  subject  matter  of  the  stipulation. 

What,  then,  is  the  fatal  uncertainty  existing  in  the  descri|)tion 
of  the  debt  and  obligation  of  Jonathan  Pasco?  The  sum  of  the- 
indebtedness  was  not,  and  could  not  be,  specified;  nor  was  it  neces- 
sary that  it  should  be;  but  the  subject  matter  of  the  mortgage  wa-« 
exj)licitlv  stated.  The  sul)se<iuent  mortgagee  had  notice  from  the 
record  that  Jonathan  Pasco  was  indebted;  and  that  he  was  ac- 
countable to  the  plaintitf  for  all  the  monies,  and  securities  for 
money,  of  Heath.  What  the  original  amount  was,  the  inventory  of 
Heath's  estate  would  inform  him;  and  he  would  have  experienced 
no  dilliculty  in  ascertaining  the  precise  sum  and  manner  of  Jona- 
than Pasco's  indebtedness.  lie  was  informed,  by  the  mouth  of  hi< 
mortgagor,  that  a  settlement  had  been  made  between  him  and  the 
l^laintifT;  and  that  the  balance  due  surmounted  twenty-eight  hun- 
dred dollars.  Instead  of  cfTectuating  the  ])olicy  of  the  recording 
system  by  an  invalidation  of  the  piaintilf's  mortgage,  the  courl 
would,  in  that  event,  be  instrumental  in  the  perpetration  of  a  hard- 
ship most  ineciuitable.  The  free  use  and  disposal  of  a  perst>n's 
})roj)erty,  where  neitlu-r  law  nor  ])olicy  forbids,  would  be  inhibited  ; 
the  exigencies  of  business,  in  promotion  of  the  general  conven- 
ience, disregarded;  and  the  impracticable  principle,  in  all  cases, 
that  mortgage  conditions  must  contain  within  themselves,  not  rea- 
sonable certainlv  only,  but  a  certainty  to  a  certain  intent  in  every 
particular,  adopted.  This  would  be  confornudile  neither  to  correct 
l)rinciplcs  Jior  to  our  own  adjudications. 

Pktkks,  J.,  was  of  oj)inion  that  this  case  was  not  distinguishal)le 
in  princii)le  from  Peitihunr  v.  (Irisirohl:  and  woidd.  therefore, 
allirm  the  decree  of  the  superior  court. 

Bk.MNAHD,  J.,  coiuiirre(l  with  the  Chief  Justice. 

Bristol,  J.,  said  that,  aside  from  the  ca.se  of  Pcttibonr  v.  Gri<- 
wohl.  he  should  have  no  doubt  that  the  mortgage  in  quest  i<Mi  was 
18 


•274  THE    OBLIGATION    SECURED.  [CHAP.  Ill, 

good;  but  that  case  had  produced  some  hesitation  in  his  mind;  and 
he  was  inclined  to  think  that  the  present  case  must  be  governed 
by  it. 

Decree  reversed. 


ROBINSON"  V.  WILLIAMS. 

Court  of  Appeals  of  Neav  York^  1860. 

(22  N.  Y.  380.) 

Appeal  from  the  Superior  Court  of  the  city  of  Buffalo.  Action 
by  the  receiver  of  the  Hollister  Bank,  against  Williams,  the  receiver 
of  the  Reciprocity  Bank,  and  other  defendants,  for  the  foreclosure 
of  a  mortgage.  Prior  to  September,  1857,  both  banks  were  doing 
business  in  the  city  of  Buffalo. 

Upon  the  trial  these  facts  were  proved:  On  the  24th  of  Octo- 
ber, 1854,  the  defendants  Gibson  and  wife  executed  and  delivered 
a  mortgage  to  the  Hollister  Bank,  which  recited  that  in  considera- 
tion of  the  sum  of  $1  to  them  in  hand  paid,  and  for  the  purposes 
thereinafter  declared  and  stated,  they  granted  and  conveyed  to  said 
bank  certain  premises  therein  particularly  described.  The  mort- 
gage contained  a  further  recital  as  follows :  "  Whereas,  it  is  con- 
templated that  the  said  party  of  the  second  part  will  hereafter  from 
time  to  time  make  loans  or  advances,  by  way  of  discount  or  other- 
wise, to  the  said  Charles  D.  Gibson,  upon  drafts,  bills  of  exchange, 
promissory  notes  and  commercial  paper,  either  made  and  drawn, 
or  accepted  or  indorsed  by  said  Gibson,  and  it  has  been  agreed 
that  these  presents  shall  be  executed  to  indemnify  and  secure  the 
said  party  of  the  second  part  on  account  of  any  such  loans,  ad- 
vances or  discounts :  Now  therefore  the  condition  of  these  pres- 
ents is  expressly  this :  that  if  the  said  Charles  D.  Gibson,  his  heirs, 
&c.,  shall  and  do  well  and  truly  pay,  retire  and  take  up  at  matur- 
ity any  and  all  such  drafts,  bills  of  exchange,  promissory  notes  or 
commercial  paper,  as  maij  he  discounted  or  advanced  upon  by  the 
said  party  of  the  second  part,  for  or  to  the  said  Gibson,  and  shall 
well  and  truly  pay  at  maturity  all  and  every  such  loans,  discounts 
or  advances,  as  above  recited,  and  shall  well  and  truly  indemnify 
pay  and  save  harmless  the  said  party  of  the  second  part  from  and 
against  all  loss,  costs,  damages,  expenses  and  interests  by  reason 
thereof,  then  these  presents  sluill  cease  and  be  null  and  void."  But 
in  case  of  the  non-fulfilment  of  the  above  conditions,  then  the 
party  of  the  second  part  was  authorized  to  sell  the  mortgaged  prem- 
ises and  to  make  and  execute  to  the  purchaser  a  deed  therefor. 


>.l..  .    III.]  i;i»|{|.\S()N     /•.     WILLIAMS.  "ii') 

Till'  niort<?a^i-  u;i>  iliily  <ukii()\vk'(l;,M'(l  on  llio  2olh  of  October, 
1S.")I,  and  rci-onlod  on  that  day  in  tlu'  clerk's  odico  of  Erie  County. 
On  the  1st  of  Oeceniber,  IS,')."),  the  deremlant  (iil)son  drew  his  hill 
of  exchan^'e  on  one  (Jri'cnleaf.  at  Boston,  wherchy  he  rccjuested 
.lid  (Ircrnleaf  to  ])ay  lo  his  own  order  the  sum  of  $2500,  sixty  (lays 
iroin  the  date  thereof;  and  hei'ore  said  hill  hceanio  duo  and  pay- 
;il»le  (iihson  indorsed  the  same  to  the  llollisti-r  liank,  which,  on  the 
faith  and  security  of  said  hill  and  said  niort<^a;,'e,  discounted  the 
-an»e  and  advami'd  to  said  (iihson  the  amount  thereof.  This  bill 
was  protested  at  maturity,  and  no  part  thereof  has  ever  been  paid. 
'  In  the  ?iMh  of  Oecemher,  IS.'),"),  (iihson  drew  another  bill  of  ex- 
lian>:e  on  (ireeiiK'af  at  sixty  days  from  date,  whereby  he  requested 
him  to  ])ay  to  his   ((iih.son's)   ordi-r,  the  sum  of  $1800. 

Hefore  this  hill  became  due.  (iihson  indorsed  it  to  the  IloUister 
I'ank,  which  discounted  it  and  advanced  to  him  the  amount  there- 
I'.  on  the  faith  of  said  hill  and  the  niortu'a^je.      This  bill  was  also 
i'otested  at  maturity,  and  no  i)art  thereof  has  been  jiaid. 
The  complaint  set  up  that  the  defendant  Williams,  among  others, 
» laimed  some  interest  in  the  morttra^red  ])remises.  and  prayed  the 
\isual  jud<:ment  of  foreclosure  and  sale,  and  that  said  defendant, 
nd  all  others  claiminir  intc^rests  therein  subsequent  to  that  of  the 
ilollister  Bank.  mij,dit  be  barred  and   foreclosed.     The  defendant 
Williams  set  uj)  and  proved  that,  on  the  20th  of  January,  ISot), 
the  Sackett's  Harbor  Bank  (whose  name  was  subsefjuently  changed, 
by  an  act  of  the  legislature,  to  that  of  the  Reciprocity  Bank),  re- 
««nered    a    judgnuMit    against    said    Gibson    to    the    amount    of 
•"*!2T0S.20;  that  a  transcri])t  thereof  was  duly  docketed  in  the  clerk's 
"tfice  of  Erie  County  on  that  day;  that  said  Gibson  was  then  the 
owner  of  said  mortgaged  jjremises;  and  Williams  insisted  that  saiil 
Jiulgment  was  a  lien  on  said  ])remises,  and  jirior  to  that  of  the 
Mortgage.     Neither  of  said  bills  of  exchange  were  due  at  the  dale 
I'  the  recovery  of  said  judgment.     The  Superior  Court  of  BufTaln. 
it  special  term,  gave  judgment  in   favor  of  the  ))laintitr,  and  de- 
lared  Said  mortgage  lo  be  a  prior  lii-n  to  said  judgment.     On  ap- 
;<al,  the  same  was  allirnu'd  at  general  term,  and  from  that  judg- 
ment the  defendant  Williams  appealed  to  this  court. 

1)avie,s,  J.  Th(>r(>  can  be  no  doubt  that,  as  between  the  original 
parties  to  this  mortgage,  the  v.ilidily  of  it,  as  a  j)ledge  of  the  mort- 
gaged prenuses  to  .secure  the  amouid  of  these  two  drafts,  could  not 
1k'  (piestioned.  It  was  clearly  the  intent  of  the  ])arties  that  the 
lands  described  should  stand  as  security  f<>r  all  advances  and  dis- 
'ounts  made  by  the  Ilollister  Bank  to  (iihson.  If,  therefore,  th(>re 
\vere  no  legal  mortgage,  tlu're  was,  undeniably,  an  eq\iitable  one. 
«liieh  a  court  of  eipiily  would  enforce  against  the  original  parties 
lo  it,  and  all  other-;  not  in  the  condifion  of  ttoiui  fide  purcha-er-  <>r 


276  THE    OBLIGATIOX    SECURED.  [CHAP.  III. 

subsequent  incumbrancers  without  notice.  The  advances  made  t<> 
Gibson  were  before  the  recovery  of  the  Eeciprocity  Bank's  judg- 
ment. As  soon  as  the  advances  were  made,  they  were  embraced 
in  and  secured  by  the  mortgage.  That  judgments  and  mortgage- 
may  be  taken  to  secure  future  advances,  though  no  present  in- 
debtedness was  subsisting  at  the  time  of  their  execution  or  rendi- 
tion, has  long  been  well  settled  (Conard  v.  The  Atlantic  Ins.  Co.. 
1  Peters,  38G;  Leech  v.  Cameron,  3  Simm.  488;  Iluhhard  v.  Savage. 
8  Conn.  215 ;  Walker  v.  Snedil-er,  1  Hoff.  Ch.  145 ;  Com.  Bank  v. 
Cunningham,  24  Pick.  270;  Monell  v.  Smith  &  Jenkins,  5  Cow. 
441;  Lyle  v.  Ducomh,  5  Bin.  585;  4  Kent's  Com.  175;  Lansing  v. 
Woodworth,  1  Sand.  Ch.  43;  Barry  v.  Merchants'  Ex.  Co.,  1  id. 
314;  United  States  v.  Hooe,  3  Cranch,  73;  Livingston  £•  Tracy  v. 
Mclnlay,  16  Johns.  165;  Truscott  v.  King,  2  Seld.  147). 

In  Conard  v.  The  Atlantic  Insurance  Company  (supra),  a  mort- 
gage Avas  given  to  secure  a  debt  upon  a  respondentia  bond,  and  it 
Avas  said  that  the  debt  was  of  too  contingent  a  nature  to  uphold  a 
mortgage  as  collateral  security  for  the  payment  of  it.  Story,  J., 
at  page  448,  says :  "  We  know  of  no  principle  or  decision  that  jus- 
tifies such  a  conclusion.  Mortgages  may  as  well  be  given  to  secure 
future  advances  and  contingent  debts  as  those  which  already  exist 
and  are  certain  and  due." 

The  case  of  Ilooe  v.  United  States  (supra),  is,  in  some  respects, 
not  unlike  the  present.  There,  one  Fitzgerald  conveyed  property 
in  trust  to  W.  &  J.  C.  Herbert,  to  indemnify  Hooc  for  all  indorse- 
ments or  liabilities  he  might  incur  on  behalf  of  Fitzgerald;  and  if 
Fitzgerald  should  pay  and  discharge  all  such  liabilities,  the  trustee^ 
were  to  reconvey  the  property  to  him ;  but  if  Hooe  should  pay  any 
such  liabilities  on  account  of  Fitzgerald,  then,  on  demand  of  llooe, 
the  trustees  were  to  sell  the  trust  property,  and  pay  and  satisfy  the 
amount  demanded  by  Hooe.  Hooe  became  liable  to  pay  several 
notes  of  Fitzgerald,  indorsed  by  him,  and  on  Fitzgerald's  death  he 
was  largely  in  arrear  to  the  United  States,  and  they  claimed  u 
])reference  over  all  other  creditors,  under  the  laws  thereof,  and  that 
such  lien  was  superior  to  that  created  by  the  trust  deed  for  tlv" 
benefit  of  Hooe,  and  that  it  was  fraudulent  as  to  the  United 
States.  It  will  be  observed  that,  in  this  case,  no  sum  certain,  for 
which  the  property  was  held  in  trust,  was  mentioned  in  the  deed. 
Marshall,  Ch.  J.,  in  delivering  the  opinion  of  the  court,  says  (p. 
88)  :  "That  the  property  stood  bound  for  future  advances  is,  in 
itself,  unexceptionable.  It  may,  indeed,  be  converted  to  improper 
purposes,  but  it  is  not  positively  inadmissible.  It  is  frequent  for 
a  person  who  expects  to  become  more  considerably  indebted  to 
mortgage  property  to  his  creditors  as  a  security  for  debts  to  be  con- 
tracted, as  well  as  that  which  is  already  due.     All  the  covenants  in 


bKr.   III.]  HOniN'SON    /•.    WILLIAMS,  277 

this  dtrd  aj){H'ar  to  tho  court   to  Im-  fair,  lt';^'itiiiiat(',  aixl  (•(»nsi>tcnt 
w  itli  t()inmt)ii  usa^a'," 

It  is  j)resso(l  upon  us  that  this  mortgage  is  invalid,  bccaufte  no 
.-uiu  certain  is  mentioned  therein.     There  might  he  some  force  in 
the  argument   if  the  Hecii)rocity  Bank  stood  in  the  position  of  a 
Mihsequeiit   i)Ur(haser  or  inc\iml>rancer  in  good   faith,  although   it 
will  he  allemi)ted  to  he  shown  that  the  mortgag<>  would  he  good  as 
gainst  the  bank,  even  if  such  were  its  position.     That  question 
\v  ill  be  considered  hereafter.     The  Supreme  Court  of  this  State, 
in  the  case  of  MoncU  v.  Sinilli,  siijini.  held  that  a  surety,  wlio  held  a 
liitnd  and  warrant  of  attorney,  conditioned  to  ])av  all  notes  thereto- 
fore or  thereafter  to  be  indorsed,  and  to  indemnify  him  against 
-ucli  indorsements,  might"  enter  up  judgment  and  issue  execution 
liiereon  for  the  sum  for  which  he  was  actually  liable,  although  the 
li'tiid  was  not  for  a  sjM'cified  sum.     That  a  bond    and    warrant    of 
itorney  might  be  taken  hy  a  surety,  to  secure  him  against  future 
abilities  to  be  incurred  by  him,  the  court  say,  is  warranted  by  the 
■ises  cited  and  considered  by  the  hite  Chancellor  in  Roosevelt  v. 
Marl-,  G  Johns.  Ch.  200,  279-285.     The  court  add,  "'the  only  rpies- 
lion  is,  whether  the  same  cour.se  may  be  pursued  where  the  bond 
•lates  in  general  terms  to  liabilities  as  surety  or  indorser,  past  and 
iiospective,  without  mentioning  a  sum  certain;  and  we  think  it 
may.     It  is  true,  the  sun.  does  not  appear  on  the  face  of  the  bond ; 
and  there  is  no  doul)t  that,  in  an  action  on  such  bond,  breaches 
mu.st  be  assigned.     It  would  be  the  same,  however,  we  think,  as  to  a 
I'ond  conditioned  to  pay  specified  sums  to  third  ])ersons.     The  ccr- 
lainty  is  the  same  in  both  cases.     In  both,  wc  may  be  obliged  to 
look  beyond  the  face  of  the  bond  to  see  what  is  due.     In  a  techni- 
d  sense,  that  is  certain  which  may  be  made  certain.     W'v  all  know 
'le  objects  of  the  parties  to  the.-e  instruments.     It    i<,  to  alTonl 
the  most  prompt  indemnity." 

In  Shiras  v.  Caig.  7  Cranch,  31,  the  .subject   under  considfra- 
lion  .seems  to  have  elicited  a  very  full  examination;  and   it   was 
•'lere  held,  that  it  was  not  necessary  to  the  validity  of  a  mortgage 
'lat   it  should  truly  state  the  debt  it  is  intended  to  secure,  but  it 
iiall  stand  as  a  security  for  the  real,  equitable  claims  of  (he  mort- 
.igees,  whether  they  existecl  at   the  (Lite  of  the  mortgage  or  arose 
fterwards  u|)on  the  faith  of  the  mortgage,  before  notice  of  the  de- 
fendant's c(|uity.     Chief  Justice  >rarsh'all,  in  delivering  the  opin- 
ion of  the  court,  at  page  50,  says:  "  It  is  true  that  the  real  trans- 
etion  does  not  appear  on  the  face  of  the  mortgage.     The  (hvd 
purports  to  secure  a  debt   of  £30.000.  due  to  all  th(>  mortgag.vs. 
It  was  really  intended  to  secure  different  sums,  due  at  the  time  to 
irticular  mortgagees,  advances  afterwards  in  be  nunh'  and  liabili- 
ty t,,  l„.  incurred  to  an  uncertain  amount.      It  is  not  denied  that 


278  THE    OBLIGATIOK    f^ECURED.  [CIIAI-.  III. 

a  deed  which  misre})reseiits  the  tnmsaetioii  it  recites,  and  tlie  con- 
sideration on  which  it  is  executed,  is  liable  to  suspicion.  It  must 
sustain  a  rigorous  examination.  It  is  certainly  always  advisable 
fairly  and  plainly  to  state  the  truth.  But  if,  upon  investigation, 
the  real  transaction  shall  appear  to  be  fair,  though  somewhat 
variant  from  that  which  is  described,  it  would  seem  to  be  unjust 
and  unprecedented  to  deprive  the  person  claiming  under  the  deed 
of  his  real,  equitable  rights,  unless  it  be  in  favor  of  a  person  who 
has  been  in  fact  injured  and  deceived  by  the  misrepresentation." 
These  principles,  and  the  cases  upon  which  they  rest,  have  lately 
been  emphatically  affirmed  by  the  Supreme  Court  of  the  United 
States,  in  Lawrence  v.  Tucher,  23  How.  14. 

I  arrive,  therefore,  to  the  conclusion,  that  this  is  a  valid  mort- 
gage as  between  the  parties  to  it,  and  that  the  mortgagee  was  s«^- 
cured  thereby  the  amount  of  the  advances  upon  the  two  drafts 
mentioned  in  the  complaint,  although  no  sum  certain  was  men- 
tioned on  the  face  of  the  mortgage.  These  advances  were  made 
prior  to  the  recovery  of  the  judgment  of  the  Reciprocity  Bank,  anrl 
prior,  therefore,  to  any  equities  of  that  bank.  It  follows,  there- 
fore, they  were  made  prior  to  any  notice  to  the  Hollister  Bank  of 
any  such  equities.  No  notice  could  be  given  of  that  which  had  not 
an  existence.  It  is  established  then,  it  is  submitted,  that,  at  the 
date  of  the  recovery  of  the  judgment  Ijy  the  Reciprocity  Bank 
against  Gibson,  the  Hollister  Bank  had  a  good  legal,  and  certainly 
equitable,  mortgage  upon  the  premises,  to  secure  the  amount  of 
the  two  drafts  already  referred  to.  Was  that  judgment  a  prior 
lien  to  the  mortgage?  The  judgment  became  a  lien;  at  the  time- 
it  was  docketed,  upon  the  interest  of  the  defendant  therein  in  all 
lands  in  the  county  of  Erie  (2  R.  S.  359).  In  equity,  the  land  was 
undeniably  bound  to  pay  off  the  amount  of  these  two  drafts.  The 
law  is  well  settled,  that  the  equitable  mortgagee  is  entitled  to  a 
preference  over  subsequent  judgment  creditors  {Matter  of  Howe. 
1  Paige,  129,  and  the  cases  there  cited;  Willard's  Eq.  Jur.,  441,. 
442 ;  Rod-well  v.  Hohhy,  2  Sand.  Ch.  9 ;  Hilliard  on  Mortg.,  Vol.  [.. 
451).  If  this  mortgage  is  to  be  regarded  simply  as  an  equitable 
mortgage,  there  can  be  no  question  that,  in  accordance  with  well- 
settled  rules  of  law  and  a  uniform  current  of  decision,  it  is  a  valid 
security,  and  is  entitled  to  priority  over  the  subsequent  judgment 
of  the  Reciprocity  Bank. 

But,  I  think,  i!  that  bank  had  i)een  a  purchaser  on  the  day  of 
the  recovering  of  its  judgment,  or  an  incumbrancer  by  way  of  mort- 
gage for  money  then  advanced,  the  mortgage  of  the  Hollister  Bank 
AV'ould  equally  have  been  entitled  to  priority.  The  recording  of  tlie 
mortgage  was  notice  that  the  Hollister  Bank  harl  a  mortgage  on  tlie 
premises  for  the  purposes  therein  specified.     There  was  enough  to 


si;c.   111. J  KOIJINSON     C.    WILLIAMS.  279 

have  put  a  bona  fide  jmrchascr  or  iiKuinbraiurr  uj)on  iiKjuiry;  and 
ail  aj)j)lk'ation  to  the  Ilollistcr  Bank  would  have  disclosi-J  the  sum 
ti'iMain  for  which  tlu'  si-curity  was  hcUl.  As  was  said  l)y  tlic  Sii- 
pri'iiu'  Court  in  MuiuU  v.  Smith,  supra,  "  \\v  niay  he  ohlif^cd  to  look 
l»oyond  the  face  of  tiie  bond  to  see  what  is  due.  in  a  technical 
sense,  that  is  certain  whicli  may  l)e  made  certain."  Tlie  precise 
sum  for  whicii  the  mort<;a<,'e  was  held  as  security  mi<;ht,  at  any 
time,  readily  and  with  certainty,  have  heen  asci-rtaincd,  and  a  bond 
fide  purchaser  or  incumhraiicer,  with  the  notice  which  the  record 
of  this  mort^afje  furnished  him.  if  he  liad  omitted  to  make  the 
incpiiry  whicli  it  indicated,  coulil  hardly  have  claimed  to  liavo  heen 
a  bona  fide  jnirchaser  or  incumhrancer.  The  authorities  bearing: 
(»n  this  question  of  notice  are  fully  reviewed  in  the  case  of  Williani- 
snn  V.  Brown,  15  N.  Y.  351,  and  the  result  of  them  stated  as  fol- 
lows: "  The  true  doctrine  on  this  subject  is,  that  where  a  purchaser 
has  knowledge  of  any  fact  sullicient  to  ])ut  him  on  inquiry  as  to  the 
existence  of  some  ri;,dit  or  title  in  coullict  with  that  he  is  about  to 
purchase,  he  is  presumed  either  to  have  made  the  inquiry  and  ascer- 
tained the  extent  of  such  ])rior  right,  or  to  have  been  guilty  of  a 
<legree  of  negligence  e(|ually  fatal  to  his  claim  to  be  considered  as 
a  bona  fide  ])urfha.'^er."  But  we  are  not  without  direct  authority 
•  •n  the  point  now  under  consideration.  The  case  of  Kramer  v.  Thr 
l^ustees,  d-c,  t)f  the  Farmers'  Hank  of  Stcubenville.  15  Ohio,  253. 
is  of  this  character.  The  ([uestion  there  was,  originally,  whether 
mortgages  given  to  one  Doyle,  in  May,  1840,  were  to  have  priority 
over  those  given  to  one  McDowell,  which,  though  dated  prior  to 
Doyle's  mortgage,  were  not  recorded  until  30th  September,  1842. 
The  mortgage  to  Doyle  specified  no  sum  in  it.  but  the  condition 
was,  "  that,  whereas  the  said  Alexander  Doyle  had  theretofore  in- 
dorsed j)aper  of  the  said  Wells,  Henry  &  Co.  (the  mortgagors),  and 
had  also  promised  to  make  further  indorsements,  it  was  provided 
lliat  if  the  said  Wi-lls,  Henry  &  Co.  should  indemnify  and  save 
harmless  the  said  Doyle,  then  the  said  deed  was  to  be  void,"  &c. 
Doyle  alleged  that,  relying  on  this  indemnity,  he  had  continued  to 
indorse  for  the  mortgagors,  and  claimed  that  his  mortgage  was  a 
prior  lien  to  that  of  McDowell  and  of  tlie  judgment  creditors.  The 
court  sustained  Doyle's  claim,  and  directed  a  sale  of  the  property 
mortgaged,  and  that  he  be  paid  the  amount  of  jiis  liabilities. 
Kramer  and  others,  judgment  creditors,  filed  a  bill  of  review,  claim- 
ing that  the  court  had  erred  in  giving  validity  and  priority  to 
Doyle's  mortgage,  .\mong  other  things  they  alleged  that  Doyle's 
niortgages  were  not  good  and  valid  as  against  the  complainants, 
l>ecau.se  they  were  void  for  uncertainty,  and  it  could  not  Im'  ascer- 
tained how  or  when  the  same  became  forfeite»l.  or  lunv  the  same 
could  or  would  be  satisfied.      In  the  opinion,  at  page  '.?()<».  the  court 


•^80  THE    OBLIGATIOX    SECURED,  [CHAP.  III. 

say,  "Doyle  had  a  right  to  ask  indemnity,  and  the  mortgagors  had 
a  right  to  give  it.     It  was  done  by  way  of  mortgage;  and  although 
these  mortgages  were  intended  to  cover  subsequent  as  well  as  pre- 
vious liabilities,  they  could  not,  on  this  account,  be  objectionable  j 
■iis  between  the  parties.     If,  during  the  existence  of  these  mort- 
gages, a  third  person  had  recovered  a  judgment  against  the  mort- 
gagors, the  lien  of  such  judgment  might,  and  probably  would,  have] 
been  preferred  to  the  lien  of  the  mortgagees  for  liabilities  subse- 
([ueutly  incurred  by  Doyle.     But  these  complainants  are  not  inj 
that  situation.     The  liabilities  of  Doyle  had  been  fixed  before  the] 
rendition  of  their  judgment.     It  is  not  perceived  that  there  would 
be  any  difficulty  in  ascertaining  when  the  condition  of  the  deeds 
was  broken  and  the  mortgage  forfeited,  nor  as  to  the  manner  in 
which  they  could  be  satisfied.     A  similar  rule  may  be  deduced  from] 
the  following  cases  in  Connecticut:    Merrills  v.  Sivift,  18  Conn.j 
366;  Lewis  v.  De  Forest,  20  id.  442;  Ketchum  v.  Jauncey,  23  id. 
327. 

In  any  aspect  in  which  this  case  may  be  regarded,  we  think  itj 
free  from  doubt,  and  that  the  judgment  appealed  from  should  be] 
<iffirmed,  with  costs. 


All  the  judges  concurring, 


Judgment  affirmed. 


YOUXGS  V.  WILSOX. 

Court  of  Appeals  of  New  York,  1863. 

(27  N.  Y.  351.) 

Appeal  from  the  Supreme  Court.  Action  to  foreclose  a  mort- 
gage. The  complaint  set  forth  a  bond,  executed  by  Moses  W. 
Eastman  to  George  Youngs  and  Abel  Hunt,  bearing  date  June  4, 
1 849,  in  the  penal  sum  of  two  thousand  four  hundred  dollars,  with 
a  condition  similar  to  that  of  the  mortgage  next  mentioned. 

It  also  set  forth  a  mortgage,  bearing  the  same  date  and  between 
the  same  parties,  by  which  Eastman  conveyed  to  Youngs  and  Hunt 
certain  lands  in  Yates  County,  which  Avere  particularly  described, 
wliicli  conveyance  was  made  subject  to  the  following  condition,  viz. : 
"  That  if  the  said  Moses  "\V.  Eastman  shall  well  and  truly  pay,  and 
save  harmless,  and  indemnify  the  said  George  Youngs  and  Abel 
Hunt,  and  each  of  them,  of  and  from  all  liabilities  which  they,  or 
cither  of  them,  may  liave  at  any  time  heretofore  contracted  to  and 
for  the  said  Moses  W.  Eastman,  either  as  surety,  indorsers  or 
guarantors,  or  otherwise,  wliether  now  due  or  yet  to  grow  due,  and 
shall  save  harmless  the  said  George  Youngs  and  Abel  Hunt,  and 


>,Kr.  111.]  YOLNCiS    c.    ull,Mi\.  '^S[ 

nil  of  llioiii,  of  and  from  all  dania^it-.  (•o>i-  aiul  char;^('>  on  a.- 
niiiii  of  llu'  >anu',"'  llu-n  tin-  convcvanir  was  to  cease;  hut  in  case 
•default  should  hi-  made  in  the  |»aynu'nt  of  all  or  any  jjart  of  the 
aid  liahilities.  as  the  same  should  heeome  due,"  the  lands  were  to 
l.e  sold  and  the  amount  due,  with  costs  and  charfjes,  to  be  dc- 
duelfd  from  tin-  jtroeecds,  and  the  surplus,  if  any,  i)ai<l  to  the  mort- 
i:a-:or. 

The  eomidaint  also  staled,  that  the  mort^'afro  was  duly  recorded 
111  the  clerk's  ollice  of  Yates  County,  on  the  day  of  its  date;  that 
Vounj:s  had  paid  debts  of  Eastman,  on  which  he  was  liable  as  surety 
or  indorser,  at  the  time  when  the  mort;:a;:e  was  executed,  wliich 
amounted  to  .$7'M.(il  [of  which  a  particular  account  was  piven]  ; 
and  that  the  estate  of  Hunt  remained  liable  on  a  note  jriven  by 
Eastman  to  one  Owens,  on  the  '2\{\\  day  of  T)eceml)er,  ISIG,  for 
$?(;;?.  on  which  said  Hunt  was  indorser,  which,  with  interest,  still 
remained  un))aid  ;  that  tlie  mort.Lra^'ed  premises  had  been  conveyed 
to  tlie  defendant,  James  Miles,  who.  with  the  other  defendants, 
■  lainied  some  interest  in  the  prcmi.ses,  which  interest  had  accrued 
subseqm^nt  to  the  lien  of  the  mort<;afro.  There  was  the  u.sual 
praver  for  a  foreclosure,  and  a  sale  of  the  mort,<ra<;ed  premises, 
and  i»ayment  of  the  plaintilTs'  demands  and  costs  out  of  the  pro- 
ceeds. 

The  usual  jud;.nnent  of  foreclosure  for  the  sale  of  the  mort- 
;iap:ed  premises,  and  the  payment,  out  of  the  jiroceeds  of  the  sale, 
<»f  the  costs  and  expenses,  and  the  amounts  found  due  to  the  sev- 
(  ral  plaintifTs,  was  entered  at  a  special  term;  from  which  judgment 
Lewis  O.  Wilson,  only,  appealed  to  the  Supreme  Court  at  fjeneral 
term.  On  the  hearing  of  that  appeal,  the  judtrment  at  the  special 
term  was  reversed,  and  the  com|)laint  dismi-sed,  as  r.jrainst  the 
ajijiellant,  with  costs,  on  the  f^round  that  the  mortgafre  was  fraudu- 
lent and  void,  as  against  creditors  of  the  mortfrafjor,  for  uncertainty 
in  respect  to  the  debt  or  debts  it  was  intended  to  secure. 

From  that  jud<:ment  the  plaintiffs  brought  the  present  appeal. 
\fter  the  bringing  of  such  appeal  both  the  ajipellants  died,  and 
he  ])ersonal  rejiresentatives  of  the  ai)j)ellant  Youngs  were  sidjsti- 
lutod  in  his  place.  There  ha<l  been  no  substitution  ns  to  the  execu- 
tors of  Abel  Hunt,  and  it  was  assumed,  on  the  argiiment,  that  as 
to  them  the  a])jM'al  was  at  an  en<l. 

Si;i,ni:N-,  .T.  I  cannot  concur  with  the  court  below  in  the  opin- 
ion that  tlu'  mortgage  in  question  was  void  as  against  creditors 
"r  pureha.sers.  There  is  no  ])retence,  and  could  be  none,  that  it 
was  not  valid  between  the  j)arties  to  it.  It  described  the  debts 
*hic1i  it  was  intended  to  secure,  with  such  certainty  that  IhtTC 
could  be  no  dilTiciilty  in  detcM-mining  what  debts  were,  and  what 
were  not,  embraced  in  the  description.     In  such  cases,  the  ma.\im, 


283  THE    OBLIGATION    SECURED.  [cilAl'.  III. 

that  that  is  certain  which  may  be  made  certain,  applies.  It  is 
not  requisite  that  the  condition  should  be  so  completely  certain  as 
to  preclude  the  necessity  of  extraneous  inquiry  (Moncll  v.  Smitli, 
5  Gov/.  441;  Bohinson  v.  Williams,  22  jST.  Y.  380;  Stoughton  v. 
Pasco,  5  Conn.  442;  Merrills  v.  Swift,  18  id.  257;  United  States 
V.  Hooe,  3  Cranch,  73;  Kramer  v.  The  Farmers'  and  Mechanics'' 
Bank,  15  Ohio,  253). 

The  mortgage  having  been  duly  recorded,  if  not  fraudulent  in 
fact,  was  as  effectual  against  subsequent  creditors  and  purchasers 
as  it  was  against  the  mortgagor.  If  it  was  sufficiently  certain 
to  be  valid  against  the  party  who  made  it,  it  was  equally  certain 
and  valid  against  all  persons  claiming  under  him.  If  valid  be- 
tween the  parties  it  was  a  mortgage,  and  as  it  was  duly  recorded, 
it  was  not  within  the  provision  of  the  statute  which  declares  void, 
as  against  subsequent  purchasers,  unrecorded  conveyances.  The 
only  statute  bearing  upon  the  question  is  the  following: 

"  Every  conveyance  of  real  e?tate  within  this  State,  hereafter 
made,  shall  be  recorded  in  the  office  of  the  clerk  of  the  county 
Avhere  such  real  estate  shall  be  situated;  and  every  such  convey- 
ance not  so  recorded  shall  be  void,  as  against  any  subsequent  pur- 
chaser in  good  faith  and  for  a  valuable  consideration  of  the  same 
real  estate,  or  any  portion  thereof,  whose  conveyance  shall  be  first 
duly  recorded."  I  can  discover  nothing  in  this  statute  to  justify 
the  distinction  between  certainty  as  against  the  party,  and  cer- 
tainty as  against  subsequent  creditors  or  purchasers,  which  forms 
the  basis  of  the  judgment  of  the  court  below.  If  the-  instrument 
was  certain  enough  to  amount  to  a  conveyance,  it  was  a  recorded 
conveyance,  and  valid  as  such. 

A  purchaser,  with  notice  of  any  outstanding  equity  against  his 
vendor,  takes  the  place  of  such  vendor  and  acquires  his  rights 
only  (Frost  v.  Beekman,  1  Johns.  Ch.  301 ;  3  Sugden  on  "Vendors 
and  Purchasers,"  440)  ;  and  notice  of  circumstances  sufficient  to 
put  a  party  upon  inquiry,  has  the  same  effect  as  actual  notice  of  the 
facts  which  could  be  learned  on  reasonable  inquiry  (3  Sugden,  468; 
Dunham  v.  Dey,  15  Johns.  569;  Peters  v.  Goodrich,  3  Conn.  150; 
Williamson  v.  Brown,  15  N.  Y.  359).  The  registry  of  the  mort- 
gage was  equivalent  to  actiial  notice  of  its  existence  and  contents, 
and  the  purchaser,  with  such  notice,  is  bound  by  all  the  equities 
which  the  holder  of  the  mortgage  had  against  the  mortgagor,  whoso 
place  he  takes  {Stoughton  v.  Pasco,  5  Conn.  442,  447).  The  con- 
dition of  the  purchaser  in  the  present  ease  is  precisely  the  same 
as  it  would  have  been  at  common  law,  if  he  had  purchased  with 
actual  notice  of  the  prior  mortgage.  In  that  case  it  cannot  be 
doubted  that  he  would  have  taken  subject  to  the  mortgage,  if  it 
Avas  valid  against  the  mortgagor. 


n.c.  III.]  YOL'NOS    I'.    WILSON.  283 

Tlu'  rule  iul<ipt('il  in  ConuL'iticul,  in  Ilnrl  v.  Chalkrr,  \l  Conn. 
77,  on  wliirli  the  court  Ix'iow  |)liU'('(l  niucli  rdianc*',  is,  tliat  "  wln-rt 
11  niort^M^'o  is  given  to  sceurr  an  ast-crtaini'd  (k'l)t,  the  amount  of 
tho  (li'bt  ought  to  be  stated."  I  am  not  disposed  to  ([uestion  the 
wisdom  of  this  rule,  althougli  it  wouhl  sometimes  l)e  inconvenient 
and  do  injustice,  and  its  propriety  is  not  free  from  doubt  (see  5 
Conn.  -140)  ;  but  1  cannot  deduce  it  from  our  statuti',  whicli  merely 
l)rovides  that  conveyances  not  recorded  shall  be  void  against  pur- 
chasers. The  mortgage  of  Kastman  was  valid  between  tiie  par- 
tics;  it  was  a  conveyance,  and  it  was  recorded,  and  therefore  was 
not  made  void  by  the  statute. 

It  is  only  with  reference  to  the  (piestion  of  an  actual  intention 
to  defraud  creditors,  that  the  indefinite  description  of  the  debts 
intended  to  be  secured  by  the  mortgage  could  be  material.  What 
intlucncc  such  indefiniteness  might  have  in  that  respect,  we  are  not 
called  upr.n  to  determine.  There  is  no  allegation  in  the  answer 
which  could  raise  that  question,  and  if  there  had  been,  we  could  not 
notice  it,  in  the  absence  of  any  finding  by  the  court  brbtw  upon 
the  question  of  fact  {Grant  v.  Mar^e.  2'1  X.  Y.  3'M).  I  am,  there- 
fore, of  opinion  that  the  court  Ix'low  erred  in  declaring  the  mort- 
gage void,  as  against  Wilson. 

Upon  the  other  questions  ])resented  i)y  the  case,  so  far  as  they 
related  to  the  rights  of  George  Youngs  (and  to  that  extent  only 
are  they  now  before  the  court),  I  entertain  no  doubt  that  they  were 
correctly  decided  by  the  special  term.  The  judgnu-nt  of  the  gen- 
eral term  should,  therefore,  be  reversed,  and  that  of  the  special 
term  aflirmed,  as  to  the  relief  granted  by  that  judgment  to  George 
Youngs. 

There  are  no  ajipellants  here  repri'senling  the  estate  of  .Mk'I 
Hunt,  and  the  judgment  dismissing  the  complaint  as  against  the 
executors  of  that  estate,  will  not  be  affected  i)y  the  judgment  of  this 
court.  The  propriety  of  bringing  on  the  argument  of  the  appeal, 
without  the  presence  of  parti(>s  rej)resenting  that  estate,  is  very 
questionable,  but  as  neither  of  the  parties  before  the  court  inter- 
posed any  objection  on  that  account,  the  drfccl  in  flic  i<ro(f.diii'_'<. 
if  it  be  one,  has  not  been  regarded. 

^f.VRViN',  J.  The  judgnu'nt  of  the  special  tcnn.  in  lavor  ut  the 
plaintifTs,  was  reversed  by  the  general  term,  upon  the  sole  ground 
that  the  mortgage  was  fraudulent  aiul  void  as  to  sidtseqtu'iit  credi- 
tors, on  the  ground  of  vagueness  and  uncertainty  in  respect  to  the 
debts  it  was  intended  to  secure. 

It  is  conceded  that  a  mortgage  given  to  secure  future  contin- 
gent liabilities  juay  be  valid,  but  the  position  is,  that,  in  case  the 
debt  exists  or  the  liability  has  been  incurred  at  the  time  the  mort- 
i-'age  is  executed,  it  nnist  be  truly  stated,  so  as  to  enable  creditors. 


284  THE    OBLTGATIOX    SECURED.  [CIIAP.  III. 

upon  examining  the  record  of  the  mortgiige,  to  ascertain  the 
amount  of  the  debt  or  the  nature  and  character  of  the  liability 
assumed. 

The  validity  of  the  mortgage  is  not  questioned  upon  the  ground 
that  there  was,  in  fact,  no  valid  consideration  between  the  parties 
to  it.  In  my  opinion,  the  court  erred  in  reversing  the  judgment. 
There  was  a  good  and  sufficient  consideration  for  the  mortgage. 
The  consideration  expressed  was  $2400  money;  but  this  was  not 
the  true  consideration.  It  has  long  and  often  been  held,  in  this 
State,  tliat  the  real  consideration  of  mortgages  or  deeds  may  be 
shown  by  parol,  thougli  different  from  that  expressed  in  the  in- 
strument; and  tliis  court,  in  McKinster  v.  Bahcock,  26  N.  Y.  378, 
aj^plied  the  rule  to  a  chattel  mortgage,  in  which  the  consideration 
expressed  was  money,  when,  in  truth,  the  real  consideration  was  the 
indorsement  of  the  note  of  the  mortgagor,  and  the  mortgage  was 
given  by  way  of  security.  This  court  sustained  the  mortgage, 
the  referee  having  found  as  a  fact  tliat  it  was  executed  in  good 
faitli,  and  not  with  intent  to  hinder,  delay  or  defraud  creditors. 
So  in  this  ca.se,  tlie  parol  evidence  upon  the  trial  showed  what  the 
consideration  actually  was,  and  it  was  sufficient,  viz.,  liabilities 
assumed  by  the  mortgagee  for  the  mortgagor,  and  the  amount 
Avhich  had  been  paid  of  such  liabilities.  It  may  be  said  in  this 
case,  as  was  said  in  the  case  just  referred  to,  and  also  in  Shiras  v. 
Caig,  7  Cranch,  34,  by  Chief  Justice  Marsliall,  in  which  the  real 
transaction  did  not  appear  on  the  face  of  the  mortgage,  that  such 
cases  are  liable  to  suspicion ;  that  they  must  sustain  a  rigorous 
examination,  and  that  it  is  always  advisable  fairly  and  plainly  to 
state  the  truth.  And  in  this  case,  I  will  say  that  it  would  have  been 
far  better  to  have  specified  the  liabilities  assumed,  so  that  the  credi- 
tors of  the  mortgagor  or  others  interested  M'ould  be  able  more 
readily  to  examine  into  the  facts,  and  ascertain  whether  they  were 
true  or  fictitious.  But,  if  the  consideration  is  actually  valid  and 
sufficient,  and  it  is  found  as  a  fact,  upon  sufficient  evidence,  that 
the  instrument  was  not  executed  with  intent  to  hinder,  delay  or 
defraud  creditors,  the  court  cannot  declare  the  instrument  void,  as 
to  creditors,  upon  the  ground  that  the  consideration,  as  expressed, 
is  vague  and  uncertain.  (See  liohinson  v.  Williams,  22  N.  Y.  380, 
in  which  many  of  the  ca.ses  are  referred  to.) 

The  judgment  of  the  general  term  should  be  reversed,  and  that 
of  the  special  term  affirmed. 

Denio,  Ch.  J.,  Davies,  Wright,  Selden,  Emott  and  Balcom,  J.J., 
concurring, 

Judgnien t  accordingly. 


iJ 


xKi  .  111.]  \<  KliKM.W    /■.    IIINSI(Ki;it.  v8.j 

ACKKHMAX  V.  Ill  NSKKKli.  h.".  X.  Y.  IT  (1881).  Action  l<i  folV- 
closo  a  Miorl^M^^i'.  CV-rtaiii  of  tlic  (Itft'iidants,  who  wen-  jinl<:iii<-iit 
iTcditors  of  llio  morl^M^or,  answered,  clainiin;;  that  tlu'ir  jud<^- 
ment.s  weir  liens  superior  to  the  inort^M;;e,  as  to  a  portion  of  iho 
amount  elaimed  by  jtlaintiir  to  lie  secured  thereby.  The  inorl;;a<(<? 
was  ^dven  to  |ilaintiir  t(^  .secure  him  for  any  indf)rseinents  he  had 
nuule  or  should  tlu'reafter  make  for  the  mort;4a;,'or  to  the  amount 
of  $G000.  Some  of  the  indorsements  were  made  sulxecpient  to  the 
judjiments  referred  to.    In  the  opinion  it  is  said: 

"  There  is  no  (juestion  as  to  the  validity  f)f  mort<;a^a's  to  .secure 
future  advances  or  lial)ililies.  'I'hey  have  become  a  reeo;:ni/.e<l 
form  of  .security.  Their  frcfjuent  use  has  grown  out  of  the  necessi- 
ties of  trade,  and  their  convenience  in  the  transactions  of  business. 
They  enable  parties  to  jirovide  for  continuous  dealings,  the  nature 
or  extent  of  which  may  not  be  known  or  anlicipate»l  at  the  tim<', 
and  they  avoid  the  e.xpense  and  inconvenience  of  executing  a  new 
K'curity  on  each  new  transaction.  It  is  well  knf)wn  that  such  mort- 
gages are  constantly  taken  by  banks  and  bankers  as  security  for 
final  balances,  and  banking  facilities  are  extended  and  daily  credits 
given  in  reliance  upon  them.  Mortgages  for  future  advances  have 
sometimes  been  regarded  with  jealou.sy,  but  their  validity  is  now 
fully  recognized  and  established  (Bank  of  Ulica  v.  Finch,  3  Barb. 
Ch.  294;  Tni.<rotl  v.  Kinfis,  (I  X.  Y.  147;  Robinson  v.  Wilh'iim<. 
'i'2  id  380;  Shlras  v.  Cnig,  7  C'ranch,  :M  ;  [jtwrencc  v.  Turlrr.  •>:? 
How.  \V.  8.]  14;  Leeds  v.  Cameron,  :3  Suinn.  in? V'.'— ^'t  An- 
drews, J. 

'The  ca.scs  aro  numerous:  Cominrrrldl  Hank  v.  Cunniiuihnm,  :i4  I'irk. 
270  (1837)  ;  doddard  v.  Sairyn;  !►  Allen,  7H  (l,St)4)  ;  MtDanicls  v.  Colrin, 
in  V(.  .-{00  (  1S44)  :  Collins  v.  (V/;7i7r.  I.J  III.  •_'.-)4  ( IS.")!  )  ;  Sprrr  v.  Skinner, 
3.-.  111.  282  (1S(;4):  Mirhi(jnn  In.i.  Co.  v.  Ihou-n,  11  Midi.  2r.(i  (18(i3): 
Madifinn  v.  M.nd,  M  Minn.  01  (1883)  ;  I'rcibcri/  v.  MmjuU,  70  Tex.  IKJ 
(1888). 


286 


BOOK  III. 

NATUEE   AND   INCIDENTS   OF   THE   MORTGAGE 
RELATION. 


CHAPTER    I. 

COMMON  LAW  RELATIONS. 

Section  I.     Title. 

FISK  V.  FISK. 

High  Court  or  Chancery,  IGOO. 

{Finch,  Pre.  Ch.  IL) 

Thomas  Fisk  the  elder  had  a  mortgage  in  fee,  which  was  for- 
feited; he  makes  his  will,  and  devises  all  his  mortgages  to  Thomas 
Fisk  the  younger,  and  makes  him  executor  and  dies:  Thomas  the 
younger  proves  the  will,  and  after  dies  intestate.  The  plaintiff  takes 
out  administration  de  bonis  iton  to  Thomas  the  elder,  and  also 
administration  to  Thomas  the  younger,  and  brings  this  bill  against 
the  mortgagor,  and  the  defendant  Fisk,  who  was  heir  at  law  to 
Thomas  the  elder  and  younger,  and  had  l)ought  in  the  equity  of 
redemption.  This  cause  was  heard  on  bill  and  answer,  and  it  was 
agreed  that  both  the  Fisks  left  sufficient  assets  without  this  mort- 
gage, and  the  lull  was  to  have  the  defendant  Fisk  to  assign  the 
mortgage,  and  have  the  money  paid,  or  else  to  foreclose  them. 

And  it  ivas  decreed,  that  the  defendant  Fisk  should  pay  the  plain- 
tiir  his  principal,  interest  and  charges  to  a  day,  or  else  assign  tlie 
mortgage,  and  be  foreclosed;  but  my  Lord  Commisstoxer  Trevok 
said,  if  the  mortgagee  had  been  in  ])ossession,  and  died  so,  he  would 
not  have  taken  tile  mortgage  from  the  heir,  there  being  no  defect  of 
assets. 


>n'.  I.]  BUUULN    r.    KLNNKUY.  287 

NOYS  V.  MORDANT. 

High  Court  of  Chancekv,  1706. 

(/•'(■;((■/;.  Pre.  Ch.  265.) 

A.,  l)oinf;  in  possession  of  an  I'statc  that  was  a  movi^i^ago  in  fee, 
liv  will  devises  it  to  his  daughters  V>.  and  V.  and  their  heirs,  and 
-lies;  B.  marries  and  dies;  the  question  was,  Whether  the  share  of 
\\.  sliould  he  decreed  real  or  jiersonal  estate,  and  consequently  po 
lit  her  heir,  or  to  her  husl)and  as  lier  administrator? 

My  Loud  Keei'EK  decreed  it  a^i^ainst  the  husband,  and  ])ut  this 
•  ase:  A  man  seised  of  lands  in  fee,  whicii  were  only  mort<raged  to 
him,  devises  them  to  his  son  and  heir,  and  his  heirs;  surely  these 
lands  sliall  descend  as  an  inheritance;  or,  though  the  mortgage  be 
paid  oir,  shall  not  the  money  1k'  considered  as  lands,  and  go  to  the 
heir,  and  his  heirs,  as  the  lands  would  have  done,  and  this  purely 
by  the  intention  of  the  testator?  And  did  not  the  testator,  who 
had  a  governing  power,  intend,  in  the  present  case,  that  the  mort- 
gaged lands  should  be  considered  as  any  other  lands  of  inheritance, 
and  be  subject  to,  and  directed  by,  the  same  rules  that  otiier  estates 
are?' 


BURDEX  V.  KENNEDY. 

IIlOII    ColltT    OK    ClIANCKlIV,    1757. 

(;5 .1//.-.  liM).) 

Lord  Ciiancellok  [HakdwickeI.  Where  an  execution  by  chtjil 
or  fieri  facias  is  lodged  in  a  sheriff's  hands,  it  binds  goods  from 
iliat  time,  except  in  the  case  of  the  crown,  and  a  leasehold  estate 
IS  also  alTected  from  that  time;  and  if  the  debtor  subseiiuent  to  this 
makes  an  assignment  of  tlif  leasehold  estate,  the  judgnu-nt  creditor 
'i«rd  not  bring  a  suit  in  tjrttiiient,  to  come  at  the  leasehold  estate. 
I'V  setting  aside  the  assignment,  but  may  proceed  at  law  to  sell  the 
lerm.  and  the  vendee,  wlio  is  generally  a  frientl  of  the  plaint ilT.  will 

'••An.l  ill  llii>  .a-c  it  wa-^  .Ic.laic.l  l.y  tlic  l.oni  i'h<tiirrll„r  (Nottinjr- 
liain]  tliat  always  wlini  a  iii<irl^a;:<M>  <li«-«  and  makes  no  di-visf  of  tin-  lanil-. 
lie  lias  in  nioii;ja^'p,  tlu-y  sliall  ^o  to  tin-  fxcciitor.  .\m\  in  I/on«lon  tluMi-  is 
iliis  sjHM'ial  ciisloni,  tliat  lands  in  iiiorljrano  an-  always  ipcktini>«l  tlio  poi  • 
■nal  rstatp  of  tin-  niort;:a;:ei'.  hi-  l>eint;  ii  citizen." — U'ifoi  v.  LittUt»».  1 
Virn.  3    (1081). 


288  COMMON    LAW    RELATIONS,  [CHAP.  I. 

be  intitled  at  law  to  the  possession,  notwithstanding  such  assign- 
ment. 

But  in  the  present  case  here  is  only  an  equity  of  redemption  in 
the  debtor  in  the  leasehold  estate,  and  an  execution  lodged  will  not 
affect  this,  as  the  legal  estate  is  in  the  mortgagee ;  and  consequently, 
by  the  common  equity  of  this  court,  he  may  come  here  to  redeem 
a  subsequent  incumbrancer,  and  likewise  to  discover  whether  there 
was  any  and  what  consideration  for  the  assignment. 


Burgess  v.  Wheate,  1  Eden,  177,  239,  255  (1759).  The  Lord 
Keeper  [Henley].  The  question  upon  the  information  in  this 
case  is  whether,  the  cestuy  que  trust  dying  without  heirs,  the  trust 
is  escheated  to  the  crown,  so  that  the  land  may  be  recovered  in 
a  court  of  equity,  or  whether  the  trustee  shall  hold  the  land  for  his 
own  benefit.   .    .   . 

It  is  said  the  king  upon  a  legal  estate  shall  be  liable  to  an  equity 
of  redemption.  I  do  not  know  that  it  has  ever  been  so  determined. 
Lord  Hale  thought  the  king  should,  because  it  is  an  ancient  right 
which  the  party  is  entitled  to  in  equity.  Baron  Atkins  thought  the 
same,  because  he  saw  the  same  equity  against  the  crown  as  against 
a  common  person.  Yet  it  is  observable,  that  there  is  in  that  case 
(Pawlctt  V.  Attorney  General)'^  a  recognition  of  the  equity  without 
any  declaration  of  the  remedy.  Whether  this  remedy  has  since  been 
settled  in  the  Exchequer,  where  alone  it  can,  I  really  do  not  know : 
but  I  hope  it  is  so  settled ;  for  I  see  a  great  deal  of  equity  to  support 
the  opinion  of  Hale  and  Atkins.  A  mortgage  is  an  assignment  on 
condition.  The  condition  being  performed,  the  conveyance  is  void 
ah  initio.  Equity  dispenses  with  the  time,  and  when  the  money  is 
paid,  the  conveyance  is  void  in  equity  and  conscience.  I  would 
by  no  means  have  it  understood  that  I  think  there  is  any  equity  that 
the  crown  cannot  avail  itself  of;  and  I  hope  that  there  is  no  equity 
that  the  subject  is  not  entitled  to  against  the  crown.  But  I  own, 
upon  very  diligent  inquiry  and  consideration  of  the  case,  I  at  present 
think  the  arms  of  equity  are  very  short  against  the  prerogative. 

The  next  is  an  objection  by  inverting  the  case  of  a  mortgage ;  and 
it  is  asked,  suppose  the  mortgagor  die  without  heirs,  shall  the  mort- 
gagee hold  it  free  of  redemption?  I  suppose  the  meaning  of  that 
question  is,  shall  not  the  lord  have  the  equity  of  redemption?  or 
else  it  is  nothing  to  the  present  purpose.  If  that  be  the  question,  it 
seems  to  me  to  be  the  same  with  the  present,  and  admits  of  the  same 
answer ;  the  lord  hath  his  tenant  and  services  in  the  mortgagee,  and 

'  Hardies,  4G-5. 


SEC.  1.]  .m'mI  KI'IIV     C.     MINUT.  2>i'.> 

he  has  no  ri^'ht  to  anythiii;^  moiv.  IN'rliap.s  it  woiihl  not  bo  dillicult 
to  answer  what  woukl  be  the  justice  of  that  ease,  but  it  is  not  to  th<' 
business  in  hand.* 


McMriMMIV   V.   MI  NOT. 

SuPRE>[H  Judicial  Coiut  <>i-   Ni;\v    IIampsiiiki:,   18"^T. 

(I  X.  If.  •.':.!.) 

This  was  an  action  of  covenant  broken,  on  an  indenture  made  the 
12th  July,  1811,  by  whicli  the  ])hiintitF  denii.sed  to  Seth  Daniels 
a  certain  tract  of  land  to  hold  durinf?  her  natural  life,  and  the  said 
Daniels  covenanted  with  the  j)laintiir  to  pay  her,  on  the  first  day  of 
May,  annually,  a  rent  of  ^.'Jo.  The  action  was  brought  against  the 
defendant,  as  assignee  of  Daniels,  for  the  said  rent  from  1st  May, 
1817,  to  1st  May,  182'),  and  was  submitted  to  the  decision  of  the 
court  upon  the  following  statement  of  facts: 

'i'he  indt'iiture  was  made  as  stated  in  the  declaration  and  Daniels, 
having  entered  under  it,  afterwards  conveyed  all  his  estate  to  one 
Oilman  Dudley,  who,  on  the  ;kl  April,  1823,  conveyed  the  land  to 
the  defen(h>nt  in  fee  and  in  mortgage.  Dudley  remained  in  posses- 
sion and  took  the  jirolits  until  his  death  in  October,  18".'".\  and  after 
his  decease  his  administratrix  remained  in  ])ossession,  taking  the 

'  "  Twiis  said,  if  u  inortjjaf^or  die  w  itliout  licir.  sliall  tlio  iii<)iij;a;,'«c  liold 
tlie  land  free?  [I  answer,  shall  it  cschoat  to  tlie  crown?]  No,  iu'causo  in 
tlint  j-ase  tlie  loid  has  a  tenant  to  do  his  services,  and  that  is  the  whole 
he  is  entitled  to  in  law  and  ecpiity.  What  the  justice  ini;.'ht  he  hetween  the 
inortKajjee  and  executor,  I  shall  not  trouldc  myself  ahout.  I  think  the 
crown  has  not  an  e<|uity  on  whicli  to  sue  a  sul)p(ena." — /'( »•  Henley,  I.ord 
Keeper,  s.  e.  1  W.  HI.  1,")."). 

"Then  it  was  said,  suppose  niort^aj,'nr  die  witliiuit  licir,  -"hall  the  nimt- 
f»nj;ee  ludil  the  estate  ahsolutely ?  And  if  he  deiiiands  his  money  too  of  the 
IMMsiuial  representatives,  shall  he  have  hotli  land  ami  money?  If  the 
inort^a;;or  di»'s  without  heir  or  creditor,  I  see  no  inconvenience  if  the  niort- 
gn^fee  held  it  ahsolutcly.  In  the  case  of  a  forfeiture  for  treason,  it  i< 
••crtain  the  crown  may  redeem,  as  in  Sir  Salathiel  Lovel's  case.  And  as  ti> 
tho  supposition  that  the  mortf^af^ce  may  demand  his  money  too,  that  mu-l 
1h»  wher<'  the  mortjjaj;or  di«'s  without  heir;  therefore  the  demand  mu>*t  he 
against  the  ]iei>oiial  repre-»entatives,  hy  virtue  «)f  some  lioml  or  eo\enaiit 
for  payment  of  the  money.  .\nd  if  tlie  moit^ja^ee  took  his  remedy  a^jain^t 
the  |)ersonal  rejuesentatives,  I  think  the  court  would  compel  the  mortgagee 
to  rp-eonvey  ;  not  to  the  lord  hy  escheat,  hut  to  the  personal  repre-icntat ivp. 
nnd,  if  necessary,  would  consider  the  estate  re-conveyed,  ns  comin;;  in  lieu 
of  the  personalty,  and  as  assets  to  answer  even  simple  contract  cretlitor*. 
Under  these  circumstances,  where  i-*  the  jjreat  inconvenience?  " — Per  Sir 
Thomas  (larke.  M.  I!.,  s.  <  .   1    K.leii.  Jlo. 


290  COMMON    LAAV    RELATIONS.  [CHAP.  I. 

profits  until  April,  183-1.  On  the  16th  April,  1824,  a  tenant  entered 
npon  part  of  the  land  under  an  agreement  with  the  defendant  to 
pay  rent  to  him  in  case  the  land  was  not  redeemed.  On  the  23d 
April,  1835,  the  administratrix  of  Oilman  Dudley  conveyed  to  the 
defendant  the  right  in  equity  to  redeem  the  land  mortgaged  as 
aforesaid,  and  the  defendant's  said  tenant  has  been  in  possession  of 
the  whole  tract  from  that  time  to  the  commencement  of  this  action 
on  the  22d  March,  1826.  All  the  interest  which  the  plaintiff  ever 
had  in  the  land  was  an  estate  for  her  own  life,  and  the  reversion 
was  in  Daniels. 

EiCHARDSON,  C.  J.  It  has  been  urged  in  behalf  of  the  defendant 
in  this  case  that  the  plaintiff  is  not  entitled  to  recover  anything, 
because  the  rent  was  never  demanded  of  Minot.  The  law  on  this 
point  is  well  settled.  When  a  lessor  proceeds  for  a  forfeiture  or  to 
enforce  a  penalty  he  must  show  a  demand  of  a  rent  on  the  very  day 
it  was  payable.  But  in  an  action  of  covenant  no  demand  is  neces- 
sary {Remson  v.  Conkliti,  18  Johns.  447;  Com.  Dig.  Rent.,  D.  4; 
Coon  V.  Brickett,  2  N.  H.  Rep.  163).  We  are  therefore  of  opinion 
that  this  objection  to  the  action  cannot  prevail. 

It  has  also  been  urged  that  this  action  cannot  be  maintained, 
because  the  particular  estate  and  the  reversion  having  become 
united  in  the  same  person  the  particular  estate  is  merged  and  the 
rent  extinguished.  Had  the  rent  in  this  case  been  incident  to  the 
reversion,  it  is  clear  that  this  action  could  not  be  maintained 
{Yorh  v.  Jones,  2  N.  H.  Rep.  454).  But  it  is  well  settled  that  the 
rent  is  not  inseparably  incident  to  a  reversion ( Co.  Lit.,  143  and47a; 
3  Bl.  Com.  176).  Rent  may  be  reserved  upon  a  grant  of  a  man's 
whole  estate,  in  which  case  there  can  be  no  reversion.  The  case  of 
Wchh  V.  Russell,  7  D.  &  E.  393,  which  has  l)een  cited  by  the  defend- 
ants' counsel  does  [not]  apply  in  this  case.  It  was  there  held  where 
rent  is  incident  to  a  particular  reversion,  when  that  particular 
reversion  is  merged,  the  rent  is  extinguislied.  But  in  tliis  case  the 
rent  was  never  incident  to  the  reversion.  The  plaintiff  granted  her 
whole  estate,  reserving  a  rent,  and  slio  had  no  reversion  to  which  it 
could  be  incident.  In  order  to  maintain  this  ground  it  must  be 
shown  that  when  he  who  has  a  reversion  takes  a  lease  of  the  particu- 
lar estate  and  covenants  to  pay  rent,  such  rent  is  extinguished  by 
llie  union  of  the  particular  estate  and  the  reversion.  But  this 
])roposition  cannot  be  sustained  by  any  reason  or  authority,  and  wc 
.•ii'c  of  opinion  that  this  ground  of  defence  fails  altogether. 

But  it  is  further  contended  on  the  part  of  the  defendaut  that 
])eing  only  a  mortgagee  he  cannot  in  any  event  be  held  liable  for 
the  rent  until  he  took  possession  under  the  mortgage,  and  the  case 
of  Eaton  v.  Jaques,  Doug.  438,  is  cited  as  an  authority.  But  tliat 
decision  has  been  long  questioned  (7  D.  &  E.  313),  and  in  1819  the 


1-1  m'mi  Itl'in     r.    MIN'OT.  'Vf\ 

<HU'!jtion  came  bcfori'  all  the  ju<l«(es  of  Miifjlainl,  and  a  great  major- 
ity were  of  opinion  tiiat  when  a  party  takes  an  assijjnnient  of  a  lease 
l>y  way  of  niort^M^^e  as  a  security  for  money  lent,  the  whole  interest 
jiasses  to  him  and  he  Ix'comes  liahle  on  the  covenant  for  the  payment 
of  rent,  thoufjh  he  has  never  occupied  or  hecome  posse-sed  in  fact 
(  Williams  v.  liosanqnct  et  al.,  1  Brod.  &  Bing.  7*^). 

In  this  State  it  lias  been  repeateclly  decid<'d  that  a  mort^'agr  in 
ftc  vests  in  the  mortgagee  the  whole  legal  estate;  the  necessary 
<-onse<iuence  of  which  seems  to  he  that  such  a  mortgagee  must  U- 
liable  for  the  performance  of  covenants  running  with  the  land. 
And  we  think  in  this  case  the  defendant  is  liable  for  any  rent  that 
Ixcame  due  after  his  mortgage  was  executed. 

In  considering  this  case,  the  question  occuned  t<t  us  whellu'r  the 
liability  of  the  defendant  could  be  affected  by  the  circumstance 
that  the  rent  was  reserved  upon  a  grant  of  the  freehold,  while  tin- 
<-onveyancc  to  him  was  in  fee.  But  we  find  that  it  has  been  decided 
that  covenant  will  lie  against  the  assignee  of  j)art  of  an  estate  for 
nut  rejtairing  his  i)art,  for  it  is  divisible  and  follows  the  land 
{CoiKjham  v.  Kitig.  2  East,  580;  Cro.  Car.  222).  And  we  are  not 
iible  to  discover  any  reason  why  he  who  takes  a  larger  estate  should 
not  be  bound  by  a  covenant  running  with  a  less  estate  which  is 
pan-el  of  a  larger. 

On  behalf  of  the  jtlaintiir  it  has  Ik-cii  argued  that  the  defendant 
is  lial)le  in  this  action,  not  only  for  the  rent  which  has  become  due 
since  be  became  owner  of  the  land,  but  the  rent  which  bi'came  dm- 
In'fore  that  time.  The  cases  which  have  Ix'cn  cited  by  the  defi-nd- 
ant's  counsel  seem  to  show  that  the  law  is  not  so.  It  is  another 
argument  in  favor  of  the  defendant,  that  when  the  action  is  against 
an  assignee,  it  is  usual  to  allege  in  assigning  the  bn-acb  of  the 
f<ivenant,  that  the  breach  happ<'ncd  after  the  assignment  (2  ('bit- 
ty "s  IM.  l!il  ;  Lilly.  i:V!  ;  Diilwis  v.  Van  Onlni.  G  Johns.  UK"); 
<'nrthew,  177;  2  S'entri.s.  2:n).  It  is  said  in  Woodfall,  27!  and 
.*J.'J8,  that  an  assignee  is  liable  for  arrearages  of  rent  incurred  befori', 
M  w<'ll  as  during  bis  enjoynicnl  ;  l)ul  he  cites  no  case  in  which  it 
has  Ix'cn  so  decided,  and  offers  no  argument  in  su])port  of  the 
propositions,  and  we  are  of  opinioti  that  this  is  not  law.  and  there 
nnist  be  judgment  for  the  plaint  ilf  for  tbi-  ri'Ut  which  has  bccoiui- 
.l.H-  since  the  :?d  .)f  April.  1S22. 

■finli/ninit  for  thr  plaintiff.^ 

'  Farmrr'ti  Hunk  v.  Mutual  AsMur.  Stu:,  4  Lriuli  (Va.)  t\9  (18.12)  :  .W<i,v- 
'«  tr  V.  Hardest  If,  H  M»l.  475)  (IS.'j.'i).  accord.  Soc  also  Cnlrert  v.  Bnidhii.  \(\ 
How,  (U.  S.)   580   (1853). 


292  .  COMMON    LAW    RELATIONS.  [CIIAP.  U^ 

AsTOR  V.  HOYT,  5  Wend.  603  (1830).  Suit  in  chancery  by  tlio-j 
landlord  of  j^remises  in  the  City  of  New  York  to  establish  his  clainif 
to  certain  monies  awarded  to  the  tenant  (Madden)  as  compensationj 
for  opening  streets  through  the  premises  demised.  Madden  had 
mortgaged  his  term  to  Hoyt,  who  thus  acquired  a  prior  claim  to] 
the  fund  in  question.  Madden  having  covenanted  in  the  lease  to-| 
pay  all  assessments,  the  plaintiff  seeks  to  charge  the  liability  forj 
the  breach  on  the  mortgagee.  The  Chancellor  (Walworth)  ha  vine 
ordered  the  payment  of  the  fund  in  court  to  the  defendant, .  anj 
appeal  was  taken  by  the  plaintiff  to  the  Court  for  the  Correction,  of | 
Errors.  On  the  point  under  consideration  the  following  opiniou] 
was  rendered  (page  613). 

Savage,  Ch.  J.    The  question  then  arises,  which  was  principally 
discussed  upon  the  argument,  is  the  mortgagee  to  be  considered  the 
assignee  of  the  leasehold  premises?    And  if  so,  is  he  liable  to  pay -I 
ment  of  the  damages  for  the  breach  of  Madden's  covenant  ?    Tliatj 
the  covenant  to  pay  all  assessments  is  a  covenant  running  Avitli  the] 
land,  there  can  be  no  doubt  (5  Co.  25)  ;  and  that  the  assignee  is] 
liable  for  the  breach  of  such  a  covenant  occurring  while  he  is] 
assignee,  is  equally  clear;  but  whether  the  mortgagee  is  assignee, 
and  if  assignee,  whether  he  is  liable  for  breaches  of  the  covenant| 
before  the  assignment,  are  questions  to  be  discussed.     In  England 
I  think  it  must  be  conceded  to  be  settled  that  where  the  mortgagor,] 
by  the  form  of  the  instrument,  conveys  or  assigns  by  way  of  mort- 
gage his  whole  estate,  the  mortgagee  is  considered,  at  law  and  ii 
equity  too,  the  assignee.     We  read,  indeed,  in  some  of  the  books 
that  though  the  mortgage  purports  to  convey  an  estate  defeasible! 
by  matter  subsequent,  yet  that  the  courts  of  equity  consider  them,] 
in  their  true  intent,  as  mere  securities  for  money ;  but  the  decision 
of  the  courts,  both  of  law  and  equity,  which  are  the  highest  evidence 
of  what  the  law  is,  have  generally  considered  mortgages  as  convey- 
ances; and  l)y  the  mode  of  drawing  them  there  it  seems  necessary 
that  when  the  condition  is  performed  there  should  be  a  reconvey- 
ance or  reassignment.     In  Spares  v.  Smith,  2  Vernon,  275,  the 
court  refused  to  compel  a  mortgagee  to  disclose  whether  a  lease  was* 
assigned  to  him  to  enable  the  plaintiff  to  prosecute  him  as  assignee 
upon  the  covenant  of  the  lessee,  who  was  also  mortgagor,  clearly 
implying  that  as  assignee  of  the  whole  term,  even  by  way  of  mort- 
gage, he  would  be  liable;  and  in  Pill-ington  v.  Shaller,  2  Vern.  374, 
where  a  recovery  had  been  had  in  a  similar  case  against  the  plain- 
tiff as  assignee,  the  court  refused  to  relieve  him,  saying  the  mort- 
gagee was  ill  advised  to  take  an  assignment  of  the  whole  term.    In 
the  case  of  Eaton  v.  Jaques,  Doug.,  460,  the  Court  of  King's  Bench 
disregarded  these  cases  and  thought  them  not  well  considered.  Lord 
Mansfield  was  of  opinion  that  upon  principle  the  assignee  is  liable' 


•-"  •  i-l  AMui;    r.    iKtVT,  203 

only  in  respect  of  the  possession,  and  that  as  a  mortf7a;::o  was  a  mere 
eeeurity,  the  niort<;agee  out  of  possession  was  not  lialde  as  assignee. 
About  ten  years  afterwards  Lord  Thurlow  entertained  a  dilTcrcnt 
opinion,  and  did  what  was  refused  in  Pilkinglon  v.  i^hallcr.  \h- 
cninprll('(l  a  j)ers(»n  who  had  received  a  lease  in  deposit  as  seeurity. 
tti  take  an  assignment,  that  he  might  be  prosecuted  as  assignee 
upon  the  covenant  of  the  lessee  to  build  a  house.  The  (|uesti<)n 
seems  to  have  been  finally  and  deliljerately  settled  in  Williams  v. 
liosanqucl,  1  Brod.  t1'  Bing.  T'3,  by  ten  judges,  overruling  the  doc- 
trine of  Lord  Mansfield  in  Ealon  v.  Ja<iues.  Dallas,  C'h.  J.,  in 
giving  the  decision  of  the  court,  states  explicitly  the  grounds  of 
the  decision.  He  shows  from  authority  that  the  Ics.^^ce  is  liable  for  the 
rent,  whether  he  enter  or  not ;  he  is  liable  by  virtue  of  his  lease, 
and  he  argues  that  the  assignee  is  under  the  same  liability,  whether 
he  takes  an  al)solute  assignment  or  only  l)y  way  of  .^iccurity,  for  the 
lessee  eonvej's  by  the  assignment  his  whole  interest,  which  the 
Assignee  takes;  and  as  the  lessee  was  liable  before  the  entry,  .^o  must 
the  assignee  be  liable  in  like  maimer.  In  that  case,  he  remarks,  the 
assigmnent  was  of  all  the  right,  title  and  interest  of  the  assignor, 
and  so  completely  did  the  interest  pass  that  there  was  a  covenant 
to  reassign  upon  payment  of  the  money.  The  money  was  not  paid 
before  the  day  when,  if  not  paid,  the  assignment  was  to  become 
absolute,  so  that  the  case  was  that  of  an  al)solute  assignment.  lie 
also  held  there  was  a  privity  of  estate,  for  the  acceptance  of  the 
assignment  was  ecjual  to  actual  entry,  and  privity  of  contract,  bi-- 
cause  contract  was  with  the  lessee  and  his  assigns,  and  the  defend- 
ants were  such  assigns;  therefore  the  (DUtract  was  between  the 
lessor  and  assignee. 

Chancellor  Walworth  considers  the  case  of  Williams  v.  Bosanquet 
..-  settling  the  principle  in  England  tiiat  a  mortgagee  of  leasehold 
premises,  whether  in  possession  or  not,  is  liable  upon  the  covenants 
as  a.ssignee,  but  he  thinks  such  a  principle  cannot  ])revail  in  this 
State,  because  we  hold  the  mortgagor  to  be  the  true  owner,  and  the 
mortgagee  as  having  nothing  but  a  chattel  interest  while  out  of 
])Ossession.  The  counsel  for  the  ap))ellant  insists,  however,  that  in 
that  respect  there  is  no  dilTerence  in  the  doctrine  held  in  h'ligland 
and  here,  for  Lord  Mansfield  said  in  The  Kituj  v.  >7.  MicKncU, 
Doug.,  ()3v>,  it  was  an  alfront  to  common  sense  to  say  the  mortgagor 
is  not  the  real  owner.  Such  was  indeed  the  doctrine  of  Ix)rd  Mans- 
field and  of  Buller,  .lustiee.  but  that  is  the  very  doi-trine  that  i- 
repudiated  in  Williams  v.  liosanqurl.  Lord  Mansfield  asserts  that 
the  mortgagor  is  the  real  owner.  \ot  so,  says  C'h.  J.  Dallas,  giving 
the  opinion  of  the  ten  judges  ;  the  whole  interest  is  assigned  ;  it  vests 
absolutely,  and  is  not  the  le.-<s  ab.solute  because  the  assignor  (the 

'Ttgagor)  may  entitle  himself  to  a  reassignment.     T'nless,  then»- 


29i  COMMOX    LAW    RELATIONS.  [CIIAI-.  I. 

fore,  a  man  can  be  the  real  owner  after  he  has  parted  with  all  his 
interest,  the  chancellor  must  be  right  in  saj^ing  that  the  English 
doctrine  of  the  ten  judges  is  inapplicable  here.  If  the  law  is  the 
same  here  as  in  England,  and  the  law  there  is  that  the  mortgage^' 
out  of  possession  has  the  whole  estate,  then  this  court  was  in  error 
in  the  case  of  Waters  v.  Steiuart,  1  Caines'  Cas.  in  Err.  47,  where 
they  decided  that  the  equity  of  redemption  remaining  in  the  mort- 
gagor was  real  estate,  and  liable  to  be  sold  on  execution;  and  the 
Supreme  Court  were  equally  in  error  when  they  decided  that  the 
mortgagee  out  of  possession  had  no  interest  which  could  be  sold  on 
execution  (Jackson  v.  Willard,  4  Johns.  E.  41),  for  if  he  had  the 
whole  estate  it  certainly  might  be  sold.  It  would  seem,  too,  tliat 
Powell  must  have  been  under  a  great  mistake  when  he  stated  that 
the  mortgagor  might  levy  a  fine  or  suffer  a  common  recovery ;  that 
he  had  an  estate  which  descended  to  his  heirs,  and  which  he  might 
devise  by  his  will  (Powell  on  Mortgages,  75,  76,  170). 

Here,  however,  the  mortgagor  is  the  owner  against  all  the  world, 
subject  only  to  the  lien  of  the  mortgage.  In  Melntyre  v.  Scott. 
8  Johns.  R.  159,  it  was  held  that  the  mortgagee  of  a  ship,  out  of 
possession,  was  not  liable  for  supplies;  and  in  Ruiiyan  v.  Mersereau, 
11  Johns.  E.  538,  the  assignee  of  the  mortgagor  was  permitted 
to  maintain  trespass  against  the  mortgagee  after  condition  broken. 
The  court  conclude  their  opinion  in  that  case  by  saying:  "The  light 
in  which  mortgages  have  been  considered  in  order  to  be  consistent 
necessarily  leads  to  the  conclusion  that  the  freehold  must  be  con- 
sidered in  the  plaintiff,  and  he  of  course  is  entitled  to  judgment." 
In  that  case  the  court  rely  on  the  doctrines  of  Lord  Mansfield  in 
Eaton  V.  Jacjucs,  and  to  show  that  the  interest  of  the  mortgagee 
is  only  a  chattel  interest,  they  refer  to  the  well-established  principles 
that  mortgages  pass  by  a  will  not  made  with  the  solemnities  of  the 
statute,  and  that  the  assignment  of  the  debt  draws  the  land  after  it. 
In  Coles  V.  Coles,  15  Johns.  E.,  320,  Spencer,  J.,  repeats  the  doc- 
trine of  Runyan  v.  Mersereau,  and  in  that  case  it  was  decided  that 
the  wife  might  be  endowed  out  of  equity  of  redemption.  In  Ilitch- 
cock  V.  Harrington,  G  Johns.  R.  295,  Kent,  Ch.  J.,  says  of  the 
mortgage :  "  We  now  regard  the  mortgage  estate  only  for  the  benefit 
of  the  mortgagee  and  his  assigns.  As  to  the  rest  of  the  world,  as 
long  as  it  is  not  put  in  force,  it  is  only  a  pledge  or  lien  on  the  bond, 
with  which  they  have  no  concern  any  further  than  not  to  disturb 
it."  And  in  DicHnson  v.  JacJcson,  6  Cowen,  147,  we  held  that  until 
default  in  payment  of  the  money  due  by  the  mortgage,  or  some  ])art 
thereof,  and  the  termination  of  a  notice  to  quit,  the  mortgagee  has 
no  right  of  entry  as  against  the  mortgagor  and  cannot  bring  eject- 
ment against  him,  though  he  may  against  the  assignee  of  the 
mortgagor,  the  tenancy  l)eing  broken  l)y  the  assignment.     It  is  too 


•**'*■•  '•]  iiiNTiNcrroN   r.  smith.  '!'.*'> 

latf  for  us  now  to  retrace  our  steps  and  adopt  tlio  doetrim  of 
WilliaiHti  V.  Jiusumjucf.  even  if  it  was  correct.  To  recover  a«,'ainst 
an  assignee  of  the  lessee  it  must  l)e  averred  and  proved  that  all  the 
riglit,  title  and  interest  of  the  lessee  passed  hy  assignment  to  the 
assignee.  Alter  these  decisions,  can  we  .say  that  all  the  right,  title 
and  interest  of  the  mortgagor  has  passed  to  the  mortgagee  out  of 
j)ossession?  So  far  from  it,  we  hold  that  the  mortgagee,  before 
foreclosure  or  the  commencement  of  j)roceedings  to  foreclose,  has 
but  a  chattel  interest.  It  is  perfectly  clear,  therefore,  that  a  mort- 
gagee of  a  term  out  of  j)()ssession  is  not  in  this  State  to  be  considered 
the  assignee.  In  Mngland  there  must  be  a  reconveyance  or  re- 
assignment ;  so  say  th(>  court  in  Willidins  v.  UdsiukiwI.  Here  that 
is  not  neci'ssary  ;  the  transfi-r  of  tlie  debt  transfers  the  mortgage; 
payment  e.xtinguishes  the  lien,  and  so  does  a  tender.  But  if  a  mort- 
gagee takes  possession  of  the  mortgaged  premi.ses  lawfully,  he  must 
be  then  considered  assignee,  and  the  assignee  must  take  the  estate 
cum  onerc.  When  the  mortgagee  taki-s  possession,  he  then  has  all 
the  right,  title  and  iiiterest  of  the  mortgagor;  then  lie  acquires  and 
the  mortgagor  loses  an  estate  liable  to  be  sold  on  execution.  lie  is 
therefore  substituted  in  the  place  of  the  mortgagor,  who  was  lessee. 
and  therefore  is  assignee  and  liable  as  such. 

If  I  am  correct  in  the  positions,  that  a  portion  of  the  fund  in 
court  is  to  be  considered  the  representative  of  the  premises  taken 
for  the  street,  and  that  the  mortgagees,  taking  possession  of  either 
the  premises  or  tlie  substitute,  became  liable  for  such  covenants  as 
run  with  the  land,  and  that  this  covenant  to  j)ay  assessments  is  of 
that  character,  it  seems  to  follow  that  the  mortgagees  in  this  case 
must  be  responsible  for  their  proportion  of  the  as.sessnu'ut,  unless, 
as  they  allege,  the  breaches  occurred  previous  to  the  assignment.' 


IirXTIXCTOX  V.   SMITH. 

SuPRFMi:  CoiKT  or  Mkkoks  or  Co-NNKcticut,  1822. 

(4  Conn.  •.';5:).) 

This  was  a  .<!rirr  facins.  stating.  That  by  the  consideration  of  the 
county  court  for  Litchfield  County,  held  at  Litchlleld,  on  the  fourth 
Tuesday  of  March.  1S17,  the  plaintilT  recovered  a  jtidgment  agaiiHt 

"That  n  tiu)rtn»)r«"  «f  «  (<mih  (Icjc.h  not  i-on.Htituto  n  limu-h  of  n  coixlition 
not  to  assi;;n,  is  law  in  Kii;;lanil  as  well  as  in  tlio  I'nito*!  Statiw;  /»<)«•  v. 
Bof/p,  4  Dowl.  A  Hy.  ZH'i  (1H-2J)  :  /^i'.';<;'»  v.  I'lirsrll.  M  N.  Y.  lO.T  (l''.7('.). 


296  COMMON    LAW    RELATIONS.  [CHAP.  I. 

the  defenclant  and  one  Miles  Tobey  for  the  sum  of  216  dollars, 
43  cents,  and  had  execution  for  the  same;  which  execution  the 
plaintiff  put  into  the  hands  of  William  P.  Eussell,  a  deputy  sheriff, 
to  execute;  who,  on  the  18th  of  May,  1817,  levied  the  same  upon 
a  piece  of  land  in  Norfolk,  particularly  described  in  his  return,  sup- 
posing it  to  be  the  property  of  the  defendant,  and  caused  it  to  be 
appraised  and  set  off  on  the  plaintiff's  execution  in  full  satisfaction 
thereof;  but  the  defendant  had,  in  fact,  no  right  nor  interest  in 
such  land,  it  being  then  owned  and  possessed  by  one  James  Rood; 
the  plaintiff's  execution  has  never  been  paid  or  satisfied ;  and  Tobey 
having  died,  the  debt  survived  against  the  defendant.  The  plaintiff, 
therefore,  prayed  that  an  alias  execution  might  issue  on  the  judg- 
ment. 

The  defendant  pleaded,  1st,  That  the  land  mentioned  in  the 
scire  facias,  as  being  levied  upon,  appraised  and  set  off  on  the  plain- 
tift"s  execution,  was  land  in  which  the  defendant  had  an  interest 
as  mortgagee  in  fee,  and  the  time  limited  for  the  redemption  thereof 
by  the  mortgagor  had  expired;  2ndly,  That  after  the  rendering  of 
said  judgment  and  the  issuing  of  said  execution,  viz.  on  the  19th  of 
May,  1817,  Tobey  executed  and  delivered  to  the  plaintiff  his  two 
promissory  notes,  one  for  the  sum  of  60  dollars,  payable  on  dei- 
niand  with  interest,  the  other  for  156  dollars,  43  cents,  payable  on 
tlie  1st  of  January,  1818,  with  interest,  being  the  amount  of  said 
judgment  and  execution,  which  notes  the  plaintiff  received  in  full 
satisfaction  of  said  judgment  and  execution.  These  pleas  were 
traversed  by  the  plaintiff;  on  which  issue  was  joined. 

The  facts  proved  on  the  trial  were  these :  Russell,  the  officer  in 
whose  hands  the  execution  was,  took  the  notes  of  Tobey  mentioned 
in  the  defendant's  plea,  in  pursuance  of  an  understanding  between 
the  plaintiff  and  Tobey,  on  the  condition  that  he,  Russell,  should 
hold  them  until  the  plaintiff  should  execute  and  deliver  to  Tobey 
a  quit-claim  deed  of  the  land  on  which  the  execution  should  be 
levied,  when  they  were  to  be  delivered  to  the  plaintiff.  Tobey 
directed  the  officer  to  levy  the  execution  on  the  land  mentioned  in 
tlie  scire  facias,  which  he  did,  and  had  it  appraised  and  set  off  to 
the  amount  of  the  execution  and  the  costs.  In  this  land  the  defend- 
ant had  the  estate  of  a  mortgagee  in  possession,  the  law-day  having 
expired  but  no  decree  of  foreclosure  having  been  passed.  In  the  fall 
after  the  levy,  Tobey  died,  and  his  executors  directed  the  officer 
not  to  give  over  the  notes  to  the  plaintiff.  The  plaintiff  did  not  get 
the  deed  and  deliver  it  for  Tobey's  use  before  his  death.  The  notes 
still  remain  in  the  officer's  hands. 

The  case  thus  made  was  reserved,  by  consent  of  parties,  for  the 
advice  of  all  the  Judges. 

P.  Smith,  for  the  defendant,  contended,  1.  That  the  interest  of 


•">••'• '1  in  N  riN(;i()N-   r.  smith.  297 

a  iiiortga^co  in  mortpiged  premises  mny  he  taken  in  execution 
(S  Mass.  Kep.  oG5 ;  Pundcrson  v.  Brown,  1  Day's  Hep.  08;  Judah  v. 
Jndd,  1  Conn.  Rej).  30«J ;  2  Swift's  Syst.  429).  2.  That  Tohey's 
notes  were  (h'livercd  iiol  as  escrows,  hut  in  satisfaction  of  tlie  judg- 
ment and  exeiution.  Neither  Tohcy  nor  his  executors  had  any 
lontroul  over  tliem  afterwards.  The  phiintifT  may  at  any  time  get 
j)ossession  of  them  hy  delivering  his  deed,  and  may  maintain  suits 
upon  them.  Notes  delivered  to  a  third  person  to  he  delivered  over 
to  the  payee  on  a  certain  event  take  efFect  from  the  first  delivery,  and 
arc  held  in  trust  for  the  jiavee  {Wliecln'gltl  £  al.  v.  Whcvlright, 
X^  Mass.  Rep.  452,  454). 

.'^.  Church  and  L.  Church,  for  the  plaintiff,  contended,  1.  That 
the  interest  of  the  mortgagee,  hefore  foreclosure  or  entry,  is  a  mere 
<hattel  interest,  and  cannot  he  levied  on  as  his  land.  The  land 
belongs  to  the  mortgagor,  and  may  he  taken  in  execution  as  his  real 
estate,  subject  to  the  incumbrance  (Bhinchard  v.  Colburn  &  ux., 
IG  Mass.  Rep.  345  ;  Jackson  d.  Xorton  and  Burt  v.  Willard,  4  Johns. 
Rep.  41).  2.  That  Tohey's  notes  were  no  bar  to  this  application. 
First,  there  was  no  agreement  to  receive  them  in  satisfaction  of  the 
execution.  Secondly,  they  were  never  delivered  so  as  to  become 
effective  instruments.  [Upon  the  statement  of  these  propositions, 
the  Court  stopped  the  counsel  for  the  plaintiff.] 

lIosMHu,  Ch.  J.  On  tiie  first  plea  in  the  case  before  us,  the  (mly 
question  is  whether  after  the  expiration  of  the  law-day,  and  before 
an  entry  or  foreclosure,  the  interest  of  a  mortgagee  in  the  premises 
mortgaged  may  be  set  off  on  execution. 

The  fee  simple  of  the  land  mortgaged  is  in  the  mortgagor;  and 
the  mortgagee,  before  entry  or  foreclosure,  has,  at  most,  a  chose  in 
action,  and  a  right  to  the  possession,  in  order  to  render  the  mort- 
gage available  to  the  payment  of  his  debt.  The  mortgage  is  an 
incident  only  to  the  ilebt.  which  is  the  principal ;  it  cannot  be  do- 
taehi'd  from  it  ;  distinct  from  the  debt,  it  has  no  determinate  value; 
and  the  assignee  must  hold  it  at  tiie  will  and  disposal  of  the  creditor 
who  has  the  note  or  bond,  for  which  it  is  a  collateral  security.  The 
debt  may  require  only  a  snudl  part  of  the  land  to  satisfy  it ;  and 
by  the  levy  of  several  executions,  the  mortgagor,  d»'>iring  to  redeem, 
may  l)e  much  embarrassed.  The  land  cannot  be  taken  for  the  debts 
of  the  mortgagee  until  his  entry  upon  it,  and,  in  my  opinion,  until 
foreclosure.  These  i)rinciples  are  .-^o  thoroughly  established,  and  so 
frtHjuently  has  it  been  decided  directly  that  mortgaged  premises 
not  entered  uj)on  by  the  mortgagee  or  foreclosed,  cannot  be  taken 
for  his  debts,  that  a  more  extensive  investigation  of  the  subjivt  is 
unnecessary  {Fish  v.  Fish.  1  Conn.  Rep.  559;  Portland  Bank  v. 
//"//.  13  Mass.  Rep.  2(1?  ;  Blanchard  v.  Cnthurn  tf  at..  1(1  Ma.'^s.  Rep. 

'"»;  Jackson   v.    Willanl.    I   .Tolm-.   Rep.   41;  Jackson   v.   I)ul>o{s, 


298  COMMON    LAW    KELATIOXS.  [CHAP.  I. 

4  Johns.  Rep.  21G;  Hitchcoclc  v.  Harrington.  G  Johns.  Rep.  200; 
Collins  V.  Torry,  7  Johns.  Rep.  278). 

The  second  plea  was,  that  certain  proniissoi*}'  notes  were  accepted 
by  the  plaintiff,  in  full  satisfaction  of  the  judgment  and  execution 
mentioned  in  his  declaration.  The  proof  exhibited  evinces  that  the 
notes  were  escrows  and  not  to  be  delivered  until  the  execution  of 
a  deed  on  the  plaintiff's  part  (Jackson  v.  Cailin,  2  Johns.  Rep. 
248,  259 ;  Lansing  v.  Gaine  &  Ten  Eych,  2  Johns.  Rep.  300,  306 ; 
Catlin  V.  Jaclcson  in  err.,  8  Johns.  Rep.  .520),  and  that  they  never 
were  delivered.  It  is  an  undoubted  consequence  that  they  could 
not  have  been  accepted  in  satisfaction. 

Neither  plea  has  been  supported,  and  I  would  advise  that  the 
plaintiff  have  judgment. 
.  The  other  judges  were  of  the  same  opinion. 

Judgment  to  he  rendered  for  the  plaintiff. 


Eaton  v.  Whiting,  3  Pick.  484  (1826).— Parker,  C.  J.  The 
opinion  expressed  in  the  case  of  Blanchard  v.  Colburn,  16  Mass. 
Rep.  345,  that  the  interest  of  a  mortgagee  in  real  estate  mortgaged 
to  him  for  security  of  a  debt,  or  the  performance  of  a  condition,  i.-> 
not  liable  to  be  levied  upon  for  the  debts  of  the  mortgagee  and  so, 
of  course,  is  not  liable  to  attachment  on  mesne  process,  we  sec  no 
cause  to  change.  It  is  in  fact  but  a  chose  in  action,  at  least  until 
entry  to  foreclose,  and  although  the  legal  efl'ect  of  the  mortgage  is 
to  give  an  immediate  right  of  entry  or  of  action  to  the  mortgagee, 
yet  the  estate  does  not  become  his,  in  fact,  until  he  does  some  act 
to  divCst  the  mortgagor,  who,  to  all  intents  and  purposes,  remains 
the  owner  of  the  land  until  the  mortgagee  chooses  to  assert  his  right 
under  the  deed.  It  is,  as  before  said,  in  the  nature  of  a  pledge,  and 
a  pawn  or  pledge  cannot  be  seized  in  execution  for  the  debt  of  the 
pledgee.  The  mortgagor  may  be  compelled  to  pay  over  the  debt  to 
the  creditor  of  the  mortgagee  on  the  trustee  process,  with  the  same 
exceptions  as  are  provided  for  other  cases,  and  payment  under  sucli 
process  will  discharge  the  mortgage  pro  tanto ;  so  that  the  creditor 
of  the  mortgagee  is  not  without  remedy,  as  has  been  suggested.  1'he 
law  in  New  York  and  Connecticut  is  the  same  as  with  us.  In  tbe 
courts  of  both  those  States  it  has  been  decided  that  a  mortgagee 
before  entry  has  not  such  an  interest  in  the  land  as  can  be  sold, 
levied  upon,  or  attached.  See  Jackson  v.  Willard,  4  Johns.  Rep.  41 ; 
Runyan  v.  Mersereau,  11  Johns.  Rep.  534;  Johnson  v.  Hart. 
3  Johns.  Cas.  329 ;  also  Huntington  v.  Smith,  4  Conn.  Rep.  237,  in 
which  Hosmer,  C.  J.,  states  at  large  the  reasons  similar  to  those 
given  in  Blanchard  v.  Colburn  by  this  court.     Before  the  case  of 


•^"v  i]  I  l;l  M  M    r.    .\lAI!>ii.  •,"•'♦ 

Jilitiuhdrtl  v.  Collnini  tlir  >aiii('  |triii(i|»l«'  liad  Ix-i-ii  (Ircidfil  m  tin- 
nis»'  of  Purlluml  Hank  v.  Hull,  \.\  Mas>.  Uc|».  •.'(»;.  So  that  wr  an- 
warranted  in  considering  it  as  settled  law,  that  tlie  iiit«'rr>t  <if  a 
iii()rt<;agee  before  entry  is  not  attadiaMc ;'  and  wr  iiii;,'lit  add  with 
Hosmer,  C.  J.,  in  the  ease  eited  from  the  Connecticut  KeiK»rt~,  thai 
we  doul)t  whether  it  is  attachaldc  before  foreclosure.  fi»r  until  then 
all  the  inconveniences  su^zgestcd  as  the  Lrround  i)f  decision  wmdd 
occur.- 


TIMMM   \.   M.\i:sil. 

Coiirr  OF  Ai'im;ai,.s  of  Nfw    ^'oi;k.  I  si  I. 

(.Jl  X.   Y.  :)!»!•.) 

Appeal  from  order  of  the  (Jeneral  Term  «d"  the  Supreme  Court 
in  the  tlrst  judicial  department,  reversin>i  a  jud<fment  in  favor  of 
plaintiffs  entered  upon  the  decision  of  the  court  at  Special  Term, 
ind  orderinj;  a  new  trial.     (Reported  below,  :?  l.,ans.  ot»!).) 

This  was  an  action  for  an  accounting  as  to  the  amount  due  ujton 
a  bond  and  mortgage,  and  for  the  recovery  of  the  ])ossessi(in  of  the 
mortgaged  premises,  u])on  payment  of  the  amount  due. 

In  1S5S  one  Kidgway,  lu-ing  the  owner  of  icrtain  j)remi^es 
situate  in  the  City  of  New  York,  mortgaged  them  to  an  insurance 
company  to  secure  $"^.()t)0 ;  the  insurance  company  assigned  the 
mortgage  to  the  defendant,  Sarah  A.  Marsh.  IJidgway  afterward 
conveyed  the  ])remi.<es  to  the  plaint  iff,  Hrown,  who  subsecpiently,  in 
Oetob<'r,  18(5'),  entered  into  an  agreement  with  pbiintilf.  Trimm, 
to  convey  the  same  to  him.  In  18(il  the  defendant,  Sarah,  com- 
menced an  action  to  foreclo.se  this  mortgage,  making  j)laintitT. 
Brown,  and  otlu-rs  j)arties,  and  obtained  judgment  of  fon-closure. 
The  premis(>s  were  s(dd  under  the  judgment  in  lS(!"v*,  and  defendant. 
Sarah  A.  Marsh,  became  the  i)unhaser,  and  receivi'd  a  sheritfs 
deed.  Immediately  after  the  sale  slu-  entered  into  posscjssion  of 
the  premises,  and  slie  or  the  other  defendant  has  ever  since  been 
in   possession.      In    Octolier,    IS»i  I,    bv   an   order   td'   the   Supreme 

'  .Iudj;»>  Tidwlii  i(l;;o  was  of  ii  (lilTririit  <i))iiii(>ii  ividv  S  .M.i-<-..  \\t\\.  5G.»). 
•111(1  mucli  n'>|n'i  t  is  diH'  to  Jiim.  Hut  tin-  lnw  rcspi-cliiif;  iimrtpiipMl  ostutfs 
ha*  txTn  clian^^pd  l>y  tlio  le';;islaturi'  siiur  tiis  tiino,  it  tK-inn  ''naftril  l>y  tlio 
xtattitr  of  17SS,  c.  .")),  that  sucli  i-sttilcs  sliail  Im-  assets  in  tho  liainis  of 
♦"Xwutors  ami  ndiuinistrators,  nml  t»o  distriliuted  as  personal  ostatr." — I'rr 
P»rkpr.  I'.  .1.,  in  lUnnrhard  v.  Colburu,  Hi  Mass.  :J4.">   (  IS'JO). 

*  Rivknt  V.  Mudvirn,  1  Hawlo  (I'a.)  32.".  (1S21>):  Siihnlsou  v.  Wnlkrr. 
4  Bra<l\v.   (III.)    (OJ    (  ISTO),  nmtnl.     So  aw  tin-  authorities  ;:rnoiaIly. 


300  COMMOX    LAW    IJELATIONS.  [CIIAP.  I. 

Court,  granted  after  due  notice  and  hearing  the  parties  interested, 
tlie  foreclosure  sale  was  set  aside  and  declared  null  and  void, 
and  a  resale  was  ordered,  which  never  took  place.  In  November, 
18G4,  the  defendant,  Sarah  A.  Marsh,  recovered  a  judgment  against 
})laintiff.  Brown,  which  was  duly  entered  and  docketed,  and  in 
1865  she  caused  an  execution  to  be  issued  upon  said  judgment  to  the 
Sheriff  of  Xew  York,  who,  in  Ma}'  of  the  same  year,  sold  all  ''  the 
right,  title  and  interest"  of  which  the  said  Elizabeth  C.  Brown  was 
seized  or  possessed  in  the  said  land,  the  said  Sarah  A.  Marsh 
becoming  the  purchaser  and  taking  the  sheriff's  certificate  of  sale. 
In  September,  1865,  she  conveyed  the  said  premises  by  deed  to  the 
other  defendant,  and  in  September,  1866,  after  the  commencement 
of  this  suit,  she  also  transferred  to  him  the  sheriff 's  certificate,  and 
he  soon  after  received  the  sheriff's  deed.  The  defendant,  William 
B.  Marsh,  had  notice  of  all  the  facts  when  he  took  his  title,  and  was 
not  a  hona  fide  purchaser  for  value.  Since  the  defendants  went  into 
possession  of  the  premises  they  have  assumed  and  claimed  an  abso- 
lute title,  free  from  any  right  of  redemption  in  the  plaintiffs  or 
either  of  them. 

The  plaintiffs  commenced  this  action  to  redeem  the  said  premises 
from  the  mortgage  and  judgment  of  foreclosure,  and  the  principal 
defence  relied  on  by  the  defendants  was  their  title  under  the  judg- 
ment and  execution  sale  against  plaintiff,  Brown.  The  referee 
decided  the  same  in  favor  of  plaintiffs,  holding  that  the  execution 
sale,  being  made  by  the  assignee  of  the  mortgagee  in  possession,  was 
null  and  void  and  conferred  no  title  upon  the  purchaser. 

Wheeler  11.  Pccl-ham  for  the  appellants. 

Justus  Palmer  for  the  respondent. 

Earl,  C.  The  only  legal  proposition  involved  in  this  case,  Avhich 
we  deem  it  important  to  consider,  is  whether  a  mortgagee  of  real 
estate  in  possession  can  cause  the  equity  of  redemption  of  the 
inortgagor  to  })e  sold  on  an  execution  and  become  the  purchaser  of 
the  same,  and,  after  obtaining  the  sheriff's  deed,  set  up  his  title 
thus  acquired  against  the  claim  of  the  mortgagor  to  redeem  from 
flic  mortgage  in  an  equitable  action  commenced  by  him  for  that 
])urpose;  or,  to  state  the  proposition  in  otlier  words,  lias  the  owner 
of  the  equity  of  redemption  of  mortgaged  premises,  after  default 
and  after  the  owner  of  the  mortgage  has  taken  possession,  such  an 
interest  in  the  premises  as  can  be  sold  upon  execution  against  him  ? 
If  this  question  be  answered  in  the  affirmative,  the  decision  of  the 
Cieneral  Term  was  right  and  must  be  a  (Tinned. 

The  respective  rights  of  the  mortgagor  and  mortgagee  in  the 
land  mortgaged  have  been  the  subject  of  much  discussion,  and  it  is 
impossible  to  reconcile  all  that  learned  judges  and  writers  have 
said  upon  the  subject.     By  the  common  law  of  England  the  legal 


Sl'^l-'-  »•!•  TKI.M.M    r.     M  AUSM.  3U 1 

estate  was  vested  in  the  in<>rl<,^»j,'ce,  to  l)e  <lefeate(l  l>y  the  perform- 
ance of  a  eondilion  suhse<(uent,  to  wit,  payment  at  the  hiw  day.  In 
default  of  sucli  payment,  the  title  became  absolute  ami  irredeemable 
in  the  mortj;a«jee.  But,  two  eenturies  a;;o,  er)urts  of  equity  assumed 
jiirisdiclion  to  relieve  niort;.,M^'ors  a<j:ainst  forfeitures,  and,  thence- 
forth, in  ecjuity  a  mort^'age  has  been  re;,Mrded  as  a  mere  security,  as 
ereatin*!;  an  interest  in  the  mortgaged  premi.ses  of  a  personal  nature, 
like  that  which  the  mortf!;agee  has  in  the  debt  itself. 

These  equital)le  ])rineii)les  have  had  an  increasing  influence  upon 
courts  of  law, and  Chancellor  Kent  says  that  "  the  case  of  inortgage.-i 
is  one  of  the  most  splendid  instances  in  the  history  of  our  juris- 
prudence of  the  triumph  of  e(piitaijle  j)rinciples  over  technical 
rules,  and  the  homage  which  tho.se  princij)les  have  received  by  their 
adoj)tion  in  the  courts  of  law"  (4  Kent's  Com.  158). 

The  common-law  rule,  as  modified  by  the  equitable  principles 
above  alluded  to,  still  prevails  in  England.  There  the  courts  still 
hold  that  the  legal  title  passes  to  the  mortgagee,  and  becomes  by 
default  absolutely  vested  in  him  at  K'tW,  and  that  the  mortgagor  has, 
after  default,  nothing  but  an  equity  of  redem|)tion  to  be  enforced 
in  a  court  of  equity.  After  default  the  mortgagor  can  again  become 
reinvested  with  the  title  to  his  land  only  by  a  reconveyance  by  the 
mortgagee.  The  same  rule  prevails  in  the  Xew  England  States,  and 
many  of  the  other  States  of  the  Union.  But  this  common-law  rule 
has  never,  to  its  full  extent,  been  adopted  in  this  State.  Here  the 
mortgagor  has.  both  in  law  and  equity,  been  regarded  as  the  owner 
of  the  fee,  and  the  mortgage  has  been  regarded  as  a  mere  chose  in 
action,  a  mere  security  of  a  personal  nature  (Wafers  v.  Stcicnrt, 
1  Caines'  Cases  in  Error,  47;  Jackson  v.  Willard,  i  Johns.  4"J  ; 
liunyan  v.  Mcrscrcnii.  11  id.  531;  Aslor  v.  Ifoj/I,  o  Wend.  GO"); 
Packer  v.  Rochester  d-  Syracuse  Railroad  Co.,  17  X.  Y.  'iS^-'i!)"* ; 
Kortright  v.  Cady,  21  id.  343;  Power  v.  Lester,  23  id.  527;  Mcrritt 
V.  linrtholirk,  3G  id.  44). 

Trior  to  the  Revi.sed  Statutes  the  mortgagee  coidd  nuiintain 
ejectment  to  recover  the  mortgaged  premises.  This  right  has  been 
taken  away  (2  R.  S.  312),  and  now  the  mortgagor,  both  Ix-fore  and 
after  default,  is  entitled  to  the  j)os.session  of  the  premises,  of  which 
he  cannot  be  deprived  without  his  consent,  exee])t  liy  forei-losurc. 
It  is  not  disj)uted  that  befon^  possession  taken  by  the  mortgagee  the 
mortgagor  has  an  interest  in  the  real  estate  which  can  be  sold  upon 
execution;  that  his  widow  is  entitletl  to  dower;  that  he  can  convey 
and  devise  his  interest  as  real  estate;  that  at  his  death  it  deseends 
to  his  heirs;  that  he  has  every  attribute  and  right  of  an  absolute 
owner  of  the  real  estate,  subject  to  the  lien  of  the  mortgage,  and 
that  his  title  can  be  defeated  only  by  foreclosure.  It  is  not  disputed 
that   the  mortgagee  before  possession   taken   has  only  a   chose   in 


302  COMMOX    LAW    RELATIONS.  [CHAP.  I. 

ai-tion;  that  he  holds  the  mortgage  only  as  security  for  the  debt; 
that  he  can  sell  the  bond  and  mortgage  by  mere  delivery  as  personal 
property;  that  at  his  death  they  pass  to  his  personal  representatives 
as  a  portion  of  his  personal  estate ;  that  he  has  no  such  estate  in  the 
land  as  can  be  sold  on  execution,  or  as  he  can  give  his  widow  dower ; 
and  that  he  has  no  attribute  of  ownership  in  the  land.  It  was  said 
by  Judge  James,  in  Power  v.  Lester  (supra),  that  "a  mortgage  is 
a  mere  security,  an  incumbrance  upon  land.  It  gives  the  mortgagee 
no  title  or  estate  whatever.  The  mortgagor  remains  the  owner,  and 
may  maintain  trespass  even  against  the  mortgagee.  A  mortgage  is 
but  a  chattel  interest;  it  may  be  assigned  by  delivery,  and  cannot 
be  seized  and  sold  on  an  execution."  Judge  Pratt  says,  in  Packer 
v.  The  Rochester  &  Syracuse  Railroad  Company  {supra),  that  "a 
mortgagee  has  a  mere  chose  in  action,  secured  by  a  lien  upon  the 
land.  Since  the  Revised  Statutes  there  is  no  attribute  left  in  the 
mortgagee,  before  foreclosure,  upon  which  he  can  make  any  pretense 
for  a  claim  of  title.  For  the  mere  right,  when  he  goes  into  posses- 
sion by  the  consent  of  the  mortgagor,  to  retain  possession,  is  not 
an  attribute  of  title.  He  would  have  the  same  right  in  case  of 
a  pledge." 

At  common  law,  payment  or  tender  at  the  law  day  extinguished 
the  lien  of  the  mortgage  and  reinvested  the  mortgagor,  without 
a  reconveyance  by  the  mortgagee,  with  his  title.  But  tender  or 
payment  after  the  law  day  did  not  have  this  effect,  and  in  such  case 
a  reconveyance  was  necessary ;  and  such  is  still  the  rule  in  England 
and  in  many  of  the  States  of  the  Union.  But  it  has  always  been  the 
law  of  this  State  that  payment  or  tender,  at  any  time  after  the  mort- 
gage debt  became  due  and  before  foreclosure,  destroyed  the  lien  of 
the  mortgage  and  restored  the  mortgagor  to  his  full  title.  As  the 
mortgagee  had  no  title,  a  reconveyance  was  not  required  by  the  law 
as  expounded  by  our  courts.  So  that  here  the  term  law  day,  which 
occupies  such  a  prominent  place  in  the  early  discussions  as  to  mort- 
gages, has  no  particular  significance.  The  mortgagor  has  his  "  law 
day"  until  his  title  has  been  foreclosed  by  sale  under  the  mortgage, 
and  it  is  a  misnomer  in  this  State  to  call  the  mortgagor's  right  in 
the  land,  before  or  after  default,  an  equity  of  redemption,  a  mere 
right  to  go  into  equity  and  redeem.  This  was  a  proper  description 
of  the  mortgagor's  right  in  the  land  according  to  the  law  as  ex- 
])ounded  in  England.  But  in  this  State  the  interest  of  the  mort- 
gagor in  the  land  is  the  same  before  and  after  default,  and  is  a  legal 
estate,  with  all  the  incidents  and  attributes  of  such  an  estate. 

But  it  is  claimed  by  the  learned  counsel  for  the  appellants  that 
tlie  position  of  the  mortgagee  is  materially  changed  when  he  gets 
possession.  It  is  true,  notwithstanding  the  provision  of  the  Revised 
Statutes,  which  prohibits  an  action  of  ejectment  by  the  mortgagee 


M  t  .  I.'  riJIMM     /  .    MAIiSll.  3015 

lo  oljiiim  ilif  possession  of  llic  iMortj;iix«'<l  jn'fiiiix-.-,  that  after  he 
liiis  liiwfullv  ()l)liiim'(l  llic  posscssinii  lie  iiiav  ivtaiii  it  until  the  debt 
.  tured  l)y  the  ni<)iM;:a^('  has  l)een  jjaid.  Before  takin;,'  possession 
he  inort-jja^'ee  lias  no  title  in  the  hmds.  How  ean  the  mere  posses- 
ion chan<;e  the  title  li<'iii  tlie  niort;:a^or  to  the  niortpigee,  or  in 
any  wav  diminish  the  estate  of  the  one  or  enhirj^e  the  estate  of  the 
other!''  lielore  takin;r  j)ossessi(»n  thi-  niort;,M;,'ee  had  a  mere  lien 
upon  the  real  estate  pledj^ed  for  the  security  of  his  dol»t.  After 
|iossession  he  has  in  his  possession  the  i)roperty  pledged  as  his  secur- 
ity, the  title  remaining  as  it  was  before.  The  mortga}?or\s  title  is 
.-till  a  legal  one.  with  all  the  incidents  of  a  legal  title  subject  to  the 
pledge,  and  the  mortgagee's  interest  is  still  a  mere  debt  secured 
by  the  pledge.  If  the  mortgagee  should  die  in  jmssession,  the  debt 
would  still  go  to  his  personal  representatives  to  be  administered  as 
personal  estati',  and  the  mortgagor's  title  would  go  to  his  heirs. 
Payment,  or  even  tender,  would  destroy  the  mortgagee's  right  to 
ntain  jiossession,  and  would  enable  the  mortgagor  to  maintain 
jeetment  to  recover  jmssession.  The  mortgagee,  in  such  case,  so 
iar  from  having  any  title,  holds  the  land  as  the  land  of  the  mort- 
gagor, and  is  liable  to  account  to  him  for  the  rents  and  profits. 
•  ludge  Comstock,  in  Korlriijhl  v.  Ciidi/  {supra),  says:  "The  mort- 
.ragee's  right  to  bring  ejectment,  or,  being  in  possession,  to  defend 
himself  against  an  ejectment  by  the  mortgagor,  is  but  a  right  to 
recover  or  retain  possession  of  the  pledge  for  the  purpose  of  paying 
the  debt.  Such  a  right  is  but  the  incident  of  the  debt,  and  has  no 
relation  to  a  title  or  estate  in  the  land.  The  notion  that  a  mortgagee's 
possession,  whether  befori'  or  after  default,  eidarges  his  estate,  or  in 
any  respect  changes  the  simple  relation  of  debtor  and  creditor 
iM'tween  him  and  his  mortgagor,  rests  upon  no  foundation.  We 
may  call  it  a  just  and  lawful  possession,  like  the  pos.session  of  any 
other  pledge,  but  where  its  object  is  accomplished  it  is  neither  just 
iKir  lawful  for  an  instant  longer." 

1  cannot  doubt,  therefore,  that  the  mortgagor,  after  default,  aiul 
after  the  mortgagee  has  taken  possession,  has  such  an  estate  in  the 
laiul  as  can  be  sold  upon  execution.  It  is  not  necessary  to  decide 
whether,  in  >ueh  a  case,  the  mortgagee  has  also  .such  an  estate  in  the 
land  as  can  be  sold  u|)on  execution,  because,  if  he  has,  it  does  not 
follow  that  the  mortgagor  has  not  also  such  a  right.  They  might 
eacli  own  an  estate  which  could  be  sold.  Hut  I  am  of  oj)inion  that 
the  mortgagee  has  no  estate  in  the  land  which  can  be  sold  on  execu- 
tion. His  interest  is  a  mere  eho.se  in  action,  a  debt  secured  by  a 
pledge-  of  real  estate.  His  debt  is  not  merged  in  the  real  estate  by 
the  possession.  He  has  no  interest  in  the  real  estate  which  he  ean 
-ell,  or  which  can  be  sold  separate  from  the  debt.  Such  a  sale  would 
ionvey  nothing.    Whoever  took  the  real  estate  from  him  would  take 


SOi  COMMON    LAW    RELATIONS.  [CHAP.  I. 

it  eul^ject  to  the  same  liability  as  he  was  under  to  account  for  the 
rents  and  profits  to  the  mortgagor.  It  has  been  decided  that  a 
transfer  of  the  mortgage  without  the  debt  is  a  mere  nullity  {Merritt 
V.  BartlioUck,  supra). 

The  fact  that  at  the  time  of  the  execution  sale,  the  defendants 
were  in  possession,  claiming  the  absolute  title,  can  make  no  differ- 
ence, as  land  held  adversely  to  the  true  owner  can  be  sold  upon 
execution  against  him  {Tuttle  v.  Jaclcson,  6  Wend.  213;  Trmx  v. 
Thorn,  3  Barb.  156). 

I  am,  therefore,  of  the  opinion  that  the  title  of  the  defendant 
under  the  execution  sale  Avas  valid,  and  that  the  i^laintiflE  had  no 
right  to  redeem. 

The  order  of  the  General  Term  must  be  affirmed,  and  judgiuent 
absolute  rendered  against  the  plaintiffs,  with  costs.^  >  ^ 


TEFFT  V.  MUNSOjST. 

Court  of  Appeals  of  New  York,  1875. 

(57  N.  Y.  97.) 

Reported,  page  139,  supra. 


RECTOR   CHRIST   CHURCH  v.   MACK, 

Court  of  Appeals  of  New  York,  1883. 

(93  N.  Y.  488.) 

Appeal  from  judgment  of  the  General  Term  of  the  Supremo 
Court,  in  the  first  judicial  department,  entered  upon  an  order  made 

'  The  concurring  opinion  of  Reynolds,  C,  as  well  as  the  elaborate  dissent- 
ing opinion  of  Gray,  C,  arguing  for  the  legal  character  of  the  mortgage 
estate,  especially  after  default  and  entry,  is  omitted. 

This  case  represents  the  general  rule  in  the  United  States.  But  see 
Van  Ness  v.  Hyatt,  13  Pet.  294  (1839),  for  the  doctrine  of  a  stranded 
jurisdiction. 

=  New  York  Code  Civ.  Proc.  §  1432.  The  judgment  debtor's  equity  of 
redemption  in  real  property  mortgaged  shall  not  be  sold  by  virtue  of  an 
execution,  issued  upon  a  judgment  recovered  for  the  mortgage  debt  or  any 
part  thereof. 


'*** '■  '•]  KKi  roi{  ciiitisT  cuiHcir   c.   matk.  :3().> 

October  2S,  1881,  which  reversed  a  ju(l«>;iiieiU  in  favor  of  defendant 
Hhoda  E.  Maek,  entered  uj)(>n  a  deeision  of  the  court  on  trial  at 
Speeial  Term,  and  direeted  judj^nient  for  i>hiinti(r  for  the  relit-f 
demanded  in  the  comjdaint.     (  Keported  helow.  'i.')  Ilun,  418.) 

This  action  was  brou^^dit  to  restrain  defendants  from  ohstructinj,' 
the  light  and  air  from  the  windows  of  plaintifT's  church  edifice, 
adjoining  a  lot  owned  hy  said  defendant,  Khoda  E.  Mack.  Plaintiff 
was  formerly  owner  of  said  lot,  wliieh  was  subject  to  a  mortgage 
given  to  one  Hell.  It  conveyed  the  same  to  defendant,  John  Mack, 
subject  to  the  mortgage,  which  the  grantee  assumed  and  agreed  to 
pay.  By  the  deed  an  easement  was  reserved  of  light  and  air  to  the 
grantor's  church  so  long  as  its  premises  were  used  for  church  pur- 
poses. !Mack  conveyed  to  a  third  jjcrson,  who,  on  the  same  day, 
conveyed  to  Khoda  E.,  wife  of  said  John  ^lack.  Ilcr  deed  was 
made  subject  to  the  Bell  mortgage,  but  contained  no  assumption 
of  the  same  by  her.  The  holder  of  the  mortgage,  at  the  request 
of  defendants  herein,  foreclosed  the  mortgage  by  suit ;  plaintilf 
was  made  a  party  defendant  therein.  Judgment  of  foreclosure  in 
the  ordinary  form  was  entered,  and  upon  the  sale  under  it  Mr-. 
Mack  became  the  purchaser  and  received  the  referee's  deed.  Mrs. 
Mack  thereafter  erected  a  fence  upon  her  lot,  which  cut  off  the  light 
from  the  basement  windows  of  ])laintifr's  church. 

E.  C.  Boarduian  for  ajtpellant. 

Wheeler  II.  Peckham  for  respondent. 

Finch,  J.  It  is  conceded  that  a  purchase  under  the  foreclosure 
of  the  Bell  mortgage  woidd  have  given  to  a  stranger  to  the  title  an 
ownership  discharged  of  the  plaint ifT'?i  easement.  That  the  same 
result  attends  the  i)urchase  by  ]\Irs.  ilack,  notwithstanding  her 
relation  to  the  property,  follows  from  the  reason  upon  which  the 
conceded  rule  is  founded.  The  statute  provides  that  the  deed  given 
in  pursuance  of  a  sale  on  foreclosure  shall  vest  in  the  punhaser 
'*  the  same  estate  (and  no  other  or  greater)  that  would  have  vested 
in  the  mortgagee  if  the  ecjuity  of  redem|)tion  had  been  foreclo.sed." 
and  further  declares  that  such  deeds  shall  be  as  valid  as  if  executed 
by  the  mortgagor  and  mortgagee.  The  construc-tion  (o  l»e  put  upon 
these  two  provisions  was  early  settled  in  this  court  {finiinnrd  v. 
Cooper,  10  X.  Y.  :j:)H  ;  Parker  \.  The  lioch.  tf  Sf/ranis,-  p.  P.  Co.. 
17  t(/.  *^87).  In  the  last  of  these  cases  it  was  said  that  where  leffal 
title  is  concerned,  a  mortgage,  which  for  nuiny  other  purposes  is 
n  mere  chose  in  action,  is  a  conv(>yance  of  the  land  ;  that  the  interest 
remaining  in  the  mortgagor  is  an  c<iuity,  and  that  the  foreclosure 
cuts  off  and  extinguishes  that  equity,  and  lc>aves  the  title  conveyed 
by  the  mortgage.  It  was  added  that  such  was  precisely  the  effect 
of  a  strict  foreclosure,  and  that  in  construing  the  statute  its  two 
clau.'ses  were  to  be  read  in  harniotiv.     It  was.  therefore,  decided  that 


30G  COMMON    LAW    RELATIONS.  [CIIAP.  I 

Avhen  the  act  says  the  master's  deed  "  shall  have  the  same  validity 
as  if  executed  by  the  mortgagor,  it  is  not  to  be  taken  that  the 
purchaser  is  to  be  considered  as  holding  under  the  mortgagor  by 
title  subsequent  to  the  mortgage  in  a  sense  which  would  subject  him 
to  the  effect  of  the  mortgagor's  acts  intermediate  the  mortgage  and 
the  foreclosure."  While  it  is  clearly  the  modern  doctrine  that  the 
mortgagee  has  by  virtue  of  his  mortgage  no  estate  in  or  title  to  the 
land,  or  the  right  of  possession  before  or  after  the  mortgage  debt 
becomes  due  {Ten  EycJc  v.  Craig,  62  N.  Y.  421),  and  only  acquires 
such  title  by  purchase  upon  the  foreclosure  sale,  yet  the  character 
and  extent  of  his  title  so  acquired  is  described  in  the  statute  by  a 
reference  to  the  old  rule  and  the  old  practice,  when  the  mortgagor's 
right  could  be  fitly  termed  an  equity  of  redemption  which  could  be 
foreclosed,  leaving  an  absolute  estate  in  the  mortgagee.  The  effect 
of  the  foreclosure  deed,  therefore,  as  determined  by  the  statute,  is 
to  vest  in  the  purchaser  the  entire  interest  and  estate  of  mortgagor 
and  mortgagee  as  it  existed  at  the  date  of  the  mortgage,  and  un- 
affected by  the  subsequent  incumbrances  and  conveyances  of  the 
mortgagor.  And  thus,  while  the  plaintiff  corporation  held  title  to 
the  Mack  lot,  the}^  held  it  subject  to  the  Bell  mortgage  and  to  the 
absolute  title  into  which  that  mortgage  might  ripen  by  a  foreclosure 
and  sale.  "When  they  sold  to  Mack,  reserving  an  easement  in  the 
lot  for  light  and  air  to  their  adjoining  windows,  they  held  their 
easement,  and  Mack  held  his  ownership,  still  subject  to  the  Bell 
mortgage  and  the  absolute  title  into  which  it  might  be  turned. 
Mack  had  assumed  the  payment  of  the  Bell  mortgage,  but  conveyed 
through  a  third  person  to  his  wife,  subject  to  that  mortgage,  but 
without  any  liability  for  its  payment  assumed  by  her.  [Jpon  its 
foreclosure  she  became  the  purchaser  and  took  the  deed.  That 
vested  in  her,  under  the  statute  provision,  the  title  of  the  mortgagor 
and  mortgagee  unaffected  by  the  intermediate  acts  of  the  mortgagor 
and  those  succeeding  to  his  interest,  unless  there  be  something  in 
her  position  which  subjects  her  to  a  different  rule. 

The  statute  allowed  her  to  be  a  purchaser,  and  in  determining 
the  effect  of  the  foreclosure  deed  its  terms  draw  no  distinction 
among  purchasers.  It  does  not  discriminate.  Whoever  may  law- 
fully purchase  becomes  the  purchaser  whose  title  is  described  and 
determined,  and  we  have  no  warrant  in  the  facts  to  take  ]\Irs.  Mack 
out  of  the  statutory  protection. 

The  argument  of  the  General  Term  and  of  the  learned  counsel 
for  the  respondent  on  this  appeal  were  both  aimed  at  the  result  of 
converting  her  purchase  into  a  mere  payment  and  discharge  of  the 
mortgage  lien,  and  her  deed  into  a  release  of  the  incumbrance.  The 
General  Term  reached  the  result  by  a  disregard  of  the  first  clause 
of  the  statute  declaring  the  effect  of  the  deed,  and  what  seems  to  us 


-><•■  i-l  HKcTolt    riiiMsT   ilIlIMII    r.    MACK.  ."WT 

a  ini>inti'r|»ri-tatit)ii  of  tin-  ^^'(•()lul  rlaiisi'.  In  l)ri(.'f.  tlu'  reasoning 
was  that  (lie  di'cd  was  to  Ix-  t'»|uival('nt  to  one  niadr  hy  tlu*  inort- 
ira«ror  and  niortga<^c'i';  that  tlir  mortgagor  had  already  conveyed 
and  his  title,  intinnheri'd  liy  an  after  constituted  easement,  liad 
readu'd  Mrs.  Mack;  that  she  could  not  be  said  to  purchase  what 
.»he  already  had:  that  so  her  deed  was  only  equivalent  to  one  made 
liy  the  mortgagt'c,  and  he  having  no  title,  but  merely  a  lien,  the 

•  redosure  deed  oj)erated  only  as  a  release  to  Mrs.  Mack,  however 
M  miglit  oj)erate  as  to  a  stranger.  We  deem  this  reasoning  defective 
in  two  resj)ects.  It  construes  the  statute  to  transfer  the  mortgagor's 
title  as  it  stood,  not  at  the  date  of  his  mortgage,  but  burdened  with 
its  after  incund)rances  and  limitations,  imj)osed  by  him  or  his 
grantees ;  and  it  assumes  what  is  not  true,  that  Mrs.  Mack  already 
had  the  entiic  title  of  the  mortgagor,  and  so  could  take  nothing 
from  him  but  only  the  right  of  the  mortgagee.  The  mortgagor 
had  the  absolute  title  incumbered  only  by  the  mortgage.  That  title 
lu'  transferred  to  the  church,  but  when  the  latter  conveyed  to  Mack 
it  reserved  an  easement  or  servitude^,  and  so  parted  with  less  than  it 
received  from  the  mortgagor.  This  title  Mrs.  Mack  took,  and 
therefore  did  not  get  the  entire  interest  which  the  mortgagor  him- 
self had.  There  was  something  which  she  had  not  got,  which  by 
a  foreclosure  of  the  Kell  mortgage  would  ])ass,  and  which  it  was 
|)(»ssible  for  her  to  purchase. 

A  furtlier  ground  is  stated  which  is  based  upon  a  theory  that 
Mrs.  Mack  by  virtue  of  her  ownershij)  of  the  lot  came  under  some 

•ligation  to  pay  off  the  mortgage,  and  so  could  not  in  equity  assert 
a  title  founded  upon  a  breach  of  that  obligation.  Cases  are  cited 
in  other  States  which  hold  that  the  mortgagor  owes  to  his  mortgagee 
the  duty  of  paying  ta.xes  upon  the  land  and  cannot  by  neglecting 
'heir  payment  and  causing  a  sale  ami  then  becoming  a  jiurchaser. 

It  off  the  lien  of  the  mortgagee.  If  the  purchase  had  been  made 
i»y  Mr.  Mack,  who  had  assumed  the  payment  of  the  mortgage,  the 
•piestion  would  have  arisen.  Hut  Mrs.  Mack  owed  no  duty  of  j)ay- 
iiient  either  to  the  mortgagee  or  to  the  ])laintilT.  She  assumed  no 
MU'h  obligatictn.  She  violated  no  duty  and  incurred  no  |)ersonal 
liability  by  omitting  to  pay  ofT  the  incumbrance.  It  was  her  right 
and  |)rivilege  not  to  do  so,  and  in  the  omission  she  did  no  wrong  of 
which  either  party  could   lawfully  comjilain.     Slu-  had   the  right 

•  leave  the  mortgagee  to  his  remedy,  and  when  he  asserte*!  it.  the 
i.iw  allowed  her  to  become  the  purcha.ser.  and  made  no  distinction 
between  her  rights  and  those  of  a  stranger  to  the  title. 

It  was  urged  that  this  view  of  the  case  left  the  plaintitT  without 
iiiy  power  to  save  its  easement,  since  on  the  sale  Mrs.  Mack  (^mld 
"•afely  outl)id  all  othiTS  and  beyond  the  mortgage  debt.  Rut  th<' 
plaintilT  sliould  not  have  waited  until  th(»  sale.     When  brought  into 


308  COMMON    LAW    RELATIONS.  [CIIAP.  I. 

court  as  a  defendant,  and  certain  to  be  bound  by  the  decree,  it 
should  have  sought  to  modify  the  decree  and,  showing  the  peril 
of  its  easement  and  offering  to  bid  the  full  amount  of  the  mortgage 
debt  and  costs  upon  a  sale  subject  to  the  servitude,  it  should  have 
asked  that  the  sale  be  so  made.  The  mortgagee  could  not  object 
since  his  debt  would  be  paid  in  full  and  he  had  no  greater  right ; 
and  Mrs.  Mack  could  have  asserted  no  equity  to  have  the  sale  so 
made  as  to  free  her  from  the  easement.  But  Avhen  no  limitation  or 
condition  is  imposed  by  the  decree,  and  no  duty  of  payment  rests 
on  the  purchaser,  the  statute  determines  the  estate  which  passes 
by  the  foreclosure  deed. 

The  judgment  of  the  General  Term  should  be  reversed  and  that 
of  the  Special  Term  affirmed,  Avith  costs. 

All  concur. 

Judgment  accordingbj. 


CHAPPELL  V.  JARDINE. 

Supreme  Court  or  Errors  of  Connecticut,  1884, 

(51  Conn.  Gl.) 

Suit  for  a  foreclosure;  brouglit  to  the  Superior  Court.  The 
defendants  demurred  to  the  complaint;  the  court  (Andrews,  J.) 
overruled  the  demurrer  and  passed  a  decree  of  foreclosure.  The 
defendants  appealed  to  this  court.  The  case  is  sufficiently  stated 
in  the  opinion. 

J.  M.  Thayer  and  C.  F.  Thayer  for  the  appellants. 

J.  Halsey  and  IF.  A.  Briscoe  for  the  appellee. 

Park,  C.  J.  This  is  a  suit  for  the  foreclosure  of  certain  mort- 
gaged premises,  constituting  an  island,  known  as  Eam  Island,  in 
Long  Island  Sound.  The  complaint  alleges  that  the  land  mort- 
gaged at  the  time  the  deed  was  given  lay  in  the  town  of  Southhold, 
Suffolk  County,  in  the  State  of  New  York,  and  it  is  averred  that  the 
mortgage  was  recorded  in  the  office  of  the  clerk  of  Suffolk  County 
in  that  State.  It  is  further  alleged  that  Eam  Island,  by  the  recent 
establishment  of  the  boundary  line  between  the  State  of  New  York 
and  this  State,  has  become  a  part  of  the  town  of  Stonington  in  this 
State.  The  complaint  is  demurred  to,  so  that  the  averment  stands 
admitted  that  the  island  was,  when  the  mortgage  was  made,  a  part 
of  the  State  of  New  York. 

We  have  heretofore  held  (Elphiclc  v.  Hoffman,  49  Conn.  331) 
that  the  boundary  agreed  upon  1iy  tbo  joint  commission  of  the  two 


-"■    '  1  ClIArrKl.L    V.    JAUDINi:.  300 

Statfsi  and  t'slal)lislR'(l  hv  the  Ic^'islativc  acc<'|itanc('  of  Ixtth  State-, 
was  to  be  re^artled  as  |)resumal)ly  a  desi^^Miaf ion  and  establisliment 
fif  the  pre-exist  in;,'  hounchirv  line  which  had  heeonie  lost,  and  not  as 
the  establishment  of  a  new  line,  leaving  the  matter  open  to  proof  in 
>-pocial  cases.  If  we  should  apply  that  rule  heri',  and  consider  the 
i-land  in  (juestion  as  having  been  legally  a  part  of  this  State  when 
llie  nu)rtgage  was  made,  we  should  at  once  eiu-ounter  an(»ther  (|ues- 
tion  of  a  serious  nature.  There  can  be  no  question  tiiat  whatever 
has  been  tlie  dr  jure  jurisdiction  over  the  island,  it  has  been  for 
many  years  within  the  dc  facto  jurisdiction  of  the  State  of  Xew 
York;  and  we  should  be  comj»elled  to  determine  the  legal  effect 
upon  this  nuirtgage  of  that  dr  fnrlo  jurisdiction. 

We  have  thought  it  as  well,  therefore,  to  take  the  case  as  the 
]>arties  have  themselves  presented  it.  the  plaintiff  by  the  averments 
of  his  complaint  and  the  defendants  by  the  admissions  of  their 
(Iciuurrer,  and  regard  the  island  in  question  as  having  been  within 
tin-  State  of  Xew  York  when  the  mortgage  was  made,  and  after- 

irds  brouglit  witliin  this  State  by  the  establishment  of  the  bound- 
ary line.  Indeed,  as  the  proceeding  is  in  error,  we  cannot  properly 
govern  ourselves  by  anything  but  the  record  as  it  comes  before  us. 
And  in  treating  the  island  as  within  the  State  of  Xew  York  when 
'111'  mortgage  was  made  we  are  regarding  the  contract   and  the 

j]\U  of  the  parties  under  it,  precisely  as  they  themselves  under- 

"<td  them  at  the  tinu'. 
The  mortgaged  premisi's  liaviug  been  in  tlic  State  of  Ww    York 

iien  the  mortgage  was  nunle,  it  is  of  course  to  be  governed  in  its 
.  .nstruction  and  effect  by  the  laws  of  that  State  then  in  force.  In 
McCurmivk  v.  ^uUivont]  10  Wheat.  li)-.\  the  court  say:  "It  is  an 
Ji<knowledged  ]»rincij)le  of  law  that  the  title  and  dis])osition  of  real 
property  is  exclusively  subject  to  the  laws  of  the  country  where  it 

situated,  which  can  alone  prescribe  the  mode  by  which  a  title  to  it 
m  j)ass  from  one  person  to  another."    The  same  doctrine  is  held 

I  I'liilrd  Sldtrs  v.  Ciosbi/.  7  C'ranch,  1  IT) ;  h'rrr  v.  Moon,  9  Wheat. 
."»(;.*»;  Darhij  v.  Mni/rr.  10  id.  \Cu},  and  in  numy  other  cases.  Indeed 
the  doctrine  is  un(iuestione(l  law  everywhere. 

Xow,  according  to  the  laws  of  the  Stale  of  Xcw  ^'ork  thcu  and 
^lill  in  force,  a  mortgage  of  real  estate  creates  a  mere  chose  in 
.action,  a  jdedge.  a  security  for  the  debt.  It  conveys  no  title  to  the 
projH'rty.  The  claim  of  the  mortgage^'  is  a  mere  chattel  interest. 
lie  has  no  right  to  the  possi'ssion  of  the  pro|)erty.     The  tith*  and 

isin  reniain  in  the  mortgagor,  and  he  can  nuiintain  trespass  and 
"jeetnuMit    against    the    mortgagee,    if    he    takes    jmsscssion    of    tln' 
property   without    the   consent    of    the    mortgagor.      This    appears 
'••arly  from  the  following  eases. 

In  Gdrdiirr  v.  IfntrH.  ."^  Henio.  'V-Vi,  the  court  sav  :  "The  ?nort- 


310  COMMON    LAW    RELATIONS.  [CHAP.  I- 

gagee,  as  such,  has  no  title  to  the  hind  mortgaged;  he  has  neithef 
jus  in  re  nor  ad  rem,  but  a  mere  security  for  his  debt ;  the  title  to 
the  land, notwithstanding  the  mortgage,  remains  in  the  mortgagor." 
In  Power  v.  Lester,  23  IST.  York,  537,  the  court  say :  "  A  mortgage 
is  a  mere  security,  an  incumbrance  upon  land.  It  gives  the  mort- 
gagee no  title  or  estate  whatever.  The  mortgagor  remains  the 
owner,  and  may  maintain  tresjjass  even  against  the  mortgagee. 
A  mortgage  is  but  a  chattel  interest ;  it  may  be  assigned  by  delivery, 
and  cannot  be  seized  and  sold  on  execution."  In  Trimm  v.  Marsh, 
5-1  iST.  York,  599,  the  court  say:  "  The  common  law  rule  .  .  .  still 
prevails  in  England.  There  the  courts  still  hold  that  the  legal  title 
passes  to  the  mortgagee,  and  becomes  by  default  absolutely  vested 
in  him  at  law,  and  that  the  mortgagor  has,  after  default,  nothing 
but  an  equity  of  redemption  to  be  enforced  in  a  court  of  equity. 
After  default  the  mortgagor  can  again  become  re-invested  with  the 
title  to  his  land  only  by  a  re-conveyance  by  the  mortgagee.  The 
same  rule  prevails  in  the  Xew  England  States,  and  in  many  of  the 
other  States  of  the  Union.  But  this  common  law  rule  has  never,  to 
its  full  extent,  been  adopted  in  this  State.  Here  the  mortgagor 
has,  both  in  law  and  equity,  been  regarded  as  the  owner  of  the  fee, 
and  the  mortgage  has  been  regarded  as  a  mere  chose  in  action,  a 
mere  security  of  a  personal  nature.  ...  At  common  law  payment 
or  tender  at  the  law  day  extinguished  the  lien  of  the  mortgage  and 
re-invested  the  mortgagor,  without  a  re-conveyance  by  the  mort- 
gagee, with  his  title.  But  tender  or  payment  after  the  law  day  did 
not  have  this  effect,  and  in  such  case  a  conveyance  was  necessary ; 
and  such  is  still  the  law  of  England,  and  of  many  of  the  State-  of 
the  Union.  But  it  has  always  been  the  law  of  this  State  that  pay- 
ment or  tender,  at  any  time  after  the  mortgage  debt  became  due 
and  before  foreclosure,  destroyed  the  lien  of  the  mortgage  and 
restored  the  mortgagor  to  his  full  title.  As  the  mortgagee  had  no 
title,  a  re-conveyance  was  not  required  Ijy  the  law  as  expounded 
l)y  our  courts.  So  that  here  the  term  '  law  day,'  which  occupies 
such  a  prominent  place  in  the  early  decisions  as  to  mortgages,  ha* 
no  particular  signiiicance.  The  mortgagor  has  his  '  law  day'  until 
his  title  has  been  foreclosed  by  sale  under  the  mortgage,  and  it  is 
a  misnomer  in  this  State  to  call  the  mortgagor's  right  in  the  land, 
before  or  after  default,  an  equity  of  redemption,  a  mere  right  to 
go  into  equity  and  redeeuL  This  was  a  proper  description  of  the 
mortgagor's  right  in  the  land  according  to  the  law  as  expounded 
in  England.  But  in  this  State  the  interest  of  the  mortgagor  in  tho 
land  is  the  same  before  and  after  default,  and  is  a  legal  estate,  with 
all  the  incidents  and  attributes  of  such  an  estate."  See  also  Jf/rA-sov 
V.  WilJnrd,  4  Johns.  42;  Astor  v.  Iloi/t,  5  Wend.  603;  Kortrighi  v. 
Cadii,  31  N.  York,  343;  Merritt  v.  BartliolicTc,  36  id.  44. 


SKI".  l]  CIlAI'l'KLL    r.    .lAlCDlNE.  311 

It  follows,  tla'ivfoiv,  thill  \\\u\v  tin-  land  in  (ju('.-«tion  remains  I 
in  the  State  of  New  York  it  was  ineiunlMTcd  In'  a  niort;4a;^e  of  this 
character;  and  when  it  caint'  into  this  State  it  bore  with  it  the  sanu- 
l)urden  precisely,  'i'iiere  was  nothing  in  the  chan;;e  of  jurisdiction 
that  could  afTcct  the  contract  of  mortgage  that  had  heen  made 
hetween  the  parties.  The  title  to  the  property  continued  to  remain 
in  the  niort^M«,'or.  and  it  remains  in  him  still.  This  is  cle.ir.  The 
laws  of  this  Stati'  could  not  make  a  new  contract  for  the  parties 
or  add  to  one  already  made.  They  had  to  take  the  contract  as  they 
found  it. 

Now  it  is  clear  that  there  is  no  remedy  by  way  of  foreclosure 
known  to  our  law  which  is  adaj)ted  or  ai)proj)riate  to  giving  relief 
on  a  mortgage  of  this  character.  Our  remedy  is  adapted  to  a  mort- 
gage deed  which  conveys  the  title  of  the  property  to  the  mortgagee, 
and  when  the  law  day  has  passed  the  forfeiture,  stated  in  the  deed, 
becomes  absolute  at  law,  and  vests  a  full  and  complete  title  in  the 
mortgagee,  with  the  exception  of  the  eciuitable  right  of  redemption, 
which  still  remains  in  the  mortgagor.  The  object  of  the  decree  of 
foreclosure  is  to  extinguish  this  right  of  redemj)tion  if  the  mortgage 
debt  is  not  paid  by  a  specified  time.  The  decree  acts  upon  this 
right  only.  It  conveys  nothing  to  and  decrees  nothing  in  the  mort- 
gagee if  the  debt  is  not  paid.  After  the  law  day  has  passed  the 
right  of  redemption  becomes  a  mere  cloud  on  the  title  the  mortgagee 
then  has,  and  wlien  it  is  removed  his  title  becomes  clear  and  per- 
fect {Phi'Ips  V.  >>(i(j(',  2  Day,  151;  Ronlh  v.  SmUh,!)  Conn.  130; 
Chambcrlin  v.  Thuinpsoii,  10  id.  241;  Porter  v.  Seclei/,  13  id.  ."ifil  ; 
Smith  V.  Vincent,  1.")  i<I.  1  ;  Doton  v.  Fiussrl}.  IT  i'(/.  146;  Cross  v. 
Robinson,  21  id.  37^;  Diidir,/  v.  Cnldwidl  V.\  id.  218;  Cnlwell  v. 
Wiirnvr,  3('»  id.  221). 

What  effect  would  >\\v\\  a  decree  jtroiluce  upon  a  mortgage  likt' 
the  one  under  consideration,  where  the  legal  title  remains  in  tin* 
mortgagor,  and  nothing  but  a  pledgee's  interest  is  in  the  mortgagiv, 
•  ven  after  the  del)t  becomes  due?  It  could  only  extingui.sh  the 
right  of  redem|)tion,  if  it  could  do  that.  It  could  not  give  the 
mortgagee  the  right  of  possession  of  the  property,  for  the  mortgagor 
has  still  the  legal  title,  which  carries  with  it  the  right  of  possession. 
It  would  re(piire  another  proceeding  in  ccjuity,  to  say  the  least,  to 
dispo.>Jsess  him  of  that  title,  and  vest  it  in  the  mortgagee.  Hence 
It  is  clear  that  full  n-dress  cann<it  be  given  th(>  plaintiff  in  thi- 
IToceeding. 

Mut  the  plaintiff  has  a  lim  on  the  proptMty  in  the  nature  of  a 
jiirdge  to  secure  payment  of  the  mortgage  debt.  And  although  our 
remedy  of  strict  foreclosure  may  ncit  be  adapted  to  give  n^lress  to 
the  plaintifT  through  the  medium  of  such  a  lien,  still  a  court  of 
<'<|uitv  (ill)  dcvivi'  a   niodi'  tb;it    will  be  apjiropriato ;   for  it   wouM 


512  COMMON    LAW    RELATIONS.  [CIIAP.  I. 

be  strange  if  a  lawful  lien  upon  property  to  secure  a  debt  could  not 
be  enforced  according  to  its  tenor  by  a  court  of  chancery.  It  is  said 
that  every  wrong  has  its  remedy;  so  it  may  be  said  that  every  case 
requiring  equitable  relief  has  its  corresponding  mode  of  redress. 
We  have  no  doubt  that  a  court  of  equity  has  the  power  to  subject 
the  property  in  question  to  the  pa3anent  of  this  debt,  upon  a  proper 
complaint  adapted  to  the  purpose.  When  personal  property  is 
pledged  to  secure  the  payment  of  a  debt,  it  may  be  taken  and  sold, 
that  payment  may  be  made,  after  giving  the  pledgor  a  reasonable 
opportunity  for  redemption.  So  here,  we  think  a  similar  course 
might  be  taken  with  this  property.  Such  a  course  would  fall  in 
with  the  original  intent  of  the  parties,  and  with  the  civil  code  and 
mode  of  procedure  of  the  State  of  New  York.  Modes  of  redress 
in  that  State  have  of  course  no  force  in  this  State,  but  such  a  mode 
of  procedure  seems  to  be  adapted  to  a  case  of  this  character. 
.  And  we  further  think  that  on  an  amended  complaint,  setting 
forth  all  the  essential  facts,  and  praying  that  if  there  shall  be 
a  default  in  redeeming  the  property  during  such  time  as  the  court 
shall  allow  for  redemption,  then  the  right  of  redemption  shall  be 
forever  foreclosed,  and  the  legal  title  and  possession  of  the  property 
be  decreed  in  the  mortgagee,  such  course  might  be  taken. 

We  think  either  of  the  modes  suggested  might  be  pursued;  but 
inasmuch  as  the  course  which  has  been  taken  leaves  the  legal  title 
and  possession  of  the  property  in  the  mortgagor,  we  think  the  court 
erred  in  holding  the  complaint  sufficient,  and  in  passing  the  decree 
thereon. 

There  is  error  in  the  judgment  appealed  from,  and  it  is  reversed, 
and  the  case  remanded. 

In  this  opinion  the  other  judges  concurred. 


DoLLTVER  v.  St.  Joseph  Insurance  Co.,  188  Mass.  315  (1880). 
A  mortgagor  of  real  property  insured  the  same  under  a  policy, 
Avlierein  he  represented  himself  as  having  "the  entire,  unconditional 
and  sole  ownership"  of  the  property.  It  was  held  that  there  was  no 
misrepresentation. 

SouLE,  J.  It  has  long  been  settled  in  this  Commonwealth  that, 
as  to  all  the  world  except  the  mortgagee,  a  mortgagor  is  the  owner 
of  the  mortgaged  lands,  at  least  till  the  mortgagee  has  entered  for 
possession  {WiUiiigton  v.  Gale,  7  Mass.  138;  Waliham  BanJc  v. 
WaJlham,  10  Met.  334;  White  v.  Whitney,  3  Met.  81;  Ewer  v. 
Uohhs,  5  Met.  1;  Henry's  case,  4  Cush.  257;  Howard  v.  Robinson, 
T)  Cush.  119;  Buff  urn  v.  Boivditch  Ins.  Co.,  10  Cush.  540;  Farns- 
u'orih  V.   Boston,   126   Mass.   1).     This  being  the  law,  and  the 


""      "   1  S.MAIill.i:    C.     UII.I.IA.MS.  ol.] 

mortgagees  not  being  in  |)osscssioii  of  ihr  promises,  the  plaintifT's 
assignor  might  well  he  (h'scrihcd  in  a  policy  of  insurance  as  the 
<i\vncr  of  the  j)roj»crty  insuri-d  ;  and.  inasnuuh  as  his  estate  was 
in  fee  simpli',  not  an  estate  for  life,  and  not  a  hase,  (pialilicd  or 
conditional  fee,  it  migiit  well  hi-  descrihcd  as  the  entire  and  uncon- 
ditional ownershij);  and  as  he  had  no  joiut  tenant  nor  tenant  in 
<ommon,  his  estate  was  well  dcscrihi-d  as  the  sole  ownership.  As 
Itetwei'ii  him  and  the  def('n(hint,  the  mortgages  and  the  lease  were 
mere  incundirances  on  his  titli-,  not  alTecting  its  character  as  entire, 
and  not  changing  it  from  an  ahsohite  to  a  conditional  estate  or 
ownersliip.  Even  as  between  him  and  ihe  mortgagees,  the  mort- 
gagees' estate  was  tiie  conditional  one,  determinable  by  satisfaction 
of  the  condition  set  out  in  the  mortgage  dee<l.  There  was  ni>  joint 
tenancy  nor  tenancy  in  common  of  the  mortgagor  and  the  mort- 
gagees. All  the  characteristics  of  such  tenancies  are  lacking  in 
their  relations  to  the  property. • 


CIIAPTKH    I.       (Cnti/inurf/.) 
»SKrri«i\       11.       1 '<>ssi;>>i<>\. 

SMAirrij';  \.  wiudAMs. 

C'ol  |{T   Ol     Kl\(i>    liKNCII.    it;i)  I. 

On  a  trial  at  bar  the  case  upon  evidence  was:  a  man  made  a 
mortgage  for  years  to  A.,  who  without  the  mortgagor's  joining 
assigned  it  to  B.,  who  assigned  to  I'.,  under  whom  the  jjlaintiir  in 
ejectment  claimed;  and  it  was  objected  by  Levinz,  that  though  In, 
iidndtted  the  first  mortgagee  might  well  assign  witiiout  making 
any  entry  or  joining  the  mortgagor,  who  is  but  tenant  at  will  to  the 
mortgagee,  and  his  possession  as  such  is  but  the  possession  of  his 
mortgagee,  yet  the  assignment  «»f  the  lirst  nmrtgagee  d«'termined 
lh«>  lease  at  will,  and  the  mortgagor  thereby  became  tenant  at  sufTer- 
anec,  and  his  continuance  in  po.sscssion  divested  the  term  and 
turned  it  to  a  right,  .so  that  it  coidd  not  be  assignable  without  R.'s 
•  ntry  on  the  mortgagor's  joining;  that  it  was  at  least  a  divesting 
of  the  term  at  the  election  of  the  assignee  according  to  liluntler  and 

'  Coinpiuo  Tilniirii  v.  Jirnnr.  2  flroonl.    (>[«>.)    1.12    (lS22t. 


314  COMMON    LAAV    RELATIONS.  [CIIAP.  I. 

Daw's  case,  1  Cro.  305.  And  B.  the  assignee  had  made  his  election 
and  brought  an  ejectment  against  the  mortgagor,  which  admitted 
his  being  out  of  possession ;  and  they  shewed  the  record  itself, 
wherein  the  assignee  was  lessor  of  the  plaintiff.  Sed  per  Holt,  C.  J. 
Upon  executing  the  deed  of  mortgage,  the  mortgagor,  by  the  cov- 
enant to  enjoy  till  default  of  payment,  is  tenant  at  will,  and  the 
assignments  of  the  mortgagees  could  only  make  the  mortgagor 
tenant  at  sufferance,  but  his  continuing  in  possession  could  never 
make  a  disseisin,  nor  divesting  of  the  term;  otherwise  if  the  mort- 
gagor had  died  and  his  heir  had  entered,  for  the  heir  was  never 
tenant  at  will,  but  his  first  entry  was  tortious ;  or  if  the  mortgagee 
had  entered  upon  the  mortgagor  and  the  mortgagor  had  re-entered^ 
for  the  mortgagee's  entry  had  been  a  determination  of  the  will,  and 
the  re-entry  of  the  mortgagor  had  been  merely  tortious.  And  as 
to  the  bringing  an  ejectment,  it  was  said,  that  could  not  admit  an 
actual  divesting,  so  as  to  turn  the  term  to  a  right,  for  that  was  not 
brought  to  recover  the  mortgage-term  but  the  actual  possession 
only,  for  the  recovery  of  which  the  assignee  of  the  first  mortgage 
had  no  other  way  but  this,  or  to  make  a  forcible  entry,  which  the 
law  forbids ;  nor  does  the  assignee  appear  a  party  to  the  record,  hut 
only  a  lessor  of  the  plaintiff,  so  that  this  record  can  be  no  evidence 
or  estoppel  against  him,  and  the  court  will  take  notice  that  an 
ejectment  is  only  a  fictitious  proceeding  for  recovering  the  posses- 
sion which  cannot  well  otherwise  be  obtained;  and  the  entry  laid 
in  the  declaration  or  confessed  by  the  defendant,  is  not  an  entry 
that  is  real,  for  it  shall  neither  avoid  a  fine,  nor  be  sufficient  evi- 
dence to  support  trespass  for  the  mean  profits.^ 


KEECH  V.  HALL. 

Court  of  King's  Bench,  1778. 

(1  Douglas,  21.) 

Ejectment  tried  at  Guildhall  before  Buller,  Justice,  and  verdict 
for  the  plaintiff.  After  a  motion  for  a  new  trial,  or  leave  to  enter 
up  judgment  of  nonsuit,  and  cause  shown,  the  court  took  time  to 
consider;  and  now  Lord  Mansfield  stated  the  case  and  gave  the 
opinion  of  the  court,  as  follows : 

Lord  Mansfield.  This  is  an  ejectment  brought  for  a  warehouse- 
in  the  city  by  a  mortgagee  against  a  lessee  under  a  lease  in  writing 
for  seven  years,  made  after  the  date  of  the  mortgage  by  the  mort- 
'  nail  V.  Doc  (1.  Surtces,  5  B.  &  Aid.  087   (1822),  accord. 


St"-<'-   111  KEF'CII     C.     HALL,  3 1  •"> 

;:ii;,'or,  who  had  contimu'd  in  possession.  The  lease  was  at  a  rack- 
rent.  The  nu)rt<,'a^ee  had  no  notice  of  the  lea.se,  nor  the  lcs.see  any 
notice  of  the  mortpige.  The  defendant  otTered  to  attorn  to  the 
mortj;aj,'ee  before  the  ejectment  was  brought.  The  plaintiff  is 
willing  to  svilTer  the  defendant  to  redeem.  There  was  no  notice  to 
(juit;  so  that,  though  the  writti-n  lease  should  be  bad,  if  the  lesstt; 
is  to  be  considereil  as  tenant  from  year  to  year,  the  plaintilT  must 
lail  in  this  action.  The  question,  therefore,  for  the  court  to  decide 
IS  whether,  by  the  agreement  understood  between  mortgagors  and 
mortgagees,  which  is  that  the  latter  shall  receive  interest  and  the 
former  keep  possession,  the  mortgagee  has  given  an  implied  author- 
ity to  the  mortgagor  to  let  from  year  to  year  at  a  rack-rent ;  or 
whether  he  nuiy  not' treat  the  defendant  as  a  trespasser,  disseisor 
and  wrongdoer. 

Xo  case  has  been  cited  where  this  question  has  been  agitated, 
much  less  decided.  The  only  case  at  all  like  the  present,  is  one 
that  was  tried  before  me  on  the  home  circuit  (lielchier  v.  Collinf!)  ; 
but  there  the  mortgagee  was  privy  to  the  lease,  and  afterwards, 
by  a  knavish  trick,  wanted  to  turn  the  tenant  out.  I  do  nut 
wonder  that  such  a  case  has  not  occurred  before.  Where  the  lease 
is  not  a  beneficial  lease,  it  is  for  the  interest  of  the  mortgagee  to 
continue  the  tenant;  and  where  it  is,  the  tenant  may  put  himsell" 
in  the  place  of  the  mortgagor,  and  either  redeem  himself  or  get 
a  friend  to  do  it.  The  idea  that  the  question  may  be  more 
proper  for  a  court  of  e([uity  goes  upon  a  mistake.  It  emphatically 
belongs  to  a  court  of  law,  in  opposition  to  a  court  of  equity :  for 
a  lessee  at  a  rack-rent  is  a  j)urchasor  for  a  valuable  consideration, 
and  in  every  case  between  purchasors  for  a  valuable  consideration, 
a  court  of  equity  must  follow,  not  lead,  the  law.  On  full  considera- 
tion, we  are  all  clearly  of  opinion  that  there  is  no  inference  of  fraud 

r  consent  against  the  mortgagee  to  prevent  him  from  consi(U-r- 
ing  the  les.see  as  a  wrongdoer.  It  is  rightly  admitted  that  if  the 
mortgagee  had  encouraged  the  tenant  to  lay  out  money  he  could 
not  maintain  this  action;  but  here  the  question  turns  upon  the 
agreement  between  the  mortgagor  and  mortgagee;  when  the  mort- 
gagor is  left  in  possession,  the  true  inference  to  be  drawn  is  an 
agreenu'ut  that  he  shall  possess  the  premises  at  will  in  the  strictest 
sen.-ie,  an<l,  therefore,  no  notice  is  ever  given  him  to  quit,  and  he 

-  not  oven  entitled  to  reap  the  crop,  as  other  tenants  at  will 
■ire.  because  all  is  liable  to  the  debt,  on  payment  of  which  the 
mortgagee's  title  ceases.  The  mortgagor  has  no  power,  e\i)ress  or 
implied,  to  let  leases  not  subject  to  every  circumstance  of  th«' 
mortgage.  If  by  implication  the  mortgagor  had  such  a  power,  it 
nnist  go  to  a  great  extent,  to  lea.ses  where  a  fine  is  taken  on  a  re- 
newal for  lives.     The  tenant  stands  e.xaitlv  in  the  situation  of  the 


316  COMMON    LAW    RELATIONS.  [CHAP.  I. 

mortgagor.  The  i^ossession  of  the  mortgagor  cannot  be  considered 
as  holding  out  a  false  appearance.  It  does  not  induce  a  belief  that 
there  is  no  mortgage,  for  it  is  the  nature  of  the  transaction  that 
the  mortgagor  shall  continue  in  possession.  Whoever  wants  to  be 
secure  when  he  takes  a  lease  should  inquire  after  and  examine  the 
title  deeds.  In  practice,  indeed,  (especially  in  the  case  of  great 
estates)  that  is  not  often  done,  because  the  tenant  relies  on  the 
honour  of  his  landlord;  but  whenever  one  of  two  innocent  persons 
must  be  a  loser,  the  rule  is  qui  prior  est  tempore,  potior  est  jure. 
If  one  must  suffer,  it  is  he  who  has  not  used  due  diligence  in  look- 
ing into  the  title. 

It  was  said  at  the  bar  that  if  the  plaintiff,  in  a  case  like  this, 
can  recover,  he  will  also  be  entitled  to  the  mesne  profits  from 
the  tenant  in  an  action  of  trespass,  which  would  be  a  manifest 
hardship  and  injustice,  as  the  tenant  would  then  pay  the  rent 
twice.  I  give  no  opinion  on  that  point;  but  there  may  be  a 
distinction,  for  the  mortgagor  may  be  considered  as  receiving  the 
rents  in  order  to^pay  the  interest  by  an  implied  authority  from  the 
mortgagee,  till  he  determine  his  will.  As  to  the  lessee's  right  to 
reap  the  crop  which  he  may  have  sown  previous  to  the  determination 
of  the  will  of  the  mortgagee,  that  point  does  not  arise  in  this  case, 
the  ejectment  being  for  a  warehouse;  but,  liowevor  that  may  be,  it 
could  be  no  bar  to  the  mortgagee's  recovering  in  ejectment.  It 
would  only  give  the  lessee  a  right  of  ingress  and  egress  to  take  the 
crop ;  as  to  which,  with  regard  to  tenants  at  will,  the  text  of  Little- 
ton is  clear.  We  are  all  clearly  of  opinion  that  the  plaintiff  is 
entitled  to  judgment. 

The  Solicitor-General  for  the  defendant. 

Dunning  and  Cowper  for  the  plaintiff. 

The  rule  discharged. 


MOSS  V.  GALLIMOEE. 

Court  of  King's  Bench,  1779. 

(1  Douglas,  279.) 

In  an  action  of  trespass,  which  was  tried  before  Nares,  Justice,  at 
the  last  Assizes  for  Staffordshire,  on  not  guilty  pleaded,  a  verdict 
was  found  for  the  plaintiff,  subject  to  the  opinion  of  the  court  on 
a  case  reserved.  The  case  stated  as  follows:  One  Harrison,  being 
seised  in  fee,  on  the  1st  of  January,  1772,  demised  certain  premises 


-K-    "J  MOSS    C.    (iALLlMOUK.  317 

to  till'  ])laintiir  fur  twenty  years,  at  the  rent  of  £10,  payable  yearly 
on  the  rvMli  of  May;  and,  in  May,  177'^,  he  mortgaged  the  Hanie 
premises,  in  fee,  to  the  defendant,  Mrs.  CJallimorc.  3Ioss  continued 
in  possession  from  the  date  of  the  lease,  and  paid  his  n-nt  regularly 
to  the  mortgagor,  all  but  £MS  which  was  due  on  and  bi-fun-  the 
month  of  November,  ITTS,  when  the  mortgagor  Ixrame  a  bankruj)!, 
being,  at  the  time,  indebted  to  the  mortgagee  in  more  than  that 
sum  for  interest  on  the  mortgage.  On  the  3d  of  January.  177!», 
one  Ilarwar  went  to  the  i)laintiir,  on  JK-haif  of  CJallimon-,  shewed 
him  the  mortgage  deed,  and  dejnantled  from  him  the  rent  then 
remaining  unpaid.  This  was  the  first  demand  that  Galliniore 
made  of  the  rent.  The  plaintilf  told  Ilarwar  that  the  assignees  of 
Harrison  had  demanded  it  before,  viz.  on  the  31st  of  December; 
but,  when  Ilarwar  said  that  CJalliiiiore  would  distrain  for  it  if  it 
was  not  paid,  he  said  he  had  some  eattle  to  sell,  and  hoped  sho 
would  not  distrain  till  they  were  sold,  when  he  would  pay  it.  The 
plaintiir  not  having  paid  according  to  this  undertaking,  the  other 
defendant,  by  order  of  Clallimore,  entered  and  distrained  for  the 
rent,  and  thereupon  gave  a  written  notice  of  such  distress  to  the 
])laintiil'.  in  the  following  words:  "Take  notice,  that  I  have  this 
day  seized  and  distrained,  &c.  by  virtue  of  an  autiiority,  &c.  for  the 
sum  of  £v*8,  being  rent,  and  arrears  of  rent,  due  to  tlu.'  said  Ester 
CJallimore,  at  Miebaelmas  last  i)ast,  for,  «S:e.  ami  unless  you  pay  the 
said  rent,  &c."  He  aecordingly  sold  cattle  and  goods  to  the  amount 
of  £2'i  2s.  The  question  stated  for  the  ojjinion  of  the  court  was 
Whether,  under  all  the  circumstances, the  distress  could  be  justilied? 
Wuod  for  the  plaintiff.  The  plaintilT's  case  rests  upon  two 
grounds:  1.  The  defendant,  (Jallimore,  not  l)eing.  at  the  time  when 
the  rent  distrained  for  became  due,  in  the  actual  seisin  of  the 
premises,  nor  in  the  receipt  of  the  rents  and  profits,  slie  had  no 
right  to  distrain.  2.  The  notice  was  irregular,  being  for  rent  due 
at  Miebaelmas,  whereas  this  rent  was  only  due  and  payable  in  Mav. 
1.  Before  the  statute  of  4  Anne,  e.  IG,  5<  !>,  a  eonveyance  by  the 
reversioner  was  void  without  the  attornment  of  the  tenant  (Co.  Liit. 
.'10!),  a,  b),  which  was  neeessary  to  sujiply  the  place  of  livery  o( 
seisin.  Since  that  statute  I  admit  that  attornment  is  no  lunger 
necessary  to  give  effeet  to  the  deed;  i)ut  it  does  not  follow  from 
thence  that  a  grantee  has  now  a  right  to  di>train  before  he  turns 
his  title  into  actual  possession.  The  mortgagor  (according  to  a  hit.* 
case  {Kerch  v.  Ilall.  supra.  M.  ID,  (ieo.  3.  p.  iM  |)  is  tenant  at  wdl 
to  the  mortgagee,  and  has  a  right  to  the  rents  and  profits  due  befon- 
his  will  is  determined.  Nothing  in  this  case  can  amount  to  u  deter- 
mination of  the  will,  before  the  demand  of  the  rent  on  In-half  of  the 
mortgagee,  and  the  whole  of  that  for  which  the  distress  was  made 


318  COMMON    LAW    RELATIONS.  [CHAP.  I. 

became  duo  before  the  demand.  If  the  mortgagor  himself  had  been  in 
possession,  he  coukl  not  have  been  turned  out  by  force ;  the  mortgagee 
must  have  brought  an  ejectment.  The  assignees  had  called  upon 
the  plaintiff  for  the  rent,  as  well  as  Gallimore,  and  how  could  he 
take  upon  himself  to  decide  between  them  ?  The  mortgagee  should 
have  brought  an  ejectment,  when  any  objection  there  might  have 
been  to  the  title  could  have  been  discussed.  It  does  not  appear  from 
the  case  that  the  interest  in  arrear  had  ever  been  demanded  of  the 
mortgagor,  and  there  is  a  tacit  agreement  that  the  mortgagor  shall 
continue  in  possession  and  receive  the  rents  till  default  is  made  in 
paying  the  interest.  2.  The  notice  is  irregular,  and,  on  that  account, 
the  distress  cannot  be  justified.  By  the  common  law,  the  goods 
could  not  be  sold.  The  power  to  sell  was  introduced  by  the  statute 
of  William  and  Mary  (3  W.  &  M.  sess.  1,  cap.  5,  §  3),  but  it  is 
thereby  required,  that  notice  shall  be  given  thereof  "  with  the  cause 
of  taking,"  &c.  These  requisites  are  in  the  nature  of  conditions 
precedent,  and,  if  not  complied  with,  the  proceedings  are  illegal. 
It  is  true,  this  irregularity,  since  the  statute  of  11  Geo.  2,  cap.  19, 
§  19,  does  not  make  the  defendants  trespassers  ah  initio,  but  the 
action  of  trespass  is  still  left  by  that  statute,  for  special  damages 
incurred  in  consequence  of  the  irregularity.  Lord  Mansfield  ob- 
served that  the  plaintiff  was  precluded  by  the  case  from  going  for 
special  damag'es  arising  from  any  supposed  irregularity  in  the  sale, 
no  svich  special  damages  being  found,  and  the  question  stated  being 
only  whether  the  distress  was  justifiable;  and  Buller,  Justice,  said 
that  it  was  not  necessary  by  the  statute  of  William  &  Mary,  to  set 
forth  in  the  notice  at  what  time  the  rent  became  due. 

Bower  for  the  defendants.  If  the  law  of  attornment  remained 
still  the  same  as  it  was  at  common  law,  the  conversation  stated  to 
have  taken  place  between  the  plaintiff  and  Harwar  would  amount 
to  an  attornment ;  and,  when  there  has  been  an  attornment,  its 
operation  is  not  restrained  to  the  time  when  it  was  made :  it  relates 
back  to  the  time  of  the  conveyance,  and  makes  part  of  the  same 
title,  like  a  feoffment  and  livery,  or  a  fine  or  recovery,  and  the  deed 
declaring  the  uses  (Long  v.  Ileming,  1  Anders.  356 ;  s.  c.  Cro.  El. 
209).  Now,  however,  any  doubts  there  might  have  been  on  this 
subject  are  entirely  removed  by  the  statute  of  Queen  Anne,  the 
words  of  which  are  very  explicit,  viz.  (4  Anne,  c.  IG,  §  9),  "that 
all  grants  or  conveyances  of  any  manors,  rents,  reversions,  or 
remainders,  sliall  1)0  as  good  and  effectual  to  all  intents  and  pur- 
poses, without  any  attornment  of  the  tenants,  as  if  their  attornment 
had  been  had  and  made."  The  proviso  in  the  same  statute  (§10) 
which  says  that  the  tenant  sliall  not  be  prejudiced  by  the  payment 
of  any  rent  lo  the  granlor  before  he  shall  have  received  notice  of 


sF.r.    II.]  MOSS    i.    GAl.LI.MUKi:.  310 

ilic  ^'rant,  shows  tliat  it  was  meant  that  all  the  rent  which  iiad  nut 
lurn  paid  at  tiie  time  of  the  notice  should  he  payahle  to  the  grantee, 
'i'he  iii()rt;,Mj,M)r  is  called  a  ti-nant  at  will  to  the  mortga^'ee.  That 
may  he  true  in  some  respects,  hut  it  is  more  correct  to  consider  him 
as  acting  for  tlir  mortgagee  in  the  receij)t  of  the  rents  as  a  trustee, 
subject  to  have  his  authority  for  that  purpose  put  an  end  to,  at 
whatever  time  the  mortgagee  pleases.  It  is  said,  the  proper  method 
for  the  mortgagee  to  have  followed  would  liave  heen  to  have  hrought 
an  ejectment,  hut  it  is  only  a  very  late  practice  to  allow  a  mort- 
iragee  to  get  into  the  possession  of  the  rents  by  an  ejectment  against 
a  tenant  under  a  lease  prior  to  the  mortgage  (U7ti7c  v.  Hawkins. 
A/z/z/v/.  M.  i;»,  Geo.  3,  p.  23,  Note  7).  The  interest,  it  is  said,  is 
not  stated  to  have  been  demanded;  but  the  case  states  tiiat,  at  the 
lime  of  the  notice  and  distress,  more  than  the  amount  of  tlie  rent 
in  arrear  was  due.  It  is  said,  the  tenant  could  not  decide  between 
ihc  mortgagor  (or,  which  is  the  same  thing,  his  assignees),  and 
the  mortgagee;  but  that  is  no  excuse.  He  would  have  had  the  same 
ililliculty  in  the  ease  of  an  absolute  sale;  a  mortgage  in  fee  being,  at 
law,  a  com))lete  sale,  and  only  differing  from  it  in  respect  of  the 
«t|uity  of  redemption,  which  is  a  mere  equitable  interest. 

The  court  lold  him  it  was  unnecessary  for  him  to  say  anything 
"11  the  other  point. 

LoHD  M.vNSFiELD.  I  think  this  case,  in  its  consequences,  very 
material.  It  is  the  case  of  lands  let  for  years  and  afterwards  mort- 
_ag('d.  and  considerable  doubts,  in  such  cases,  have  arisen  in  respect 
lo  the  mortgagee,  when  the  tenant  colludes  with  the  mortgagor; 
for,  the  lease  protecting  the  possession  of  such  a  tenant,  he  cannot 
be  turned  out  by  the  mortgagee.  Of  late  years  the  courts  have  gone 
-o  far  as  to  permit  the  mortgagee  to  proceed  by  ejectment,  if  he  has 
-ivcn  notice  to  the  tenant  that  he  does  not  intend  to  disturb  his 
|.ossession,  but  only  reciuires  the  rent  to  be  paid  to  him.  and  not  to 
the  mortgagor.  This,  however,  is  entangled  with  dilliculties.  The 
question  here  is,  whether  the  mortgagee  was  or  was  not  entitled 
to  the  rent  in  arrear.  Before  the  statute  of  Queen  Anne,  attornment 
was  necessary,  on  the  i»rinci|)le  of  notice  to  the  ti'uant ;  l)ut.  wlu'ii 
It  took  place,  it  certainly  had  relation  back  to  the  grant  and,  like 
other  relative  acts,  they  were  to  be  taken  together.  Thus  livery  of 
M'isin,  though  made  afterwards,  relates  to  the  time  of  the  feolTment. 
Since  the  statute,  the  conveyance  is  eom])lete  without  attornment, 
but  tiicre  is  a  i)rovision.  that  the  tenant  shall  not  be  iirejudict  d 
for  any  act  done  by  him.  as  hohling  under  the  grantor,  till  he  ba- 
llad notice  of  the  deed.  Therefore  the  payment  of  rent  before  such 
notice  is  good.  With  this  protection  he  is  to  be  considered,  by  forc«' 
of  the  statute,  as  having  attorned  at  the  time  of  the  <'xeeution  of  th«' 
grant  :  and.  here,  the  tenant  has  sulTered  no  injury.     No  rent  ha> 


320  COMMOX    LAW    RELATIONS.  [CIIAI'.  I. 

I 

been  demanded  which  was  paid  before  he  knew  of  the  mortgage. 
He  had  the  rent  in  question  still  in  his  hands,  and  was  bound  to 
pay  it  according  to  the  legal  title.  But,  having  notice  from  the 
assignees  and  also  from  the  mortgagee,  he  dares  to  prefer  the 
former,  or  keeps  both  parties  at  arm's  length.  In  the  case  of 
execution  it  is  uniformly  held  that  if  you  act  after  notice,  you  do  it 
at  your  peril.  He  did  not  offer  to  pay  one  of  the  parties  on  receiving 
an  indemnity.  As  between  the  assignees  and  the  mortgagee,  let  us 
see  who  is  entitled  to  the  rent.  The  assignees  stand  exactly  in  the 
place  of  the  bankrupt.  Now,  a  mortgagor  is  not  properly  tenant  at 
will  to  the  mortgagee,  for  he  is  not  to  pay  him  rent.  He  is  so  only 
quodam  modo.  Nothing  is  more  apt  to  confound  than  a  simile. 
When  the  court,  or  counsel,  call  a  mortgagor  a  tenant  at  will,  it  is 
barely  a  comparison.  He  is  like  a  tenant  at  will.  The  mortgagor 
receives  the  rent  by  a  tacit  agreement  with  the  mortgagee,  but  the 
mortgagee  may  put  an  end  to  this  agreement  when  he  pleases.  He 
has  the  legal  title  to  the  rent,  and  the  tenant,  in  the  present  case, 
cannot  be  damnified,  for  the  mortgagor  can  never  oblige  him  to 
pay  over  again  the  rent,  which  has  been  levied  by  this  distress. 
I  therefore  think  the  distress  well  justified;  and  I  consider  this 
remedy  as  a  very  proper  additional  advantage  to  mortgagees,  to 
prevent  collusion  between  the  tenant  and  the  mortgagor. 

AsHiiURST,  Justice.  The  statute  of  Queen  Anne  has  rendered 
attornment  unnecessary  in  all  cases,  and  the  only  question  here 
arises  upon  the  circumstance  of  the  notice  of  the  mortgage  not 
having  been  given  till  after  the  rent  distrained  for  became  due. 
Where  the  mortgagor  is  himself  the  occupier  of  the  estate,  he  may 
be  considered  as  tenant  at  will ;  but  he  cannot  be  so  considered,  if 
there  is  an  undertenant ;  for  there  can  be  no  such  thing  as  an  under- 
tenant to  a  tenant  at  will.  The  demise  itself  would  amount  to 
a  determination  of  the  will.  There  being  in  this  case  a  tenant  in 
possession,  the  mortgagor  is,  therefore,  only  a  receiver  of  the  rent 
for  the  mortgagee,  who  may,  at  any  time,  countermand  the  implied 
authority,  by  giving  notice  not  to  pay  the  rent  to  him  any  longer. 

BuLLER,  Justice.  There  is  in  this  case  a  plea  of  the  general  issue, 
Avhich  is  given  by  statute  (11  Geo.  2,  c.  19,  §  21),  but  if  the  justifica- 
tion appeared  upon  the  record  in  a  special  plea,  the  distress  must 
be  held  to  be  legal.  Before  the  act  of  Queen  Anne,  in  a  special 
justification,  attornment  must  have  been  pleaded.  But  since  that 
statute,  it  is  never  averred  in  a  declaration  in  covenant,  nor  pleaded 
in  an  avowry.  In  the  case  of  Keech  v.  Ilall,  referred  to  by  Mr. 
Wood,  the  court  did  not  consider  the  mortgagor  as  tenant  at  will 
to  all  purposes.  If  my  memory  do  not  fail  me,  my  lord  distinguished 
mortgagors  from  tenants  at  will  in  a  very  material  circumstance, 
namely,  that  a  mortgagor  would  not  be  entitled  to  emblements. 


f*^:<■•   "1  l'AUTl£llJ(Ji:    f.    Ui;i{L.  iJ'vl 

Exprcssiuns  used  in  particular  cases  are  to  be  uiulerstood  with  rela- 
tion to  the  subjeet-inatti'r  then  before  the  court. 
The  postca  to  be  delivered  to  the  defendants.' 


PAKTRIDGK  v.  BERK. 

CoLUT  OF  KiNc's  BKN'cir,  1822. 
(.5  B.  cl-  .!/</.  (iOl.) 

Action  for  diverting  a  water  course.  The  declaration  contained 
an  averment,  that  a  certain  clo-se  was  in  the  pos.session  and  oce\ipa- 
tion  of  one  John  Turner,  as  tenant  thereof  to  the  plaintitf,  the 
reversion  belonging  to  the  plaintiff.  At  the  trial  before  Park,  J., 
at  the  last  assizes  for  the  county  of  Devon,  it  appeared  that  Turner, 
being  tenant  for  life  of  the  clo.se  mentioned  in  the  declaration,  in 
March,  ISIT,  had  mortgaged  the  same  to  the  plaintiff  for  £100,  for 
a  term  of  years,  provided  he,  Turner,  lived  so  long,  and  that  Turner 
had  since  that  time  continued  in  possession  and  paid  tlie  interest. 
It  was  objected  on  the  ])art  of  the  defendant  that  the  relation  of 
landlord  and  tenant  did  not  subsist  In'tween  a  mortgagor  and 
mortgagee,  and,  con-setpu'iitly,  that  the  averment  was  not  supported 
by  evidence;  the  learned  judge  overruled  the  objection,  and  now 

Adam  moved  for  a  new  trial,  and  contended  that  there  was  no 
tenancy,  there  was  no  payment  of  rent,  but  of  interest ;  and  he 
relie<l  on  the  opinion  of  BuUer,  J.,  in  Jiinli  v.  Writjlif,  1  Term.  Rep. 
382. 

Pefi  Curiam.  Here  the  mortgagor  was  in  actual  possession  of 
the  mortgaged  pri'iniscs,  by  sufferame  of  the  mortgagee,  who  has 
the  legal  title  vested  in  him.  The  former,  therefore,  is  a  tenant 
within  the  strictest  definition  of  that  word. 

liuh'  ri'fiu^cd. 

'In  fiirch  V.  ^\'ri(|ht,  1  T.  R.  37S,  this  caso  was  oonfirniod  l)y  the  court, 
and  fully  re-rttated  by  Bullor,  J.,  who  declarod  by  Lord  Manstitdd'-H  dc»ir<« 
that  his  Ix)rdship  continued  satisfied  with  the  decision.  In  that  case  it  wu'* 
deterniincd  that  the  ^nantee  of  a  reversion,  in  trust  for  payment  of  an  an- 
nuity, nii^ht  recover  in  an  action  for  t>se  and  oc<'upati<in  apainst  a  tenant 
from  year  to  year,  who  came  in  under  the  grantor  lK*ft)re  the  >»rant,  all  the 
rent  unpaid  in  his  han<ls  at  the  time  of  notice  of  the  prant. —  Hep. 

Thumhr  V.  Uclclur,  3  East,  449   (1803),  accord. 


322  COMMON    LAW    RELATIONS.  [CHAP.  I. 

JON^ES  V.  CLARK. 

Supreme  Court  of  Judicature  of  New  York,  1822. 
(30  Johns.  51.) 

In  error,  to  the  Court  of  Common  Pleas,  or  Mayor's  Court,  of 
Albany. 

The  defendants  in  error  brouglit  an  action  of  assumpsit  against 
the  j)laintiff  in  error,  in  the  court  below,  to  recover  one  quarter's 
rent  of  a  house  and  lot,  formerly  owned  by  Gilbert  Stewart,  due 
August  1,  1821.  The  defendant  pleaded  the  general  issue.  At 
the  trial,  the  plaintiffs  gave  in  evidence  a  written  lease  of  the 
premises  from  them  to  the  defendant  and  ]\Ialtby  Howel,  for  one 
year,  ending  May  1,  1821,  for  the  rent  of  400  dollars,  payable 
qiuirterly. 

]\I.  Howel,  a  witness  for  the  jilaintiff,  testified  that  the  defend- 
ant took  possession  of  the  premises,  under  the  said  lease,  at  its 
commencement,  on  the  first  of  May,  1820,  and  has  since  continued 
in  occupation  thereof.  The  witness,  in  answer  to  a  question,  which 
was  oljjected  to  by  the  defendant's  counsel,  but  allowed  by  the  court, 
and  the  point  reserved,  said  that  he  joined  in  the  execution  of  the 
lease  merely  as  surety  for  the  payment  of  the  rent  by  the  defendant, 
Jones,  and  had  never  occupied  the  premises.  It  was  proved  that,  at 
the  expiration  of  the  term,  Jones,  without  the  intervention  or 
concurrence  of  Howel,  agreed  with  Clark,  one  of  the  plaintiffs 
below,  to  take  the  premises  for  another  year,  at  the  same  rent. 

The  defendant  below  gave  in  evidence  a  bond  of  Gilbert  Stewart 
to  E.  Pratt  and  W.  Durant,  for  6000  dollars,  payable  on  the  4th  of 
February,  1821,  and  a  mortgage  to  them  of  the  premises,  dated 
February  4,  1819,  duly  recorded;  and  also  a  lease  from  Pratt  and 
Durant,  to  the  defendant,  of  the  premises  in  question,  dated  Febru- 
ary 7,  1821,  for  one  year,  commencing  May  1,  1821,  at  the  yearly 
rent  of  400  dollars ;  which  lease  contained  a  clause,  by  which  the 
lessors  engaged  to  indemnify  the  defendant  against  all  claims  for 
rent  by  any  other  persons ;  and  also  a  general  assignment  by  Gilbert 
Stewart  of  all  his  property,  including  the  premises  in  question,  to 
the  plaintiffs  below,  dated  August,  1819,  in  trust  for  the  benefit 
of  his  creditors,  as  specified  in  the  assignment. 

A  verdict  was  taken  by  consent,  for  the  plaintiffs  below,  for  one 
quarter's  rent,  subject  to  the  opinion  of  the  court,  &c.,  on  which 
a  judgment  was,  afterwards,  rendered  by  the  court  below. 

//.  Bleeclicr  for  the  plaintiff  in  error. 

Louclcs,  contra. 

Spencer,  Ch.  J.,  delivered  the  opinion  of  the  court.    The  points 


«»•      "1  JONKS    V.    CLAUK.  32:i 

iiuuli-  Ity  llic  counsel  for  the  plaint ilT  in  error,  are,  1.  'I'liat  there 
was  no  sullicient  evidence  that  .Junes  hehl  under  Clark  and  Stewart. 

.'.  That  Ilowel  was  an  inoonipctont  witness. 

;i.  That  till"  matters  shown  hy  the  defendant  helow  were  a  com- 
plete defence. 

The  first  and  second  j)()ints  may,  at  once,  he  disposed  f)f.  There 
was  complete  evidence  of  the  hirin;;  of  the  premises  hy  Jones,  for 
the  second  year,  llowcl  was  a  competent  witne.ss  to  show  that  he 
had  no  heneficial  interest  in  the  expired  lease,  thoufrh  the  fact  itself 
was  no  wise  material.  The  cause  depends  on  the  third  point ;  and 
it  presents  this  (juestion,  whether  a  tenant  of  the  mortfjaj^or  in 
pos.scssion.  and  who  hecame  such  suh.sequent  to  the  giving  the  mort- 
gi\go,  can,  in  a  suit  by  his  landlord,  the  mortgagor,  set  up  as  a  legal 
defence,  that  after  the  mortgage  hecame  forfeited  he  attorned  to 
the  mortgagee  and  took  a  lease  from  him,  during  the  continuance 
of  the  lease  from  the  mortgagor.  This  case  has  prohaljly  been 
decided  in  the  court  below  on  the  authority  of  the  case  of  M'Kirchcr 
V.  Ilairleij,  IG  Johns.  Rep.  280.  The  principle  decided  in  that  case 
was  this:  that  a  mortgagee  could  not  distrain  for  rent  becoming 
due  under  a  lease  made  by  the  mortgagor  subsequent  to  giving  the 
mortgage,  because  there  was  no  privity  of  estate  or  contract  between 
the  mortgagee  and  such  a  tenant ;  and  we  held  that,  to  enable  a 
party  to  distrain  for  rent,  he  must  have  a  concurrent  right  to 
maintain  an  action  for  the  rent ;  and  if  there  was  no  privity  of  C(m- 
tract  or  estate,  an  action  could  not  be  maintained. 

When  the  plaintilY  in  error  attorned  to  the  mortgagees  and  took 
a  lease  from  them,  their  title  to  enter  under  their  mortgage  was 
complete;  for,  the  day  of  payment  having  passed,  the  condition 
was  broken,  and  the  estate  of  the  mortgagees  was  absolute  at  law. 
This  case,  then,  presents  a  very  dilferent  question  from  the  one 
decided  in  M'Kirchcr  v.  IlnwJnj.  There  the  point  was  whether 
the  mortgagee  could  distrain,  or,  in  eir(>ct,  sue  for  the  rent.  Here 
it  is  whether  the  tenant  of  the  mortgagor  could  not,  l)y  his  own 
a<t  and  consent,  become  the  future  tenant  of  the  mortgagees,  with- 
out any  disloyalty  to  the  mortgagor.  "  .\1  common  law."  says 
Mr.  Butler  (in  note  272  to  Co.  Litt.  309  <;),  "  attornment  signified 
only  the  consent  of  the  tenant  to  the  grant  of  the  seigniory;  or,  in 
other  words,  his  consent  to  become  the  tenant  of  the  new  lord.** 
He  goes  on  to  show  the  oj)eration  of  the  statute  of  71/i/j  ctnptore:i. 
and  the  statute  of  uses,  an«l  the  statute  of  wills,  and  ob.serves  that 
tlie  necessity  and  elliiacy  of  attornnuMits  have  been  almost  totally 
taken  away  l)y  the  statutes  of  I  and  r»  Anne,  e.  If.,  and  1 1  (Jeorge  II., 
<*.  in.  Tlu^se  two  statutes  hav(>  be«'n  n'-enacted  here.  The  former 
does  not  relate  to  this  case,  but  the  latter  has  an  important  and 
il.risive  bearing  upon  it.   The  2Sth  section  of  the  statute  concerning 


324:  COMMON    LAW    RELATIONS.  [CH.vp.  I. 

distresses,  rents,  and  the  renewal  of  leases  (1  X.  K.  L.  -A^o),  aftei- 
reciting  that  the  possession  of  estates  is  rendered  precarious  by  the 
frequent  and  fraudulent  practice  of  tenants  attorning  to  strangers,, 
by  which  means  landlords  and  lessors  are  turned  out  of  possession,, 
and  put  to  the  difficulty  and  expense  of  recovering  possession  by 
suits  at  law,  enacts  that  every  such  attornment  shall  be  null  and 
void,  and  the  possession  of  the  landlords  or  lessors  shall  not  be 
deemed  to  be,  in  any  wise,  changed  by  any  such  attornment ;  with 
a  proviso  that  nothing  therein  contained  should  extend  to  vacate 
or  affect  any  attornment  made  pursuant  to  and  in  consequence  of 
any  judgment  at  law,  or  decree  or  order  of  a  court  of  equity,  or 
made  with  the  privity  and  consent  of  the  landlord  or  lessor,  or  to 
any  mortgagee  after  the  mortgage  is  become  forfeited. 

The  mischief  which  the  statute  was  intended  to  remedy  was  the 
attornment  by  tenants  to  strangers  claiming  title ;  and,  without  the 
proviso,  the  construction  of  the  enacting  part  of  the  statute  would 
have  admitted  of  no  doubt.  But,  to  remove  every  doubt,  the  legisla- 
ture have  declared  wdio  were  not  strangers,  and  to  whom  the  tenant 
might  lawfully  attorn;  he  may  attorn  to  a  mortgagee  after  the 
mortgage  is  forfeited.  The  reason  of  this  is  obvious.  The  mort- 
gagee, as  between  him  and  the  mortgagor,  has  the  right  of  entry, 
and  is  entitled  to  the  possession  of  the  premises.  If,  then,  the- 
tenant  wdll  do  voluntarily  what  the  law  will  coerce  him  to  do,  yield 
up  the  possession  to  the  mortgagee,  it  is  not  an  act  injurious  to- 
the  just  rights  of  the  mortgagor,  nor  disloyal  towards  him.  Indeed, 
the  rights  of  the  tenant  also  require  that  he  should  be  allowed 
to  do  so ;  for,  if  he  refuses  to  attorn,  he  at  once  subjects  himself  to 
eviction  and  the  payment  of  costs.  The  statute  makes  no  difference 
between  a  tenant  to  the  mortgagor,  who  becomes  so  before  or  after 
the  execution  of  the  mortgage.  It  applies  to  every  tenant  of  the 
mortgagor,  without  reference  to  the  time  when  he  became  tenant. 
The  reason  is  the  same  in  both  cases,  and  they  are  both  embraced 
by  the  proviso  of  the  statutes ;  and  neither  of  them  are  within  the 
mischiefs  intended  by  the  enacting  part  of  the  statute. 

Judgment  reversed,  and  a  venire  de  novo  to  be  awarded  in  the 
court  below.i 

^  Magill  v.  Hinsdale,  G  Conn.  464  (1827),  accord.  Compare  McKirchT 
V.  Haicley,  IG  Johns.  (N.  Y.)  289  (1819),  and  see  Uogsctt  v.  Ellis,  17  Mich- 
351    (18G8),  contra. 


^"  •    "1  SULULliS    c.    VANSKM.i;.  325 

SOUDERS  V.   XANSICKU: 

SrPHKMi:  CoritT  of  JinR-ATnn-:  or  Xi:\v  .h;itsi;v_,  l.s.'o. 

(;{  lliiht.  \n:\  (:^s(;|.) 

>>axton  and  Vroom  for  tlir  j)laintilT. 

U'(///  for  the  defendant. 

The  Chief  .Fustice  havin<;  heen  coneerned  as  founsel  in  the  cause 
ht  lore  he  eaine  upon  the  l)eneh,  <;ave  no  opinion. 

Tlie  opinion  of  the  court  was  delivered  hy 

FoiJD,  J.  This  writ  of  error  lnMn«,'s  up  ,\  jud^'iiient  of  the  inferior 
I  'iirt  of  Conimon  Pleas  for  the  county  of  Hunterdon,  in  an  action 
<>n  the  case  hy  Vansickle  and  (Jarrison  against  Joshua  Souders  for 
the  enjoyment  of  certain  jjremises  hy  their  permission  from  May. 
1821,  to  April,  1822.  The  case  was  that  one  John  Holmes,  the 
j>rior  owner,  had  mortgajjed  the  premises  in  1817  to  Samuel  and 
Joseph  Drake  for  the  payment  of  a  sum  of  money,  and  after 
remaining  several  years  in  ])ossession,  had  conveyed  his  remaining 
interest  in  the  ])remises  to  Maxwell  and  Conover.  These  men 
filtered  and  put  Joshua  Souders  in  possession  as  their  tenant.  Hi 
this  state  of  thing^s  the  sheritf  levied  on  Maxwell's  right  in  the 
premises  hy  virtue  of  an  execution  against  him,  and  struck  it  olT 
at  puhlic  sale,  the  11th  of  May,  1821,  to  Vansickle  and  CJarrison; 
oji  the  21st  of  July  following  he  made  out  to  them  a  deed  of  con- 
\eyance.  As  soon  as  the  right  was  struck  otf  to  Vansickle  and 
l!arri.>;on,  and  before  they  got  a  deed,  Joshua  Souders,  the  tenant, 
attorned  to  them  as  his  landlords  and  agreed  to  j)ay  theni  a  stipu- 
lated rent.  Shortly  afterward  Sanuiel  and  Hiday  Drake  conceived 
that  as  mortgagees  they  were  the  persons  entitled  to  have  the  rent ; 
wiiereujyon  tlu-y  served  notice  of  their  mortgage  on  Souders,  the 
tenant,  forhid  him  to  pay  the  rent  to  Vansiikle  and  (iarrison.  his 
immediate  landlords,  and  recpiired  him  to  pay  it  to  them  as  holders 
of  the  mortgage.  This  Souders  not  only  agreed  to  do,  hut  afterward 
paid  it  accordingly  to  the  mortgagees  on  receiving  from  them  an 
indemnity.  The  mortgagees,  on  liling  a  hill  against  lltdmes.  the 
mortgagor,  and  making  \'ansiekle  and  (Jarrison  j)arties  thereto, 
obtained  a  decree  on  the  loth  of  Oetolter,  1S21.  foreclosing  the 
equity  of  redemption  against  all  thnr  of  tluni  in  the  Court  of 
Chancery. 

On  the  trial  of  the  cause  X'ansickh'  and  (iarrison  i>rove«l  thf 
iHcupation  of  the  premises  hy  Souders,  \inder  their  j>ermission,  and 
^'i<  agreement  to  pay  them  rent ;  and  then  restetl  their  cause. 
^  uders  thereupon  offered  to  prove  the  mortgage,  the  notice  of  it 

rved  (»n  him  liy  tlie  mortgagees.  (luMr  ilemand  upon  him  for  the 


326 


COMMON    LAW    RELATIONS.  [CHAP.  I. 


rent,  and  his  actual  payment  of  it  to  them.  He  insisted  that  ho 
was  bound  by  law,  under  such  circumstances,  to  pay  to  the  mort- 
gagees, and  therefore  the  payment  was  a  good  defence  against  his 
landlords.  The  court  being  of  a  different  opinion  overruled  his 
defence.  Whether  the  mortgagees  after  such  notice  or  demand 
could  have  sued  Souders  or  distrained  his  goods  for  the  rent,  is  the 
main  point  in  dispute. 

It  was  fully  settled  on  satisfactory  principles,  in  the  case  of  Moss 
V.  Gallimore,  Doug.  269,  that  a  tenant  under  a  lease  made  prior  to 
the  mortgage  may  be  sued  or  distrained  upon  by  the  mortgagee 
for  rent,  after  notice  not  to  pay  it  to  the  landlord.  The  lease  in 
that  case  was  a  few  months  older  than  the  mortgage ;  consequently 
the  rent  was  an  incident  of  the  estate ;  in  other  words  it  was  a  part 
of  the  property  at  the  time  of  the  grant,  and  passed  by  it  to  the 
mortgagee.  The  mortgagor  was  estopped  by  his  own  deed  from 
claiming  rent  that  he  had  conveyed  away;  the  mortgagee  was  the 
assignee  of  the  rent,  and  might  take  it  to  himself  whenever  he  saw 
proper.  No  injury  is  done  in  such  case  to  the  tenant,  who  is  to 
pay  to  the  lessor  or  his  assigns,  and  can  pay  but  once.  Moreover 
it  is  the  duty  of  a  tenant  at  common  law  to  attorn  to  the  grant  of 
his  landlord  whenever  he  makes  one.  He  was  compellable  to  do  s!> 
till  the  statute  rendered  the  form  of  it  unnecessary.  Since  the 
statute,  the  court  are  to  consider  him  as  having  attorned  at  tho 
time  of  the  execution  of  the  grant.  To  attorn  is  to  acknowledge 
the  grantee  (that  is  the  mortgagee)  as  landlord  under  whom  he 
holds  the  estate.  On  this,  a  liability  to  him  for  rent  is  a  matter 
of  course. 

But  in  this  case  Souders  was  no  tenant  at  the  date  of  the 
mortgage  nor  till  many  years  afterward ;  he  never  held  under  the 
mortgagor  or  grantor,  nor  stood  in  the  relation  of  a  tenant  to  him ; 
his  rent  could  not  have  been  conveyed  by  the.mortgage  as  incident 
to  or  a  part  of  the  estate,  because  his  rent  did  not  exist  at  the  date 
of  the  mortgage.  As  it  has  no  resemblance  whatever,  therefore,  to 
the  case  of  Moss  and  Gallimore,  and  stands  wide  of  the  principle 
contained  in  that  decision,  it  cannot  be  governed  by  it. 

I  admit  that  some  authors,  treating  of  mortgagors  remaining  in 
possession  and  making  leases  subsequent  to  the  mortgage,  say  that 
in  such  case  the  mortgagee  has  his  option  either  to  treat  such 
tenants  as  wrongdoers  and  turn  them  out  by  ejectment,  or  to 
recover  rent  from  them  by  distress  or  action,  after  giving  notice 
of  the  mortgage  and  making  a  demand  of  the  rent.  See  Powell  on 
Mortgages,  66,  67,  68 ;  and  Bacon's  Ab.  tit.  IMortgage,  c.  note  e. 
Tin  fortunately  these  authors  do  not  cite  a  case  that  turned  on  this 
point,  nor  have  I  been  able  to  find  one ;  yet  cases  must  have  been 
very  frequent  and  familiar  if  such  were  the  law.     \  mortgage!^ 


''^:«••    "1  SOUDEKS    r.    VANSK'KI.K.  3*^7 

would  seldom  hriiij;  an  (jfcUiicMt,  whit-li  is  the  common  w.iv,  if 
l)y  distraining'  the  tenant  he  could  <,'et  into  possession  of  the  rent; 
for  he  would  not  oidy  ohtain  thereby  the  rent  towards  his  interest, 
hut  j,'et  into  ])ossession  also.  The  only  case  cited  hy  those  authors 
is  that  of  Jiirch  v.  Writjhl.  1  Term.  Kep.  .'JTS ;  but  that  was  the  ca.-e 
of  one  who  had  been  a  tenant  linni  year  to  year  of  the  mortgagor 
from  before  the  date  of  the  mortgage  till  many  years  after  it. 
Huller,  Justice,  said,  "  I  consider  him  as  holding  all  that  time 
under  a  demise  made  before  the  conveyance  to  the  plaintiff;  for  if 
tenant  from  year  to  year  holds  for  four  or  live  years,  either  lie  or  his 
landlord  may  declare  on  the  demise  as  having  been  made  for  such 
a  number  of  years,  and  so  it  was  expressly  laid  down  by  Holt.  (\  .T., 
in  LajQ  V.  Slrndir'uh-.  Salk.  414." 

But  their  position  is  not  more  destitute  of  cases  to  support  it, 
than  it  is  to  my  mind  of  principle.  IIow  could  Souders  attorn 
to  the  mortgage  at  the  time  it  was  made,  when  he  was  no  tenant  at 
that  time  nor  till  three  or  four  years  afterward?  IIow  can  the 
court  consid(>r  him  as  having  attorned  at  that  time  without  an 
absurdity?  Could  Souders'  rent  have  been  part  and  parcel  of  the 
estate  when  Holmes  conveyed  it,  at  which  time  there  was  no  such 
rent  in  being?  And  Holmes  had  no  such  rent  to  convey.  It  is 
a  maxim,  according  to  Co.  Lit.  lib.  3.  sec.  ')7y\,  that  no  man  sliall 
attorn  to  a  grant  l)ut  he  who  is  immediately  privy  to  the  grantor; 
therefore  Souders  could  not  attorn  to  a  grant  of  Holmes,  for  he  was 
not  his  lessee,  he  held  no  part  of  the  estate,  and  there  was  no 
relation  or  privity  between  them. 

As  a  mortgagor  remains  in  jiossession  only  at  the  will  of  the 
mortgagee,  and  in  the  meantime  receives  the  rent  and  j)ays  it  over 
to  keep  down  the  interest  of  the  mortgage,  he  was  once  accidentally 
likened  to  an  agent  of  the  mortgagee;  fnun  thence  an  inference 
was  hastily  drawn  that  if  the  agent  at  any  tinu^  made  a  lease  the 
mortgagee  as  principal  might  have  the  benefit  of  it.  Hut  a  njort- 
gagor  in  pos.session  is  no  agent;  for  according  to  a  long  train  of 
decisions  he  cannot  l)e  made  to  account  either  in  law  or  equity  for 
the  jirofits  h(^  may  have  received  from  (he  estate;  the  idea  of  an 
agency  was  thereff)n>  instantly  exploded.  In  fine,  no  jirinciple 
presents  it.self  to  my  mind  on  which  a  mortgagee  who  is  neith«'r 
party  nor  privy  to  a  ha.se  can  claim  the  benefit  of  it  against  the 
will  of  the  lessor  and  lesse«'  and  in  contravention  of  the  covenant 
therein,  that  the  lessee  shall  pay  the  rent  to  the  les.sor.  The  (|Ue>- 
tion  now  under  consideration  came  Jip  in  the  Su|)reme  Court  of  the 
State  of  Xew  York  directly  in  the  ease  of  MrKirrhrr  v.  Ifnirleif. 
H>  John.  28(5,  and  there  the  court  held  unanimously  that  where 
the  lease  is  subsequent  to  the  date  of  the  mortgage,  a  mortgagee 
an  neith(>r  distrain  nor  briiiir  an  action  for  rent  a<rainst  the  tenant. 


328  COMMOX    LAW    RELATIONS.  [CIIAP.  I. 

there  being  no  privity  of  contract  or  estate  between  liim  and  such 
tenant,  without  which  there  can  be  no  distress  nor  action  for  rent. 

It  was  insisted  that  the  mortgagees,  having  the  legal  estate  and 
also  peaceable  possession  by  Souders  their  tenant,  had  a  right  to 
keep  it;  that  the  attornment  of  their  tenant  to  Vansickle  and 
Garrison  became  entirely  void  under  the  18th  section  of  the  act 
(Rev.  Laws,  192),  and  gave  them  no  possession  nor  right  or  title 
to  the  rent.  The  validity  of  Souders'  attornment  to  the  mortgagees 
depends  on  the  question  whose  tenant  he  was  at  the  time  he  at- 
torned. The  statute  says  that  the  possession  of  estates  is  rendered 
precarious  by  the  practice  of  tenants  in  attorning  to  strangers, 
whereby  the  landlords  of  such  tenants  are  turned  out  of  possession 
and  put  to  great  trouble  and  expense ;  therefore,  every  such  attorn- 
ment (meaning  to  strangers)  shall  be  void,  and  the  possession  of 
such  landlord  shall  not  be  deemed  or  construed  to  be  changed, 
altered  or  affected  thereby.  Now  Maxwell  and  Conover  had  put 
Souders  in  possession  as  their  tenant,  and  he  could  not  lawfully 
attorn  to  any  person  but  their  grantee.  Tlie  sheriff's  act  in  convey- 
ing ^Maxwell's  right  was  the  same  thing  as  a  conveyance  by  Maxwell 
himself,  the  sheriff  being  a  legal  agent  of  his  to  transfer  the  title 
(1  South.  273).  To  this  transfer  of  his  landlord  it  was  proper  that 
Souders  should  attorn,  as  he  did,  and  the  court  must  have  considered 
him  as  liaving  attorned  whether  he  did  or  not.  Vansickle  and 
CJarrison  having  thus  become  his  landlords  he  could  not  turn  over 
their  possession  to  strangers  without  contravening  the  statute;  and 
the  court  must  consider  his  attempt  to  do  so  as  having  no  power 
to  change,  alter  or  affect  the  lawful  possession  of  Vansickle  and 
Garrison,  the  landlords.  The  mortgagees  had  therefore  no  legal 
possession. 

But  it  is  argued  that  attornment  to  a  mortgagee  after  the  mort- 
gage becomes  forfeited  is  made  good  by  the  proviso  of  the  17th 
section.  I  think  it  is  inaccurate  to  say  that  the  statute  makes  any 
attornment  good ;  its  whole  office  is  to  make  certain  attornments, 
so  called,  void.  In  vacating  certain  attornments  it  provides  that 
it  shall  not  extend  to  three  cases,  namely:  that  made  by  consent  of 
llie  hmdlords;  that  to  a  mortgagee  after  the  mortgage  becomes 
forfeited;  and  that  made  by  direction  of  a  court  of  justice;  it 
neither  makes  these  good  nor  makes  them  void,  but  leaves  them  to 
be  good  or  not  according  to  the  manner  in  which  they  have  been 
made.  Xow  attornment  is  the  consent  of  a  tenant  to  the  grant  of 
liis  landlord;  he  must  be  a  tenant,  and  the  grant  assented  to  must 
be  that  of  his  landlord ;  the  assent  of  any  stranger  is  no  attornment 
for  want  of  privity.  Lord  Coke  says  it  is  a  maxim  that  no  man  can 
attorn  to  a  grant  but  he  that  is  privy  to  the  grantor  (1  Ins.  lib.  3, 
sec.  554) .   Now  when  John  Holmes  made  the  grant  of  the  mortgage. 


'^K      Il-l  ATTOItNMKNT    IJY    TKNANT.  329 

iioiu'  l)Ut  his  tenant  could  iitt(»rn  to  it.  Souders  stood  as  to  him 
a  stranger  without  the  h-ast  ])rivity  hetwoen  them.  Ilis  agreement 
many  years  afterward  to  pay  rent  to  the  mortgagees  was  so  far  from 
heing  an  attornment  to  that  grant,  that  it  is  a  misnomer  to  give  it 
that  appelhition,  for  want  of  i)rivity  in  hiw  hetween  liim  and  the 
grantor. 

Finally,  it  was  argued  lliat  N'ansiekle  and  (Jarrison  had  no  right 
in  the  premises  that  was  not  extinguished  by  the  decree  of  fore- 
closure, and  tlie  tenant  should  have  hcen  permitted  to  prove  that 
the  title  of  his  landlords  had  expired.  But  I  apprehend  that  this 
eould  not  liave  heeii  lawfully  permitted.  In  the  ease  of  Cook  v. 
Lotiley,  5  Tcr.  Kep.  4,  the  court  held  it  to  he  a  common  rule  that 
a  tenant  should  not  be  allowed  to  impeach  his  landlord's  title  in  an 
action  for  use  and  oecujiation.  In  Lewis  v.  Wallace,  Bui.  N.  Pr. 
130,  the  court  said  that  where  a  tenant  held  by  permission  the 
landlord  should  recover  though  he  had  no  title  at  all.  This  princi- 
ple is  most  fully  recognized  in  Kniyht  v.  Smith,  4  Maul.  &  Selw. 
349;  see  also  4  Cowen,  57G,  and  the  cases  collected  in  Woodfall's 
I>andlord  and  Tenant,  330,  too  numerous  to  be  cited.  There  seem 
to  be  some  exceptions  to  this  rule,  where  a  tenant  has  been  ejected 
or  turned  out  of  possession  by  title  paramount,  and  where  the  lease 
shews  that  the  title  will  expire  at  a  certain  time  or  on  a  certain 
event,  as  in  consequence  of  the  lessor  being  only  an  executor  during 
the  minority  of  A.;  but  this  case  comes  under  none  of  those  excep- 
tions. It  would  form  the  i)lain  precedent  of  a  tenant  occupying 
by  permission  till  the  end  of  his  term,  and  then  evading  the  pay- 
ment of  rent  by  denying  the  landlord's  title  for  the  very  time  that 
the  tenant  held  under  liim.  On  the  whole,  the  matters  ofTered  in 
evidence  would  not  have  amounted  to  a  legal  di'fence.  and  were 
properly  overruled.  I  am  therefore  of  opinion  that  the  judgment 
of  the  court  below  ought  to  be  atrirmed. 

Judgment  affirmed.^ 


Xew  York  Rk.vl  PitorKRTV  Law,  g  19 J.  AHurnnintf  hi/  irmiul. 
I  lie  attornment  of  a  tenant  to  a  stranger  is  absolutely  void,  and 
does  not  in  any  way  alTct  (  the  possession  of  the  li.ndlord  unless 
made  either: 

'"Tlii.s  <'nsr  wax  rov«>r>r(l  liy  tlio  Court  nf  Krrnr«,  N'ovoinlxr  (orni.  1S32" 

llaM.  N.  .1.  l)i>j.,  Ttnant.   10.     Ami  sc-  I'tirv  v.  Smilh,   1   (;iorn  Ch.  .'>l«l 

il83,S),  and  Sumlnson   v.  I'rirr,   1    Znl)r.  (».'{7    (lS4t»).  ic<'o>riiizinp  the  efll- 

rarv  of  ultm  imu-nt   (if  Irimnt   to  iiiiirltraj;c«'.  uiulor  tlio  statute    ((Jon.  Stat. 

flSOC]    !!)•_»().  §  -20. 


330  COMMOX    LAW    RELATIONS.  [CIIAP.  I. 

1.  With  the  consent  of  the  landlord;  or, 

2.  Pursuant  to  or  in  consequence  of  a  judgment,  order,  or  decree 
of  a  court  of  competent  jurisdiction ;  or, 

3.  To  a  mortgagee,  after  the  mortgage  has  become  forfeited. ^ 

Maine  Rev.  Stat.  (1883),  chap.  90,  §  2.  A  mortgagee,  or 
person  claiming  under  him,  may  enter  on  the  premises,  or  recover 
possession  thereof,  before  or  after  breach  of  condition,  when  there 
is  no  agreement  to  the  contrary;  but  in  such  case,  if  the  mortgage- 
is  afterwards  redeemed,  the  amount  of  the  clear  rents  and  profits 
from  the  time  of  taking  possession  shall  be  accounted  for  and 
deducted  from  the  sum  due  on  the  mortgage. 

Mass.  Pub.  Stat.  (1882),  chap.  181,  §  10.  Nothing  contained 
in  this  chapter  shall  prevent  a  mortgagee  or  any  person  claiming 
under  him  from  entering  on  the  premises  or  from  recovering 
jiossession  thereof  before  breach  of  the  condition  of  the  mortgage,, 
when  there  is  no  agreement  to  the  contrary. 

Vermont  Stat.,  §  1498.  Every  mortgagor  shall,  until  condition 
broken,  have,  as  against  the  mortgagee,  the  legal  right  of  possession 
to  the  mortgaged  premises,  unless  it  is  otherwise  stipulated  in  the 
mortgage  deed. 

'To  the  same  effect  are  New  Jersey  Gen.  Stat.  (1896),  p.  1920,  §  20,  and 
Missouri  Rev.  Stat.   (1889),  §  6373. 

"  It  is  claimed  that  the  attornment  to  defendant  is  valid  under  section 
2013  of  the  Code,  which  is  as  follows:  'The  attornment  of  a  tenant  to  a 
stranger  is  void,  unless  made  with  the  consent  of  the  landlord,  or  pursuant 
to  or  in  consequence  of  a  judgment  at  law  or  in  equity,  or  to  a  mortgagee 
after  the  mortgage  has  been  forfeited.'  It  is  claimed  that  the  mortgage  to 
Hamilton  was  forfeited  by  the  non-payment,  at  maturity,  of  the  note  se- 
cured, and  that  thereupon  the  tenant  in  possession  had  the  right  to  attorn 
and  transfer  the  constructive  possession  to  defendant.  This  cannot  be  the 
meaning  of  this  section.  Under  such  a  construction  all  the  decisions  of  this 
court  liolding  that  the  legal  title  and  right  to  possession  are  in  the  mort- 
gagor until  after  foreclosure  and  expiration  of  the  year  for  redemption, 
could  be  evaded  and  nullified  in  all  cases  where  the  mortgaged  property  is  in 
possession  of  a  tenant.  The  decisions  relied  upon  by  appellant  were 
based  upon  the  common  law  idea  of  a  mortgage,  under  which,  in  default  of 
payment  at  the  time  named,  the  mortgagee  was  entitled  to  possession  of  the- 
mortgaged  premises,  and  might  maintain  an  action  of  ejectment  therefor. 
We  are  satisfied  that  under  this  section  there  can  be  no  valid  attornment 
until  after  foreclosure  and  expiration  of  the  period  of  redemption,  where 
the  property  is  sold  subject  t©  redemption." — Per  Day,  J.,  in  Mills  v.  Ham- 
ilton, 49  la.  108  (1878).  See  also  Mills  v.  Beaton,  52  la.  215  (1879),  ami 
Code  (1897),  §  2990,  in  whi  h  the  ambiguity  is  removed.  Tlie  similar 
provision  of  the  Wisconsin  statute  ( R.  S.  [1871]  1165,  §  1),  apparently 
interpreted  in  accordance  with  Jones  v.  Clark,  has  also  been  repealed. 
Ann.  Stat.   (1889),  §  2182. 


M<'-  II  1  stom;  c.   i'\  I  1 1  it-^ov.  :VM 

S.  V.  C'oDi:  I'lV.  I'uoc.  Action  to  rcrovrr  nut  prttprrttj.  5;  I  l!lS. 
A  mortfja<;(v,  or  his  assi<;n(r  or  other  rcpn'scntativc,  cannot  main- 
tain siith  an  art  ion,  to  ncovcr  tlir  niortgagt'd  premises. 


STONI-:  V.  i'.\'r'ri:i{sox. 

Supreme  Jiduial  ContT  of  Massachusetts,  1837. 
(1!)  I'iik.   ITd.) 

Assumpsit  for  rent  from  A])ril  1st,  183.'),  to  .Fanuary  1st,  IS.'.C. 
On  a  case  stated  it  ai)peari'(l,  that  one  Kni;,dit,  hein<(  the  owner  of 
the  premises,  suhject  to  a  mort^'a^e  t(»  one  French,  executed  a  k-ase 
of  the  same  to  the  defendant,  on  the  1st  of  April,  183."),  for  three 
years,  at  a  certain  rent  ])er  annum,  jiayalik'  (piarterly;  that  the 
defendant  ]>aid  Kni',dit  a  ])art  of  the  rent  in  advance;  that  in  May, 
183.'),  Kni<jht  conveyed  the  premises  to  tlie  lihiintilfs  in  fee,  suhject 
to  the  mortga^je  and  lease,  without  notice  of  such  paymcjit  of  th«' 
rent  in  advance,  and  that  the  plaintilfs  notified  the  defendant  that 
he  nnist  pay  the  rent  to  them  as  it  should  heconu'  due;  that  on  the 
20th  of  duly,  1835,  the  mortfi:a<,'ee  took  j)ossession  of  the  ])remises 
for  condition  hroken,  hut  without  notice  to  the  plaintilfs,  and 
ordered  the  defendant  to  ])ay  the  rent  to  him,  and  the  defendant 
thereuj)on  a«jreed  to  pay  it  to  him  from  that  time;  and  that  the  sum 
paid  in  advance  exceeded  the  rent  aceruini;  hetween  the  date  of  tln' 
lease  and  the  time  of  the  entry  hy  the  morti,'am'e. 

W.  Smith,  for  the  plaintilfs,  cited  to  the  point  that  the  entry  1> 
the  niortga<jee  was  ineffectual,  Tlun/cr  v.  t^initli.  IT  Mass.  IJ.   T?'.'; 
Stearns  on  Heal  Actions,  '.]'t\  (!il>son  v.  Crrliorr.  ')   l*iek.   I."»l. 

G.  Parker,  for  the  defendant,  cited  as  to  the  rent  paid  in  advance, 
St.  4  &  T)  Anne,  c.  Ki;  Slurilij  v.  AriKiiid.  3  T.  K.  .'»lili;  Ftirlrif  v. 
Thompson,  15  Mass.  U.  18;  and  as  to  the  entry  l>y  the  m<>rt^M;ree, 
Fitrhhurg  Manuf.  Corp.  v.  Mclvrn.  1.')  Mass.  U.  "..MiS  ;  l!r<il  v.  Ihirl^. 
•I  Pick.  2\(\;  .S'mi7/t  v.  Shrpnrd,  ]h  I'ick.  1  17. 

l*i:i{  CiKiAM.  The  payment  of  rent  in  advance  was  a  valid  pay- 
nient  and  a  ^ood  discharf^e  pro  tanto  from  the  claim  of  the  h>ssor 
to  whom  |)ayment  was  made,  and  is  a  <;oo(I  har  to  the  claim  of  th»» 
plaintilfs,  his  assi;,'nees.  'IMie  case  of  Furlcij  v.  Thompson,  l.l  Mas<. 
K.  IS,  is  decisive  on  this  jiart  of  the  case.  It  has  heen  ar<iued  that 
the  assignees  oii;,'ht  to  liave  l)«'en  notiliecl;  jind  no  douht  this  would 
have  heen   necessary   if  the   rule  of  law   in   respect    t>>   iK'uotiahlo 


333  COMMON    LAW    RELATIONS.  [CHAP.  I. 

securities  applied  to  the  assignments  of  leases;  but  these  assign- 
ments are  governed  by  the  well-known  rule  of  caveat  emptor.^ 

In  respect  to  the  other  portion  of  the  rent  claimed,  it  is  quite 
<'lear  that  the  defendant  was  bound  to  pay  it  to  French,  who  entered 
under  a  mortgage  made  previously  to  the  lease,  and  ordered  the 
rent  to  be  paid  to  him.  It  is  objected  that  this  entry  was  not  a  good 
entry  for  condition  broken,  because  no  notice  was  given  to  the 
plaintiffs.  But  it  is  immaterial  whether  it  was  a  good  entry  for 
the  purpose  of  foreclosure  or  not ;  for  the  entry  was  lawful,  and  the 
mortgagee  thereby  became  possessed  of  the  premises,  and  might 
have  expelled  the  defendant  if  he  had  not  agreed  to  pay  rent  to  him. 
This  was  eqiiivalent  to  an  actual  and  complete  ouster  or  eviction,  as 
was  decided  in  Fitchburg  Manuf.  Corp.  v.  Melven,  15  Mass.  E.  2G8, 
and  in  Smith  v.  Shepard,  15  Pick.  147.  Such  an  ouster  or  eviction 
by  a  person  having  a  paramount  title  is  a  good  defence  to  an  action 
for  rent  by  the  lessor  or  those  claiming  under  him. 

Plaintiffs  nonsuit.- 


KIMBALL  V.  LOCKWOOD. 

Supreme  Court  of  Ehode  Island,  1859. 

(C)  7?.  I.  138.) 

Debt  for  rent  of  a  shop  in  High  Street,  Providence,  wherein  the 
plaintiff  claimed  $150,  for  the  last  three  quarters  of  the  year 
elapsing  between  March  1,  1858,  and  March  1,  1859,  under  a  lease 
parol  by  him  made  to  the  defendants. 

The  case  was  submitted  to  the  court,  under  the  general  issue,  in 
fact  and  law;  and  it  appeared  that  the  late  Henry  Matthewson, 
being  the  owner  of  the  leased  premises,  in  his  lifetime  mortgaged 
them  in  fee  to  his  son,  Henry  C.  Matthewson,  and  upon  his  death 
tliey,  with  other  real  estate,  came  into  the  possession  of  the  plaintiff, 

'See  Farley  v.  Thompson,  15  Mass.  18  (1818),  accord.  De  Nicholls  v. 
fi(iundcr.<i,  5  C.  P.  589  (1870),  Cook  v.  Cluerra,  7  C.  P.  132  (1872),  and 
(snnblc)   Castleman  v.  Belt,  2  B.  Moii.   (Ky.)   157   (1841),  contra. 

■Jiockire.il  v.  Bradley,  2  Conn.  1  (1810)  ;  Wakeman  v.  Banks,  2  id.  44« 
(1818)  ;  Blaney  v.  Bcarse,  2  Greenl.  (Me.)  132  (1822)  ;  Den  v.  Stockton, 
7  llalst.  (N.  J.)  322  (1831)  ;  Carroll  v.  Ballancc,  26  111.  9  (18G1)  ;  Gray  v. 
(liUespie,  59  N.  If.  4G0  (1879)  ;  Comer  v.  Sheehan,  74  Ala.  4.52  (1883),  ac- 
cord. So,  after  condition  broken:  Vermont  Stat.,  §  1498  (pajje  330,  supra) : 
Pierce  v.  Broun,  24  Vt.  105  (18,52)  :  (lartside  v.  Outley,  58  111.  210  (1871) 
{seinhle)  ;  or  for  tlie  purpose  of  enforcing  payment:  New  TJai^en  Savings 
Bank  v.  McParllund,  40  Conn.  90  (1873)  ;  or  after  foreclosure:  Downard 
V.  draff,  40  la.  597    (1875). 


SEC.  U.]  Kl.MIJ.M.r.    r.    l.ocKWOOD.  33o 

whose  wife  was  ont'  of  said  Mattliewsou's  heirs  at  hiw  ;  that,  beiii;,' 
thus  in  possession,  the  jthiintilV  leased  the  shop  in  (juestion  to  the 
defendants  by  parol,  from  Man  li  I,  1858,  to  March  1,  18.39,  at 
the  rent  of  $300  for  the  year,  payable  quarterly;  that  after  the 
death  of  his  father,  the  son's  innrt^a;:e  Jiavin^'  beeoin*'  due,  on  the 
13th  day  of  May,  1858,  he  sued  the  plaintiff  in  ejectment  to  recover 
possession  of  tiie  estate  of  wiiich  the  shop  in  question  was  a  tene- 
ment, and  gave  notice  to  the  defendants  to  pay  their  rent  to  him 
as  mortgagee;  that  the  defendants,  liaving  offered  under  the  advice 
of  counsel  to  pay  rent  to  the  j)Iaintilf  if  lie  would  give  them  a  bond 
of  indemnify  against  the  claim  of  the  mortgagee,  which  he  did  not 
do,  promised  the  mortgagee  to  pay  the  rent  to  him,  and  did  pay  to 
him  the  last  three  quarters  rent,  accruing  from  the  first  day  of 
June,  1858,  to  the  first  day  of  March,  185!),  under  a  bond  of  in- 
demnity from  the  mortgagee  against  the  claim  of  the  phiintitT,  to 
recover  which  rent,  after  such  payment,  this  action  was  brought. 
The  rent  of  the  quarter  during  which  notice  was  given  by  thi' 
mortgagee  to  the  defendants  to  pay  the  rent  to  him,  was  paid  by 
them  to  the  i)laintifT. 

James  TUUughast,  for  the  plaintiff,  cited  Evans  v.  Elliot,  0  Ad. 
&  Ell.  392;  Field  v.  Swan,  10  Met.  112. 

B.  y.  Lapham.  witli  whom  was  Wm.  If.  Potter,  cited  Morse  v. 
Gallimore,  ct  al,  Doug.  279  ;  Keech  v.  Hall,  ih.  21 ;  Birch  v.  U'r/y///. 
1  T.  K.  378;  Pope  v.  Briggs,  9  B.  &  C.  24",;  Babcock  v.  Kennedi/. 
1  Vt.  457;  Stone  v.  Patterson,  19  Pick.  47G ;  Jones  v.  Clark,  20 
Johns.  51. 

Ames,  C.  J.  It  seems  to  be  clear,  uj)on  principle,  and  is  well 
settled  by  authority,  that  a  mortgage  by  the  lessor  of  lands  under 
lease,  operating  as  an  assignment  pro  tanto  of  the  reversion,  carries 
the  rent  as  incident  to  it  to  the  mortgagee.  In  such  case,  therefore, 
all  that  the  law  requires  of  the  mortgagee  to  entitle  him  to  rent 
of  the  tenant  of  the  mortgagor,  is  notice  to  the  tenant  to  pay  the 
rent  to  him;  such  notice  preventing  any  injustice  to  the  tenant 
from  double  payment. 

If,  on  the  other  hand,  the  lease  be  subsequent  to  the  mortgag--, 
as  the  mortgage  gives  to  the  mortgagee  no  title  to  the  reversion 
out  of  which  the  lease  was  granted,  he  cannot  bv  mere  notice 
compel  the  tenant  to  pay  rent  to  him,  nor  does  his  title  to  the  rent 
accrue  until  he  has  obtained  possession  of  the  mortgaged  estate. 
ITe  is  not  the  landlord  of  the  mortgagor,  nor  by  virtue  of  the  rela- 
tion between  them  entitled  to  the  rents  and  profits  of  the  mortgagetl 
estate  as  long  as  the  mortgagor  retains  j>ossession  (Erans  v.  Elliot, 
9  Ad.  i*;-  Ell.  159;  The  Manchester  Hospital  anJ  I.ifr  Ins.  Cn,  v 
^yilson.  10  Met.  12(1). 

The  mortgage,  however,  ci>iivcys  liic  title  to  possession  I'j  ih-.' 


334  COMMON    LAW    RELATIONS.  [CHAP.  I. 

mortgagee,  and,  indeed,  when,  as  in  this  case,  forfeited,  the  whole 
title  at  law;  and,  unless  some  statute  forbid,  which  none  here  does, 
the  tenant  of  the  mortgagor  may  attorn  to  the  mortgagee,  and  by 
thus  placing  him  in  possession  of  the  mortgaged  premises  entitle 
him  to  the  rents  thereof.  There  is  no  disloyalty  to  his  landlord 
in  such  attornment  by  the  tenant,  since  thereby  he  only  recognizes 
a  title  which  his  landlord  has  granted  (Jones  v.  Clarh,  20  Johns. 
51).  In  Evans  v.  Elliot,  supra.  Lord  Denman  seems  to  agree  that 
the  tenant's  attornment  will  create  a  privity  between  himself  and 
the  mortgagee,  or,  as  he  expresses  it,  "  is  at  least  necessary"  to 
create  the  relation  of  tenant  and  landlord  between  them ;  although 
he  decides  that  the  attornment  will  not  relate  back  to  a  notice 
before  given  by  the  mortgagee  to  the  tenant,  but  creates  the  privity 
and  right  to  rent  only  from  the  time  when  it  is  actually  made.  As 
attornment  is  nothing  more  than  the  consent  of  the  tenant  to  the 
grant  of  the  seignory,  or,  in  other  words,  to  become  tenant  of  the 
new  lord  (Co.  Lit.  309  a;  Butler's  note,  272),  and  the  tenants  in 
this  case,  by  promising  to  pay  and  actually  paying  the  rent  to  the 
mortgagee,  thus  attorned  to,  and  became  tenants  to  him,  it  follows 
that  they  rightfully  paid  to  him  the  subsequently  accruing  rent, 
and  cannot  be  compelled  to  pay  it  over  again  to  the  plaintiff. 
eTudgment  must  therefore  be  rendered  for  the  defendants,  for  their 
costs.^  . 


HUBBELL  V.  MOULSOK 

Court  of  Appeals  of  New  York,  1873. 

(53  N.  Y.  225.) 

Appeal  from  judgment  of  the  General  Term  oi  the  Supreme 
Court  in  the  fourth  judicial  department  in  favor  of  defendants, 
entered  upon  an  order  denying  motion  for  a  new  trial  and  directing 
a  judgment  on  verdict. 

This  action  was  ejectment  to  recover  possession  of  the  undivided 
lialf  of  a  lot  of  land  situate  in  Brighton,  Monroe  County.  The 
facts  appear  sufficiently  in  the  opinion.  The  court  directed  a 
verdict  in  favor  of  defendants,  which  was  rendered  accordingly. 

'  Htcdman  v.  Gassett,  18  Vt.  34G  (184G),  accord.  That  neither  entry  by 
tlie  mortgagee  nor  attornment  of  the  tenant  is  necessary  to  entitle  the  mort- 
},r:igee  to  "intercept"  the  rents,  see  Marx  v.  Marx,  51  Ala.  222  (1874); 
Comer  v.  Hhechan,  74  Ala.  4ry2  ( 188,3).  But  compare  Dralford  v.  Turk,  75 
Ala.  339  (1883),  and  see  Bartlctt  v.  Hitchcock,  10  Bradw.  (111.)  87 
(1881),  contra. 


•■"  •  "1  iintiiii  I    ;■    \i(»ri.s()v.  3;J5 

lv\(  I'jjiions  were  onli'icd  lnaiii  m  \\\r  {\v^[  iii>t;m(c  ;il  (icncral 
Tfrni. 

Fraiitis  Kcniaii  for  tlio  appellant.  Paymont  of  the  mortga^o 
or  tendtT  of  the  amount  due  diseliarges  the  lien  of  a  mortgagee 
(.5  K.  S.,  3d  ed.,  5i)!),  850;  4  Kent's  Com.,  11th  cd.,  JO!),  note  4; 
Eihcnrds  v.  Farmers'  Ins.  Co.,  -2\  Wend.  -I(i7;  s.  c.  in  error,  :?<)  iil. 
041  ;  Ariwlt  v.  Post,  (i  JliU,  (J.-);  Kurlr'uihl  v.  ('(uhj.  2\  X.  V.  :{|;'.; 
Wariiiij  V.  Smith,  2  Barb.  Cli.  11!».  i:?-")).  After  payment  or  tender 
f  the  amount  due  an  aetion  of  t'jeetinent  will  lie  ('-*1  Wend.  4tJT  ; 
<;  /(/.  541;  G  Hill.  i\r>). 

W.  F.  Co(jsircll  for  the  respondents.  Defendants  were  mort- 
gagees in  possession,  and  an  aetion  of  ejectment  could  not  be 
maintained  against  them  {Van  Duyue  v.  Thayrc,  14  Wend.  233; 
rhiife  V.  Eilcij,  15  id.  248;  Chase  v.  Peck.  21  X.  Y.  581  ;  Hubhcll 
'I  al.  V.  Siblri/.  Ms). 

AxDiunvs,  J.  The  plaintiffs  claim  title  under  Alfred  Ilubbell, 
tlie  mortgagor,  to  the  undivided  half  of  premises  mortgaged  by  him 
to  Hiram  Sibley,  December  1,  1846,  to  secure  the  payment  of  $7,0(»0. 
The  action  is  ejectment,  and  it  was  necessary  for  the  jilaintilFs,  in 
nrdi-r  to  recover  under  their  complaint,  to  show  that  they  were 
Mtitled,  as  against  the  defendants,  to  the  possession  of  the  premises 
.a  the  time  of  the  commencement  of  the  action.  The  defendants 
are  the  grantees  of  Sibley,  the  mortgagee,  under  a  deed  dated 
.'une  7,  1840.  and  are  in  possession,  claiming  under  that  deed. 
They  stand,  by  reason  of  that  conveyance,  in  privity  with  the  mort- 
gagee, and  their  right  to  the  possession  is  the  right  of  the  mortgagee, 
and  the  right  of  the  plaintifTs  dejjcnds  upon  the  same  principles 
as  if  Sibley  was  in  possession  and  the  action  had  been  brought 
against  him  {■/(iclson  v.  Mueller,  10  J.  II.  47!>;  Jiirhson  v.  Jimrrn, 
7  Cow.  13 ;  Robinson  v.  Pijan,  25  X.  Y.  320).  The  plaintitts  on  the 
!  ial  offered  to  ])rove  that  the  mortgage  debt  had  been  paid  by  the 
nceipt  by  Sibley,  before  the  commencement  of  the  action,  of  rents 
and  |)ro(its  from  the  land  sullicient  to  satisfy  it.  The  evidenci'  was 
«'\(lu(led.  If  the  mortgage'  was  in  law  subsisting  and  unsatislii-d 
when  the  action  was  commenced,  then  it  cannot  be  maintained,  as 
the  authorities  are  decisive  that  ejectment  will  not  lie  by  a  mort- 
gagor against  a  mortgagee  in  jjossession   (Van  Diitfue  v.   Thut/rr, 

14  Wend.   233;   Phi/fe   v.    Rih;/.    15    Wend.    248;    'Pell   v.    11  mar, 

15  X.  '^'.  13!t).  Leaving  out  of  view  the  alleged  title  under  the 
stilt ute  foreclosure,  the  (piestion  ari.ses.  whether  the  receipt  by  a 
mortgagee  in  jwssession  of  rents  and  profits  suflieient  to  .'satisfy  the 
mortgage  debt,  does  ipso  facto  extinguish  it  and  discharge  thf  lien 
of  the  mortgage.  If  it  does  not.  then  tlie  «'vidence  was  j)roj>('rly 
<  \cluded.     If  admitted,  it   would  not  have  shown  a  riirht   in   the 


336  COMMON    LAW    RELATIONS.  [CHAP.  I. 

plaintiffs  to  the  possession  of  the  premises  when  the  action  was 
brought. 

It  is  the  settled  doctrine  in  this  State  that  a  mortgagee  has  by 
virtue  of  his  mortgage  a  lien  only,  and  not  an  estate  in  the  land 
mortgaged  (Runyan  v.  Mersereau,  11  J.  E.  537;  Jackson  v.  Craft, 
18  id.  110;  Jackson  v.  Bronson,  19  id.  325;  Kortright  v.  Cady, 
21  K  Y.  343;  Stoddard  v.  Hart,  23  id.  560).  In  harmony  with 
this  view  it  was  held  in  Kortright  v.  Cady  that  a  tender  of  the 
mortgage  debt  after  it  became  due  discharged  the  lien  of  the  mort- 
gage and  prevented  a  subsequent  foreclosure.  And  it  was  held  in 
Edwards  v.  The  Fireman's  Fire  Ins.  and  Loan  Co.,  21  Wend.  467, 
26  id.  541,  that  upon  a  tender  after  default  by  a  mortgagor  of  the 
mortgage  debt,  ejectment  would  lie  in  his  favor  upon  the  refusal 
of  the  mortgagee  to  surrender  the  possession.  But  while  no  title 
in  a  strict  sense  vests  in  the  mortgagee  of  land  until  foreclosure, 
yet  his  interest  is,  in  some  cases,  treated  and  regarded  as  a  title, 
for  the  purpose  of  protecting  and  enforcing  the  equities  between 
parties.  An  instance  of  this  is  found  in  Mickles  v.  Townsend, 
18  N.  Y.  575,  where  it  was  so  held  for  the  purpose  of  applying  the 
doctrine  of  estoppel  by  deed  against  a  person  claiming  as  assignee 
of  a  mortgage  which  existed  at  the  time  of  his  prior  conveyance 
of  the  mortgaged  premises  with  warranty,  but  Avhich  was  assigned 
to  him  afterward.  And  in  Van  Dyne  v.  Thayre,  19  Wend.  162, 
the  release  of  the  equity  of  redemption  by  the  mortgagor  to  the 
mortgagee  was  held  to  inure  as  an  enlargement  of  the  estate  of  the 
mortgagee  so  as  to  prevent  the  plaintiff's  recovering  dower  at  law, 
in  disregard  of  the  equity  of  the  defendant  to  have  the  mortgage 
first  satisfied  out  of  the  land  (Cowen,  J.,  21  Wend.  485). 

It  is  easy  to  see  that  where  the  English  doctrine  prevails,  that 
the  mortgage  conveys  a  legal  title  to  the  mortgaged  premises,  the 
right  of  the  mortgagor  to  an  account  of  the  rents  and  profits  of  the 
land  received  by  the  mortgagee  is  purely  and  exclusively  of  equi- 
table cognizance.  At  law,  the  mortgagee  is  the  owner  of  the  estate, 
and  takes  the  rents  and  profits  in  that  character.  In  equity,  the 
mortgagor  is  regarded  as  the  owner  until  foreclosure,  and  his  right 
to  an  account  is  incident  to  his  right  of  redemption  (2  Wash,  on 
Real  Property,  161,  205;  Seavcr  \.  Durant,  39  Vt.  103;  Parson  v. 
^Yelles,  17  Mass.  419).  But  the  necessity  to  resort  to  an  accounting 
in  equity,  in  order  to  have  the  rents  and  profits  applied  to  the 
satisfaction  of  the  mortgage,  is  not  obviated  by  the  fact  that  here 
the  mortgagor  retains  the  legal  title.  The  mortgagee  in  possession 
takes  the  rents  and  profits  in  the  quasi  character  of  trustee  or  bailiff 
of  the  mortgagor  (2  Pow.  on  Mort.,  946  a;  2  Wash.  205).  They 
are  applied  in  equity  as  an  equitable  set-off  to  the  amount  due  on 


sKc.  II. 1  iirniti:!.!.  r.   moi  i.son.  3;JT 

the  iM()rtg;i;;t'  dchl    (Riirkmnn  v.  .l.-f/or.  0  Pnifjo,  517).     The  law 

•  loi's  not  apply  them  as  rtroivi-d  to  the  payment  of  the  mort- 
;,Mge.  It  depends  upon  the  result  of  an  accounting  upon  equitabh; 
jjrinciplcs,  whi-thcr  any  part  of  the  rents  and  profits  received  ^hall 
i)e  so  iij>plie(l.  Tlu'  mortgagee  is  entitled  to  have  them  applied,  in 
the  first  instance,  to  reimburse  him  for  taxes  and  necessary  repairs 
made  upon  the  ])remises;  for  sums  paid  hy  him  upon  prior  incum- 
hrances  upon  the  estate,  in  order  to  protect  the  title,  and  for  co>t< 
in  defending  it  ;  and  if  he  has  made  i)ermanent  improvements  uj)on 
the  land  in  the  belief  that  he  was  the  absolute  owner,  the  increast-fl 
value  by  reason  thereof  may  be  allowed  him.  So  he  may  be  charged 
with  rents  and  profits  he  might  have  received,  if  his  failure  to 
recover  them  is  attributable  to  his  fraud  or  willful  default  {2  Powell 
on  Mort.,  057.  note;  1  Kent,  ISo;  2  Wash.  218;  Cameron  v.  Irwin, 
5  Hill,  272;  Micl-les  v.  Dillaije,  17  X.  Y.  80).  In  many  cu^es 
complicated  equities  must  be  determined  and  adjusted  before  it  can 
be  ascertained  what  part,  if  any,  of  the  rents  and  profits  received 
is  to  be  applied  upon  the  mortgage  debt.  In  the  absence  of  an 
agreement  between  the  parties  there  is  no  legal  satisfaction  of  tin* 
mortgage  by  the  receipt  of  rents  and  profits  by  a  mortgagee  in 
possession  to  an  amount  suflicicnt  to  satisfy  it,  and  his  character 
as  mortgagee  in  possession  is  not  divested  until  they  are  applied 
by  the  judgment  of  the  court  in  satisfaction  of  the  mortgage. 
These  considerations  lead  to  an  allirmance  of  the  judgment  without 
<'onsidering  the  question  of  the  validity  of  the  statute  foreclosure. 

The  plaintiffs  claim  to  recover  upon  the  allegation  of  a  right  to 
the  j)osscssion  of  the  premises  when  the  action  was  commenced. 
The  defendants  were  in  possession,  claiming  under  the  mortgagro 
whoso  mortgage  was  outstanding  and  unsatisfied.  The  action  i> 
not  for  a  redemption  or  for  an  accounting,  and  the  plaintitTs  are 
not  in  the  attitude  of  resisting  an  attempt  by  the  mortgagee  t<^ 

•  M force  the  mortgage. 

The  judgment  should  be  allirmed,  with  costs. 
All  concur. 

•Judijment  nffirnirii.^ 


338  COMMON    LAW    RELATIONS.  [CHAP.  I. 


KING  V.    HOUSATONIC   EAILEOAD    COMPANY. 

Supreme  Court  of  Errors  of  Connecticut,  1877. 
(45  Conn.  336.) 

Scire  facias  upon  a  process  of  foreign  attachment,  brought  to 
the  Superior  Court  in  Fairfield  County,  and  tried  to  the  court  on 
the  general  issue  with  notice,  before  Beardsley,  J. 

A.  S.  Treat,  with  whom  was  R.  Averill,  for  the  plaintiff  in  error. 

H.  B.  Harrison  and  If.  K.  Secley  for  defendants  in  error. 

Hovey,  J.  The  proceedings  below  were  upon  a  scire  facias  to 
recover  certain  rents  due  from  the  defendants  as  lessees  of  the  New 
York,  Housatonic  &  Northern  Railroad  Company.  The  lease 
reserving  the  rents  was  executed  on  the  36th  day  of  February,  1873, 
and  was  for  the  term  of  five  years  from  the  1st  day  of  March  then 
next,  when  the  defendants  entered  into  possession  under  the  lease. 
Subsequently,  on  or  about  the  first  day  of  October,  1873,  the  lessors, 
being  the  owners  of  the  leased  premises,  mortgaged  the  same,  with 
other  property  situate  in  the  State  of  New  York,  to  secure  the 
payment  of  certain  bonds  of  the  mortgagors,  amounting  to  the 
sum  of  two  million  dollars,  to  David  S.  Dunscomb  and  Erastus  F. 
Mead,  as  trustees  for  those  who  might  become  holders  of  the  bonds. 
The  principal  of  the  bonds  was  made  payable  on  the  first  day  of 
October,  1893,  and  the  interest  semi-annually  on  the  first  day  of 
April  and  the  first  day  of  October  in  each  year,  upon  the  presenta- 
tion and  surrender  of  the  interest  warrants  or  coupons  which  were 
annexed  to  the  bonds.  And  the  mortgage  expressly  authorized  the 
mortgagees,  after  six  months'  default  in  the  payment  of  interest,  to 
enter  into  and  take  possession  of  the  property  mortgaged  and  receive 
the  rents,  income  and  profits  thereof.  Soon  after  the  execution  of 
the  mortgage  the  bonds  passed  into  the  hands  of  bona  fide  holders 
for  value,  and  still  remain  outstanding  and  unpaid.  The  mort- 
gagors having  made  default  in  the  payment  of  interest  more  than 
six  months  prior  to  the  15th  day  of  March,  1875,  and  interest  to 
a  large  amount  being  then  due  and  unpaid,  the  mortgagees  on  that 
day  gave  notice  thereof  to  the  defendants  and  demanded  of  them 
the  rents  then  due  and  thereafter  to  become  due  under  their  lease. 
Five  days  afterwards  the  plaintiff  commenced  a  suit  by  foreign 
attachment  against  the  mortgagors,  the  New  York,  Housatonic  and 
Northern  Eailroad  Company,  and  attached  the  rents  then  due, 
amounting  to  the  sum  of  $3,315.60.  In  that  suit  the  plaintiff 
recovered  judgment,  took  out  execution,  placed  the  execution  in  the 
hands  of  a  proper  officer,  and  tlie  officer,  by  virtue  of  the  execution. 


«f"»"-   ll-l  KIX(i    /•.    II(»1>A1(»M(     It.    i;.    (  u.  '.iA  f 

(111  the  '?;](]  (lay  of  DtM'('iiil)(.'r,  IST."),  nuulc  (Iciiiand  of  the  present 
•  li'fcndanls  of  tlu'  sums  contaiiu'd  in  tlie  exiriition  and  of  any  estate 
of  the  Xew  York,  Ilousatonie  and  Xorthern  Kailroad  0)ni|mny  in 
llicir  hands,  but  the  defendants  refused  to  conijdy  with  the  demand. 
And  on  the  21st  day  of  Feltruary.  ISTC,  the  suit  upon  which  the 
proeeedin;j:s  beK)w  were  had  was  hrou,<,dit.  Th(>  court  l)elow  rendered 
judirment  in  favor  of  the  defendants;  and  the  (piestion  is  whether 
in  so  doing  the  court  erred. 

It  is  a  wi'll-.selth'd  jirinciple  of  the  common  hiw  tha<  the  i;rant  (.f 
the  reversion  of  an  estate  expectant  on  the  delt-rminalion  of  a  lea«' 
lor  years,  passes  to  the  grantee  tlie  rents  reserved  in  the  lease  as 
incident  to  the  reversion  (Co.  Litt.  151,  l.'i'J;  2  Bl.  Comm.  KH; 
1  Kent,  354).  The  consent  of  the  tenant,  expressed  hy  what  wa> 
'  alK'd  his  attornment,  was,  however,  necessary  to  the  perfection 
•  f  the  grant  in  Knghind,  until  the  fourth  year  of  the  reign  of 
(^leen  Anne;  but  in  that  year  a  statute  was  passed  which  made  the 
irrant  efTectual  without  attornment.  And  since  that  time  notice 
f  the  grant  to  the  tenant  has  been  sulTicient  to  entitle  tlie  grantc 
!i»  demand  and  recover  the  rents  {llirclt  v.  Wrlijlit,  1  T.  1!.  ".si; 
Luiitlcy  v.  lluihjson,  1(!  East,  90). 

Where  the  grant  is  by  way  of  mortgage,  the  mortgagee,  though 
'  iititled  to  the  rents  as  incident  to  the  reversion,  may  take  them  or 
lit  at  his  election.  If  he  elects  not  to  take  them,  as  he  generally 
<locs  so  long  as  his  interest  is  paid,  he  may  forbear  to  give  notice 
to  the  tenant,  and  in  that  case  the  mortgagor  is  authorized  to 
'  ollwt  the  rents  and  appropriate  them  to  his  own  use.  But  if  the 
mortgagee  elects  to  take  the  rents  and  gives  notice  of  his  election 
to  the  tenant,  he  then  becomes  entitled  to  all  the  rents  accruing 
ifter  the  execution  of  the  mortgage  and  in  arrear  and  unpaid  at 
I  he  time  of  the  notice,  as  well  as  to  those  which  accrue  afterwards. 
But  the  rents  in  arrear  at  the  time  the  mortgage  was  executed 
belong  to  the  mortgagor.  The  leading  authority  for  this  doctrine 
is  the  case  of  Moss  v.  (laHiinorr.  Doug.  270.  Tlie  decision  in  that 
«ase  seems  to  have  settled  the  law  in  England  (2  Cruise  Dig.  SI; 
liirch  V.  Wn'i/lil.  .sw//>n;  .•  Tnnl  v.  Ilimf.  0  Kxch.  M).  And  its 
'•undness,  in  view  of  the  relations  of  a  mortgagor  and  mortgagee 
"f  a  reversicni  to  each  other  and  to  a  tenant  in  ])ossession  \inder 
I  lea.se  j)rior  to  the  mortgage,  cannot  well  be  (piestioned.  In  com- 
menting upon  the  decision,  the  learned  English  editor  of  Smith's 
l-«'nding  Cases  observes  that  it  "  is  upon  a  point  which  seems  so 
<  lear  in  principle  that,  were  it  not  for  its  g(>neral  importance,  it 
would,  perhajis.  be  matter  of  sur|)ris(>  that  any  case  should  have 
been  deemed  recpiisite  to  establish  it"  (1  Smith's  I^ead.  Va>i.  (lO.?). 
It  is  true,  as  suggested  by  counsel  for  the  plaintiff,  that  the  court. 
in  making  that   dtnision.  was  governed   by  the  provisions  of  the 


340  COMMON    LAW    RELATIONS.  [CHAl'.  I. 

statute  of  Anne.  But  the  principle  embodied  in  that  statute,  and 
enforced  in  the  case  of  Moss  v.  GalUmore,  has  been  adopted  by  the 
courts  of  last  resort  in  many  of  our  sister  States  (4  Kent,  165), 
and  was  expressly  sanctioned  and  approved  by  this  court  in  the 
case  of  Baldwin  v.  Walker,  21  Conn.  168.  In  that  case  one  Stod- 
dard, being  the  owner  of  an  undivided  half  of  certain  real  estate, 
leased  it  to  the  defendant  for  a  term  of  years  and  afterwards  mort- 
gaged it  to  the  plaintiff.  The  defendant  had  notice  of  the  mortgage, 
but  refused  to  pay  to  the  plaintiff  the  rent  due  under  the  lease, 
and  the  plaintifE  sued  in  an  action  of  covenant  to  recover  it,  and 
judgment  was  rendered  in  his  favor.  The  case  then  came  to  this 
court  upon  a  motion  for  a  new  trial,  and  also  upon  a  motion  in 
error.  Both  motions  were  unsuccessful,  and  the  judgment  below 
was  affirmed.  Church,  C.  J.,  in  giving  the  opinion  of  the  court, 
after  referring  to  the  lease,  and  declaring  that  as  between  Stoddard, 
the  lessor,  and  the  defendant  the  lease  must  be  treated  as  an  effective 
one  and  as  leaving,  when  made,  a  reversion  in  Stoddard,  says :  ''  By 
his  mortgage  to  the  plaintiff  this  reversion,  as  a  subsisting  legal 
interest,  was  conveyed  or  assigned  to  the  plaintiff,  unless  he  elected 
to  treat  it  as  void.  This  he  has  not  done,  but  claims,  as  he  may,  his 
right  as  mortgagee  or  assignee  to  the  rent  incident  to  such  rever- 
sion;" citing  2  Cruise's  Dig.  Ill;  Moss  v.  Gallimore,  Doug.  279; 
2  Swift  Dig.  179;  Fitchhurg  Manuf'g  Co.  v.  Melvin,  15  Mass.  268. 
The  learned  judge  then  observes  that,  "  if  the  lease  had  been  exe- 
cuted after  the  mortgage  to  the  plaintiff,  he  could  not  as  mortgagee, 
perhaps,  have  any  remedy  for  the  recovery  of  this  rent,  without 
attornment,  for  want  of  legal  priority."  That  case  is  decisive  of 
the  one  at  bar  and  fully  sustains  the  court  below  in  the  judgment 
which  it  rendered  in  favor  of  the  defendants.  The  judgment  must, 
therefore,  be  affirmed. 

In  this  opinion  the  other  judges  concurred.^ 


Teal  V.Walker,  111  U.  S.  242(1884).  Mr.  Justice  Woods  (247). 
The  decicion  of  the  question  raised  by  the  demurrer  to  the  complaint 
is  not  affected  by  the  stipulation  contained  in  the  defeasance  of 
August  19th,  1874,  that  Goldsmith  and  Teal  should,  on  -default 
made  in  the  payment  of  the  principal  of  Goldsmith's  note,  and 
on  the  demand  of  Hewett,  surrender  the  mortgaged  premises  td 

"■Baldioin  v.  Walker,  21  Conn.  108  (1851)  ;  Ahhott  v.  Uanfton,  24  N.  J. 
Law,  493  (1854)  ;  Russell  v.  Allen,  2  Allen  (Mass.)  42  (1801),  and  Mirkk 
V.  Hoppin,  118  Mass.  582  (1875),  accord.  So,  after  forfeiture,  McKircher 
V.  Haivley,  16  Johns.  (N.  Y.)  289  (1819),  semble.  But  compare  Myers  v. 
White,  1  Rawle    (Penn.)    355    (1829)    (semble) ,conira. 


>"      ".1  TKAI.    C.    W.Vr.KKK.  341 

hi  111.  If  tliis  was  a  valid  and  bindin<(  undcrtakinp;,  it  did  not 
<  lianj^'e  tlie  rights  of  thi-  parties.  Without  any  such  stipuhiticjn, 
lli'W«.'tt,  unh'ss  it  was  otherwise  provided  hy  statute,  was  entitled, 
ai  least  on  default  in  the  payment  of  the  note  of  Goldsmith,  to  the 
l»ossession  of  the  mortgaged  premises  {Kecch  v.  Hall,  1  Doug.  21 ; 
Ji'ockncll  V.  Bracllci/.  2  Conn.  1;  Smith  v.  Johns,  3  Gray,  517; 
Jackson  V.  Dubois,  4  Johns.  21(5;  Furbush  v.  Goodwin^  29  N.  II. 
;5v*l  ;  Howard  v.  Hoiujhion,  (>  1  Me.  445;  Den  ex  dcm.  Harl  v. 
Stockton,  7  Ilalst.  322;  Ely  v.  M'Guire,  2  Ohio,  223;  vol.  1  and  2.' 
.'tl  Ed.  372).  The  rights  of  the  parties  are,  therefore,  the  same 
;is  if  the  defeasance  contained  no  contraft  for  the  delivery  of  the 
possession. 

We  believe  that  the  rule  is  without  e.\ee|)tion  that  the  mortgagee 
is  not  entitled  to  demand  of  the  owner  of  the  equity  of  redemption 
the  rents  and  profits  of  the  mortgaged  premises  until  he  takes 
actual  possession.  In  the  ea.se  of  Moss  v.  (ialliniore,  1  Doug.  270, 
l.iird  Mansfield  held  that  a  mortgagee,  after  giving  notice  of  his 
mortgage  to  a  tenant  in  possession  holding  under  a  lease  older  than 
the  mortgage,  is  entitled  to  the  rent  in  arrear  at  the  time  of  the 
notice,  as  well  as  to  that  which  accrues  afterwards.  This  ruling 
has  iieen  justified  on  the  ground  that  the  mortgagor,  having  con- 
veyed his  estate  to  the  mortgagee,  the  tenants  of  the  former  became 
the  tenants  of  the  latter,  which  enabled  him,  by  giving  notice  to 
iheiii  of  his  mortgage,  to  place  himself  to  every  intent  in  the  same 
.situation  towards  them  as  the  mortgagor  previously  occupied 
(Rau'son  v.  Eicke,  7  Ad.  &  Kl.  451;  Burrowcs  v.  Gradin.  1  Dowl. 
A'  Lowndes,  213).  Where,  however,  the  lease  is  subsequent  to  the 
mortgage,  the  rule  is  well  settled  in  this  country,  that,  as  no  rever- 
-  i>n  V(»sts  in  the  mortgagee,  and  no  privity  of  estate  or  contract  is 
ivated  between  him  and  the  lessee,  he  cannot  proceed,  either  by 
xlislress  or  action,  for  the  recovery  of  the  rent  (Mai/o  v.  Shattuck, 
1  I  Pick.  533;  Watts  v.  Coffin.  11  Johns.  495;  McKirchn-  v.  Hawleij. 
Hi  id.  289;  Sanderson  v.  Price,  1  Zabr.  G37 ;  Price  v.  Smith. 
1  (ircen's  ("h.  fX.  J.]  51(;). 

The  case  of  Moss  v.  Gallimorc  has  never  been  held  to  ajiply  to 

;   mortgagor  or  the  vendir  of  his  equity  of   redemi)tion.      Ij<ird 

Mansfield  him.^clf,  in  the  case  of  Chinnerij  v.  Blackman.  3  Doug. 

'1,  held  that  until  the  mortgagee  takes  po.sse.ssion  the  mortgagor  is 

wncr  to  all  the  world,  and  is  entillccl  to  all  the  profits  made.     The 

lie  on  this  subject   is  finis  stated  in  Bacon's  Al)ridgement,  title 

Mortgage,  (':  "  .Mthoiigli  the  mortgagee  may  assume  possession  by 

jcctment  at  his  j)leasure,  and,  according  to  tlie  case  of  Moss  v. 

'  illiniore.  Doug.  279,  may  give  notice  to  the  tenants  to  pay  him 

I  he  rent  due  at  the  time  of  the  notice,  yet.  if  he  sutlers  the  mort- 

:  iL'or  to  remain   in  possession  or  in  receipt  of  the  rents,  it   is  a 


343  COMMOX    LAW    RELATIONS.  [CHAP.  I.. 

privilege  belonging  to  his  estate  that  he  cannot  be  called  upon 
to  account  for  the  rents  and  profits  to  the  mortgagee,  even  although 
the  security  be  insufficient."  So,  in  Iliggins  v.  York  Buildings 
Company,  2  Atk.  107,.  it  was  said  by  Lord  Hardwicke:  "In  case 
of  a  mortgagee,  where  a  mortgagor  is  left  in  possession,  upon  a  bill 
brought  by  the  mortgagee  for  an  account  in  this  court,  he  never 
can  have  a  decree  for  an  account  of  rents  and  profits  from  the 
mortgagor  for  any  of  the  years  back  during  the  possession  of  the 
mortgagor,"  and  the  same  judge  said  in  the  case  of  Mead  v.  Lord 
Orrery,  3  Atk.  244 :  "  As  to  the  mortgagor,  I  do  not  know  of  any 
instance  where  he  keeps  in  possession  that  he  is  liable  to  account 
for  the  rents  and  profits  to  the  mortgagee,  for  the  mortgagee  ought 
to  take  the  legal  remedies  to  get  into  possession."  In  Wilson,  ex 
parte,  2  Yes.  &  B.  253,  Lord  Eldon  said :  "  Admitting  the  decision 
in  Moss  V.  Gallimore  to  be  sound  law,  I  have  been  often  surprised 
by  the  statement  that  a  mortgagor  was  receiving  the  rents  for  the 
mortgagee.  ...  In  the  instance  of  a  bill  filed  to  put  a  term  out 
of  the  way,  which  may  be  represented  as  in  the  nature  of  an  equi- 
table ejectment,  the  court  will,  in  some  cases,  give  an  account  of 
the  past  rents.  There  is  not  an  instance  that  a  mortgagee  has  per 
directum  called  upon  the  mortgagor  to  account  for  the  rents.  The 
consequence  is  that  the  mortgagor  does  not  receive  the  rents  for 
the  mortgagee."  See,  also,  Coleman  v.  Duhe  of  St.  Albans,  3  Yes. 
Jr.  25 ;  Gresley  v.  Adderly,  1  Swanst.  573. 

The  American  cases  sustain  the  rule  that,  so  long  as  the  mortgagor 
is  allowed  to  remain  in  possession,  he  is  entitled  to  receive  and 
apply  to  his  own  use  the  income  and  profits  of  the  mortgaged 
estate;  and,  although  the  mortgagee  may  have  the  right  to  take 
possession  upon  condition  broken,  if  he  does  not  exercise  the  right, 
he  cannot  claim  the  rents ;  if  he  wishes  to  receive  the  rents,  he  must 
take  means  to  obtain  the  possession  {Wilder  v.  Houghton,  1  Pick. 
87;  Boston  Bank  v.  Reed,  8  Pick.  459;  Noyes  v.  Rich,  52  Me.  115). 
In  Hughes  v.  Edwards,  9  Wheat.  500,  it  was  held  that  a  mortgagor 
was  not  accountable  to  the  mortgagee  for  the  rents  and  profits 
received  by  him  during  his  possession,  even  after  default,  and  even 
though  the  land,  when  sold,  should  be  insufficient  to  pay  the  debt, 
and  that  the  purchaser  of  the  equity  of  redemption  was  not  account- 
able for  any  part  of  the  debt  beyond  the  amount  for  which  the  land 
was  sold.  In  the  case  of  Gilman  v.  Hlinois  &  Mississippi  Telegraph 
Company,  91  U.  S.  603,  it  was  declared  by  this  court  that  whero 
a  railroad  company  executed  a  mortgage  to  trustees  on  its  property 
and  franchises,  "  together  with  the  tolls,  rents,  and  profits  to  be 
had,  gained,  or  levied  thereupon,"  to  secure  the  payment  of  bond-; 
issued  by  it,  the  trustees,  in  behalf  of  the  creditors,  were  not  entitled 
to  the  tolls  and  profits  of  the  road,  even  after  condition  broken 


••<►:<••  II  I  tj:al  r.   \valki;k.  343 

and  tlie  filing  of  u  bill  to  foreclose  tlu'  mortgage,  they  not  having 
taken  possession  or  had  a  receiver  aj)|)ointed.  The  court  said,  in 
delivering  judgment  in  this  case:  "A  mortgagor  of  real  estate  is 
not  liable  for  rent  while  in  j)osscssion.  He  contracts  to  pay  interest, 
not  rent."  So  in  Kounlzc  v.  Omaha  Hotel  Company,  107  U.  S. 
378,  it  was  said  by  the  court,  speaking  of  the  rights  of  a  mortgagee: 
"  But  in  the  case  of  a  mortgage,  the  land  is  in  the  nature  of  a 
))ledge  ;  it  is  only  the  land  itself,  the  specific  thing,  which  is  j)lc(lged. 
The  rents  and  profits  are  not  pledged ;  they  belong  to  the  tenant 
in  possession,  whether  the  mortgagor  or  a  third  person  claiming 
under  him.  .  .  .  The  plaint i IT  in  this  case  was  not  entitled  to 
])ossession,  nor  to  the  rents  and  profits."  See  also  Hiitcldiis  v. 
Kinrj,  1  Wall.  53,  57-58. 

(-"hancellor  Kent  states  the  modern  doctrine  in  the  following 
langiiage:  '*  The  mortgagor  has  a  right  to  lease,  sell  and  in  every 
respect  to  deal  with  the  mortgaged  ])remises  as  owner  so  long  as 
he  is  permitted  to  remain  in  possession,  and  so  long  as  it  is  under- 
stood and  held  that  every  person  taking  under  him,  takes  subject 
to  all  the  rights  of  the  mortgagee,  unimpaired  and  unafTected.  Nor 
is  he  liable  for  rents,  and  the  mortgagee  must  recover  the  possession 
by  regular  entry  by  suit  before  he  can  treat  the  mortgagor,  or  the 
person  holding  under  him,  as  a  trespasser"  (4  Kent  Com.  157). 
See  also  American  Bridge  Company  v.  Ilcidclbach,  94  U.  S.  798; 
Clarke  v.  Curtis,  1  C! rattan.  289;  Bank  of  Ogdensburg  v.  Arnold, 
5  Paige  Ch.  38;  Ilitnlrr  v.  Hays,  7  Biss.  3(52;  Souter  v.  L'l  Crosse 
Railway.  Woolworth  C.  ('.  SO,  85;  Foster  v.  Bhodes,  10  liank  Reg. 
523.  The  authorities  cited  show  that,  as  the  defendant  in  error 
took  no  effectual  steps  to  gain  possession  of  the  mortgaged  premises, 
he  is  not  entitled  t(  the  rents  and  profits  while  they  were  occupied 
by  the  owner  of  the  e(|uity  of  redemption. 

The  case  against  the  right  of  the  defendant  in  error  to  recover 
in  this  case  the  rents  and  profits  received  by  the  owner  of  the  ecpiity 
of  redemption  is  strengthened  by  section  323,  chapti'r  4,  title  1, 
(ieneral  Laws  of  Oregon,  1813-1872,  which  declares  that  "a  mort- 
gage of  real  projx'rty  shall  not  be  deemed  a  conveyani'c  .so  as  to 
enable  the  ovner  of  the  mortgage  to  recover  po.ssession  of  the  real 
]»roperty  without  a  foreclosure  and  sale  according  to  law."  This 
provision  of  tiie  statute  cuts  uj)  by  the  roots  the  doctrine  of  Mt)ss  v. 
(Jallimore,  uhi  sujira.  and  gives  efTect  to  the  view  of  the  .Vmerican 
courts  of  (>(piity  that  a  mortgage  is  a  mere  security  for  a  debt,  and 
establishes  absolutely  the  rule  that  the  mortgage  is  not  entitled 
to  the  rents  and  jirofits  until  he  gets  jiossession  under  a  decree  of 
foreclosure.  I'or  if  a  mortgage  is  not  a  conveyance,  and  the  mort- 
gagee is  not  entitled  to  possession,  his  claim  to  the  rents  is  without 
support.     This  is  recognized  by  the  Supn>me  Court  of  On'-ron  a< 


344  COMMON    LAW    RELATIONS.  [CIIAP.  I. 

the  effect  of  a  mortgage  in  that  State.     In  Besser  v.  Hawthorn, 

3  Oregon,  129,  at  133,  it  was  declared:  "Our  system  has  so  changed 
this  class  of  contracts  that  the  mortgagor  retains  the  right  of 
possession  and  the  legal  title."     See,  also,  Anderson  v.  Baxter, 

4  Oregon,  105 ;  Roberts  v.  Sutherlin,  id.  219. 

The  case  of  the  defendant  in  error  cannot  be  aided  by  the  stipula- 
tion in  the  defeasance  of  August  19th,  1874,  exacted  by  the  mort- 
gagee, that  Goldsmith  and  Teal  would,  upon  default  in  the  payment 
of  the  note  secured  by  the  mortgage,  deliver  to  Hewett,  the  trustee, 
the  possession  of  the  mortgaged  premises.  That  contract  was 
contrary  to  the  public  policy  of  the  State  of  Oregon,  as  expressed 
in  the  statute  just  cited,  and  was  not  binding  on  the  mortgagor  or 
his  vendee,  and,  although  not  expressly  prohibited  by  law,  yet,  like 
all  contracts  opposed  to  the  public  policy  of  the  State,  it  cannot  be 
enforced  (Railroad  Company  v.  Lochwood,  17  Wall.- 357;  BanJc 
of  Kentuclcij  v.  Adams  Express  Company,  93  U.  S.  174;  Marshall 
V.  Baltimore  £•  Ohio  Railroad  Company,  16  How.  314;  Meguire  v. 
Conrine,  101  U.  S.  108). 


CHAPTP:R  I.     (Continued.) 

Sectiox  III.     Dower  and  Curtesy. 

NASH  V.  PEESTON. 

Court  of  King's  Bench,  1631. 

(3  Cro.  Car.  190.) 

A  bill  in  chancery  was  referred  to  Jones,  Justice,  and  myself 
[Croke,  J.]  to  consider  whether  one  should  be  relieved  against 
dower  demanded,  &c. 

The  ease  appeared  to  be  that  J.  S.,  being  seised  in  fee,  by  inden- 
ture inrolled,  bargains  and  sells  to  the  husband  for  one  hundred 
and  twenty  pounds,  in  consideration  that  he  shall  re-demise  it  to 
him  and  his  wife  for  their  lives,  rendering  a  peppercorn;  and  with 
a  condition  that  if  he  paid  the  hundred  and  twenty  pounds  at  the 
end  of  twenty  years  the  bargain  and  sale  shall  be  void.  He  re- 
demised it  accordingly,  and  dies ;  his  wife  brings  dower. 

The  question  was,  whether  the  plaintiff  shall  be  relieved  against 
this  title  of  dower? 

We  conceived  it  to  be  against  equity  and  the  agreement  of  the 
husband  at  the  time  of  the  purchase,  that  she  should  have  it  against 
the  lessees;  for  it  was  intended  that  they  should  have  it  re-demised 


^^'■-  '"I  N()i;i.  r.  .n:vo\.  315 

iiiunediatc'ly  to  ihi'iu  as  si»uii  as  tlioy  parted  with  it;  and  it  is  but 
in  nature  of  a  mortga<j;t' ;  and  upon  a  niort<^age,  if  land  be  redeemed, 
the  wife  of  the  inor(pi<,'ce  shall  not  have  dower.  And  if  a  husband 
taKe  a  line  Siir  itxjnisunre  dc  droit  come  ceo,  and  render  arrear, 
;dtliou<;h  it  was  onee  the  husbaiul's,  yet  his  wife  shall  not  have 
d(jwer,  for  it  is  in  him  and  out  of  him  quasi  uno  flatii,  and  by  one 
nd  the  same  act.  Yet  in  this  ease  we  conceived  that  by  the  law 
-I'.e  is  to  have  dower;  for  by  the  bar<:ain  and  sale  the  land  is  vested 
ill  the  hu.^band,  and  thereby  his  wife  entitled  to  have  dower;  an<l 
when  he  re-demises  it  upon  the  former  agreement,  yet  the  lessees 
arc  to  receive  it  subject  to  this  title  of  dower;  and  it  was  his  folly 
that  he  did  not  conjoin  another  with  the  bargainee,  as  is  the  ancient 
course  in  mortgages.  And  when  she  is  dowable  by  act  or  rule  in 
law,  a  court  of  equity  shall  not  bar  her  to  claim  her  dower,  for  it  is 
against  the  rule  of  law,  viz.,  "  Where  no  fraud  or  covin  is,  a  court 
of  equity  will  not  relieve."  And  upon  conference  with  the  other 
justices  at  Serjeants-Inn  upon  this  question,  who  were  of  the  same 
judgment,  we  certitied  our  opinion  to  the  court  of  chancery  that 
tile  wife  of  the  bargainee  was  to  have  dower,  and  that  a  court  of 
<<|uity  ought  not  to  preclude  her  thereof. 


XoEL  V.  Jevox,  -2  Frocm.  Ch.  13  (ICrS).  In  CurUi  CanccUaricv. 
The  bill  was  to  be  relieved  against  the  defendant's  dower,  her 
husband  being  only  a  trustee;  and  it  appearing  that  the  husband 
was  but  a  trustee,  the  defendant  was  barred  of  her  dower,  contrary 
to  the  opinion  of  Nn^h  v.  Preston.  1  Cro.  Car.  101,  and  so  it  was 
said  is  the  constant  j)ractice  of  the  court  now.^ 

'  "  If  the  lMisI)aiHl  was  seised  merely  as  trustee,  the  wife  would  be  en- 
titled to  dower  at  coinmon  law;  tint  tliis  court  would  not  sutTer  her  to  take 
advantaffe  of  it." — llinton  v.  Jlintuii,  2  Ves.  Sen.  G.34.  "  Beeause  the  es- 
tate, in  eiiuity,  would  not  lielon^'  to  the  trustee  !)ut  to  the  cestui  que  trust.'' 
— Finch  V.  Karl  of  Wiiulnl.sru.    I    V.   Wins.  278. — Rep. 


346  COMMON   LAW   RELATIONS.    .  [CHAP.  I. 


CASHBOEN  V.  INGLISH. 

Court  of  Chancery,  1738. 

(7  Vin.  Ahr.  156.) 

The  resolution  of  the  court  by  Lord  Chancellor  [Hardwicke]. 
The  principal  question  in  this  case,  on  which  I  am  now  to  give  my 
opinion,  is  whether  the  defendant  Inglish  can  be  tenant  by  the 
curtesy  of  an  equity  of  redemption.  The  mortgagee  came  into 
possession  in  1731. 

Thomas  Cashborn,  father  of  the  plaintiff  and  of  the  wife  of  the 
defendant  Inglish,  by  virtue  of  a  marriage  settlement  being  seized 
of  some  lands  in  tail  and  of  other  lands  in  fee  simple,  had  issue 
three  daughters.  Part  of  the  land  of  which  he  was  seized  in  fee 
he  settled  on  himself  for  life,  with  remainder  to  Anne,  his  eldest 
daughter  in  fee,  and  the  other  part  of  such  lands  he  devised  by  his 
will  to  the  said  Anne,  his  daughter,  and  her  heirs,  subject  to  the 
payment  unto  her  two  sisters  of  £200  apiece.  Anne,  after  the 
death  of  her  father,  borrowed  £900  of  the  defendant  Scarf,  and 
by  lease  and  release  of  24th  and  25th  of  June,  1728,  mortgages 
part  of  the  fee  simple  lands  to  the  said  Scarf  and  his  heirs,  under 
a  proviso  to  be  void  on  payment  of  £900  and  interest.  August  Gth, 
1729,  the  said  Anne  intermarried  with  the  defendant  Inglish,  and 
in  1731  died,  leaving  issue  by  him  a  son,  who  died  without  issue, 
and  on  his  death  his  two  aunts,  the  plaintiffs,  became  his  heirs  at 
law  and  entitled  to  that  inheritance,  and,  as  such,  brought  their 
bill,  Trin.,  1733,  in  this  court,  against  mortgagee  defendant  Scarf 
and  the  defendant  Inglish,  among  other  things  for  a  redemption 
of  the  mortgaged  premises,  and  to  have  an  account  of  the  rents  and 
profits  of  the  real  estate  which  belonged  to  the  plaintiff's  wife,  that 
descended  to  his  son,  from  the  time  of  the  death  of  such  son,  as 
heir  at  law  to  both  of  them. 

The  defendant  Inglish  insisted  to  be  entitled  to  the  mortgaged 
premises  for  his  life,  as  tenant  by  the  curtesy,  and  the  cause,  being 
at  issue,  Avas  heard  on  the  8th  of  May,  1735,  before  his  Honour,  the 
j\Iastcr  of  the  Rolls,  when  it  was  decreed  that  the  defendant  Inglish 
was  not  entitled  to  be  tenant  by  the  curtesy  of  the  mortgaged 
estates,  and  so  was  decreed  to  account  for  the  rents  and  profits 
thereof  from  the  death  of  his  son. 

From  tliis  decree  the  defendant  Inglish  thought  fit  to  appeal,  and 
tlic  general  question  now  is  whether  the  husband  can  be  tenant  by 
the  curtesy  of  the  equity  of  redemption  upon  a  mortgage  in  fee? 
This  question  depends  on  two  considerations': 


«Kr.  iii.l  CASIIBORX    I'.    INifLISH.  347. 

First.  What  kind  of  interest  an  equity  of  redemption  is  consid- 
ered to  be  in  the  eye  of  tliis  court? 

Second.  Wliat  is  retjuisite  to  entitle  the  husband  to  be  tenant 
by  the  curtesy? 

First.  What  kind  of  interest  in  tlie  eye  of  this  court  an  ccjuity  of 
redemption  is?  An  equity  of  redemption  has  always  been  considered 
in  this  court  as  an  estate  in  the  hinds;  it  is  such  an  interest  in  th<; 
hmd  as  will  descend  from  ancestor  to  heir,  and  may  be  granted, 
entailed,  devised  or  mortgaged,  and  that  equitable  interest  may  be 
barred  by  a  common  recovery ;  which  proves  that  an  equity  of 
redemption  is  not  considered  barely  as  a  mere  right,  but  such  an 
estate  whereof,  in  the  consideration  of  this  court,  there  may  be 
a  seisin,  or  a  devise  of  it  could  not  l)e  good.  The  person  who  is 
entitled  to  the  equity  of  redemption  is  in  this  court  considered 
as  owner  of  the  land,  and  the  mortgagee  to  retain  the  land  as  a 
pledge  or  deposit.  And  for  this  reason  it  is  that  a  mortgage  in  fee 
is  considered  as  a  personal  estate,  notwithstanding  the  legal  estate 
vests  in  the  heir  in  jioint  of  law.  The  husband  of  a  mortgagee  in 
fee  shall  never  be  tenant  by  the  curtesy  of  the  mortgaged  estate 
unless  there  be  a  foreclosure,  or  that  such  mortgage  has  subsisted 
for  so  great  a  length  of  time  as  the  court  thinks  sutKcient  to  induce 
tiiem  not  to  grant  a  redemjition.    .    .    . 

It  is  objected  by  the  plaintill's  that  an  equity  of  redemption  is 
only  a  right  of  action,  and  not  to  be  considered  as  such  an  estate 
whereof  there  can  be  a  tenancy  by  the  curtesy,  but  this  is  by  no 
means  well  founded ;  for  this  is  no  otherwise  a  right  of  action 
than  every  trust,  and  as  there  can  be  no  benefit  had  of  an  equity 
of  redemption  but  by  suing  a  subpoena  out  of  the  court,  so  is  the 
case  of  every  mere  trust  in  land,  which  is  considered  as  a  real 
estate  in  this  court,  but  cannot  be  come  at  without  a  subi)ccna.  To 
say  that  is  a  mere  right  of  action  is  by  consefjuence  to  say  that  the 
estate  in  the  lands  is  in  nobody,  and  this  determines  the  question  ; 
for  if  a  mortgage  is  but  a  chose  in  action,  this  aflirms  that  the 
i|uity  of  redemption  is  the  real  ownership  of  the  estate,  and  tiiis 
will  determine  the  point  between  them. 

It  is  objected  that  the  mortgagee  is  not  barely  a  trustee  for  the 
mortgagor;  it  is  true,  not  barely  a  trustee,  but  it  is  sullicient  for 
the  present  purpose  if  he  is  in  part  a  trustee  for  the  mortgagor, 
and  it  is  most  certain  that  as  to  the  real  estate  in  the  lantl  the 
Mortgagee  is  only  a  trustee  for  the  mortgagor  till  foreclosurr. 
\Iortgag(>e  is  only  owner  as  a  charge  or  incumbrance,  and  intitb'd 
to  hold  as  a  pledge,  and  as  to  the  inheritance  desceniled  and  real 
'•state  in  the  land.  th(^  mortgag(M»  is  a  trustee  for  the  mortgag<^r 
till  tlie  ei^uity  of  redemption  is  foreclosed. 

Secondly.     The  n<>\t  consideration  is  what  is  re<juisite  to  intitlf 


.348  COMMON    LAW    RELATIONS.  [CHAP.  I. 

the  hnsband  to  be  tenant  by  the  curtesy.  At  law  four  things  are 
necessary  to  make  a  tenancy  by  the  curtesy,  to  wit,  marriage, 
having  issue  that  may  inherit,  death  of  the  wife,  and  seisin  of  the 
wife  (Co.  Litt.,  30  a).  Here  it  is  admitted  that  the  three  first  did 
concur,  but  the  objection  that  is  relied  on  is  that  there  was  no 
actual  seisin  of  the  wife  during  the  coverture,  which  is  contended 
to  be  as  necessary  in  respect  to  an  equitable  estate  as  of  a  legal 
estate,  and  it  is  admitted  that  the  wife  had  no  actual  seisin  of  the 
legal  estate,  either  in  fact  or  in  law.  Here  is  no  dispute  whether 
actual  seisin  in  consideration  of  law,  but  all  that  is  beside  the 
present  Cjuestion;  for  the  proceedings  are  upon  a  supposition,  as 
no  such  thing  as  a  tenant  by  the  curtesy;  but  the  true  question  is 
upon  this  point,  whether  there  was  not  such  a  seisin  or  possession 
in  the  wife  of  the  equitable  estate  in  the  land,  as  in  consideration 
of  equity  is  equivalent  to  an  actual  seisin  of  a  legal  estate  at 
common  law. 

In  consideration  of  this  court,  I  am  of  opinion  there  was  such 
a  seisin  of  the  wife  in  the  present  case  of  the  equity  of  redemption. 

I  have  shown  that  a  person  intitled  to  the  equity  of  redemption 
is  owner  of  the  land  of  the  legal  estate;  and,  if  so,  there  must  bo 
a  seisin  of  the  legal  estate;  and  what  other  seisin  could  there  bo 
than  what  Inglish  and  his  wife  had  in  the  present  case?  For  here 
is  a  mortgage  in  1728  by  Anne  Cashborn,  who  in  1T29  married 
with  the  defendant  Tnglish,  and  in  1731  died,  leaving  issue  a  son, 
and  the  wife  was  all  along  in  possession  till  her  death,  and  mort- 
gagee did  not  come  into  possession  till  after  her  death,  and  there  is 
not  any  foreclosure,  and  though  the  possession  of  the  wife  was  but 
as  tenant  at  will  to  the  mortgagee,  yet  it  was,  in  equity,  a  possession 
of  the  real  owner  of  the  land,  subject  only  to  a  pecuniary  charge 
on  it,  and  from  thence  I  think  it  clearly  follows  that  there  cannot 
be  a  liigher  seisin  of  an  equitable  estate. 

Xext,  whether  there  can  be  tenant  by  the  curtesy  ?  I  am  of 
opinion  there  may  be  a  tenant  by  the  curtesy  of  the  equitable  estate 
of  the  wife ;  equity  follows  the  law  because  made  a  rule  of  property. 

Williams  and  Wray,  2  Vern.  680,  Ball's  Case  cited :  where  it  was 
determined  that  the  husband  be  tenant  by  the  curtesy  of  a  trust 
estate  of  the  wife,  and  so  clearly  there  admitted;  and  yet  the  case 
was  of  a  trust  for  the  payment  of  debts. 

Siveetapple  and  Bindon,  2  Vern.  536 :  Mrs.  Bindon  gave  money 
to  be  laid  out  in  land  to  bo  settled  on  her  daughter  and  her  issue, 
and  afterwards  the  mother  dies,  and  the  daughter  marries  with 
Sweetapple,  l)y  whom  she  had  issue,  and  dies  before  the  money  was 
laid  out  in  lands;  and  upon  the  death  of  the  wife  Sweetapple 
brought  his  bill,  praying  that  the  money  might  be  laid  out  in  lands, 
and  that  lie  mio^ht  be  decreed  to  hold  the  same  for  his  life  as  tenant 


>-►«•■  III]  Tni  s  r.   Ninsov.  ni!> 

liy  c-iirtosy,  which  my  L«»ril  Cnwjtcr  (Ifrrcfd  a(i<irclii);:ly  ;  which  is 
;i  much  stronger  case  than  the  j)resent ;  for  in  that  <a~e  there  was 
neither  seisin  nor  hinds,  hut  it  was  determined  according  t<»  tlie 
common  received  rule  of  this  co\irt  in  considering  money  dirertrrl 
io  be  laid  out  in  land,  the  ^anl(•  as  land.    .   .    . 

And  as  to  the  next  oltjection  of  the  wife's  not  heing  endowed  <>{ 
an'equity  of  redemptioH  on  a  mortgage  in  fee.  and  that  therefore 
a  husband  ought  not  to  be  tenant  by  the  curtesy  of  an  <'f|uity  (»f 
redemption,  this  proves  too  much;  for  it  has  been  determined  that 
a  wife  sliall  not  be  endowed  of  a  trust  estate,  yet  that  husband  shall 
be  tenant  by  the  curtesy  of  a  trust  estate.  The  argument  from 
dower  to  the  case  of  a  tenant  by  the  curtesy  fails  in  this  casr. 
TVrhaps  it  may  be  hard  to  find  out  a  sufficient  reason  how  it  came 
to  be  so  determined  in  the  one  case  and  not  in  the  other,  but  it  is 
safe  to  follow  former  precedents  and  what  an-  settled  and  estal)- 
lished,  and  if  such  precedents  should  be  departi'»l  from,  I  hold  it 
fit  rather  that  the  wife  should  be  allowed  her  dower  of  a  trust  estate, 
and  not  that  a  tenancy  by  curtesy  of  a  trust  estate  should  be  taken 
away.  It  may  be  refusing  to  allow  the  wife  dower  of  a  trust  estate 
was  because  she  could  not  have  it  at  law,  and  that  it  was  foundetl 
"11  the  maxim  of  cquitas  sc(jiii(iir  legem;  but  whatever  the  rea.son 
I'f  such  refusal  was,  the  husband  is  allowed  to  have  a  tenancy  by 
the  curtesy  of  a  trust  estate,  nay,  even  of  money  directed  to  be  laid 
out  in  land,  though  not  actually  laid  out.  as  in  the  case  of  Sirret- 
applr  before  cited.   .   .   . 

For  these  reasons,  upon  the  best  consideration  (although  I  form 
my  judgment  with  great  deference,  when  I  difTer  in  oj)inion  from 
other  great  persons  that  have  gone  before  me),  I  am  of  opinion  that 
the  defendant  Inglish  is  intitled  to  be  tenant  by  the  curtesy  of  the 
mortgaged  ])remises  in  question,  and  the  consequence  of  that  is  that 
that  part  of  the  decree  of  his  Honour,  the  Master  of  the  Roll-, 
whereby  it  is  adjudged  that  the  said  defendant  is  not  tenant  by  the 
curtesy,  must  be  reversed  (MS.  Rej).  Hill.  Vac.  11,  IJeo.  2). 


TiTi's  V.  XiKi.sox,  5  Johns.  Ch.    l.")-.'   (IN'JI).     The  |)etition  ••f 
Catherine  Nielson  was  presented,  claiming  dower  out  of  the  pr'>- 
eeds  of  the  sale  of  an  equity  of  redemption  in  certain  mortgaged 
i'remises.     The  opinion  was,  in  part,  as  follows: 

TiiK  ('ii.vNCKLLOH  [Kent].     The  claim  of  the  widow  mu-t  be 

admitted,  according  to  a  series  of  decisions  in  the  c(Uirts  of  this 

^tate.     In  England  dower  is  considered  as  a  mere  legal  right  and 

quity  follows  the  law  and  will  not  create  the  right  whore  it  does 

aot    subsist    at    law.      It    i^   on    this   jirinciple,   according   to    T.ord 


350  COMMOX    LAW    RELATIONS.  [CHAP.  I. 

Eedesdale  (2  Sch.  and  Lef.  388),  that  a  court  of  equity  will  not 
allow  dower  of  an  equity  of  redemption  reserved  upon  a  mortgage 
in  fee,  though  there  may  be  dower  of  an  equity  of  redemption  upon 
a  mortgage  for  a  term  of  years,  because  in  that  case  the  law  gives 
dower  subject  to  the  term.  The  justice,  however,  of  allowing  dower 
of  an  equitable  estate  seems  to  have  been  very  generally  felt  and 
acknowledged  in  the  English  courts  of  equity.  But  we  have  notliing 
to  do  at  present  with  the  English  adjudications  on  the  subject,  for, 
as  our  courts  of  law  do  now  allow  dower  in  certain  cases  of  an 
equity  of  redemption,  this  court,  according  to  the  doctrine  referred 
to,  ought  to  follow  the  law,  and  also  allow  dower  out  of  the  proceeds 
of  the  equity  of  redemption,  and  which  proceeds  have  in  this  case 
been  placed  before  the  court.   .   .   . 

The  case  of  Coles  v.  Coles,  15  Johns.  Eep.  319,  went  a  step  still 
further,  and  held  that,  where  a  person  seised  of  land  in  fee  mort- 
gages it,  and  afterwards  marries,  his  widow  was  entitled  to  doAver 
out  of  that  equity  of  redemption,  against  the  purchaser  of  that 
equity,  though  the  mortgage  was  still  subsisting.  Here  was  a  final 
and  full  establishment  in  our  courts  of  law  of  the  principle,  not 
admitted  in  the  English  courts  of  law,  that  a  wife  could  be  endowed 
of  an  equity  of  redemption  arising  upon  a  mortgage  in  fee,  and 
this  court  ought  to  follow  the  rule  of  law.  It  ought  to  do  so,  accord- 
ing to  the  rule  and  practice  of  the  courts  of  equity  in  England  in 
the  like  case,  and  because  the  doctrine  recognizing  the  legal  title 
of  the  mortgagor  before  foreclosure  first  originated  in  this  court, 
and  was  confirmed  in  the  Court  of  Appeals,  and,  finally,  because 
it  is  a  most  just  and  reasonable  doctrine,  and  has  been  so  acknowl- 
edged throughout  the  history  of  the  cases.^ 


STOW  V.  TIFFT. 

Supreme  Court  of  Judicature  of  New  York,  1818. 

(15  Johns.  458.) 

This  was  an  action  of  dower,  brought  to  recover  dower  in  two 
lots  in  Douglas  patent,  in  the  town  of  Bolton,  in  the  county  of 
Warren.  The  tenant  pleaded  tic  iinques  scisie  que  dower,  and  7ie 
■iinques  accouple  in  loyal  matrimonie.  The  cause  was  tried  before 
Mr.  J.  Yates,  at  the  Warren  circuit,  in  June.  1817. 

The  marriage  of  the  demandant,  and  the  death  of  her  husband 

'  This  is  the  general  rule  in  the  I'nited  States  •  but  see  Htelle  v.  Carroll, 
12   Peters,  201    (18.38). 


^K ■•  I"  1  STOW    1'.    TIFFT.  351 

in  Dt'cenibor,  1804,  were  proved.  Timothy  Stow,  the  liusband  of 
llie  deniundant,  purchased  the  premises  in  (juestion  during  the 
roverture,  and  paid  part  of  tlie  consideration  money;  and  to  secure 
the  payment  of  the  rcsiihie,  executed,  at  tlie  tim<'  of  receiving  the 
<<)nveyanee,  a  mortgage  of  the  same  premises  to  the  grantor;  after 
liis  death  the  hind  was  soUl  under  a  power  contained  in  the  mort- 
gage, and  was  j)urchased  bv  a  person  from  whom  the  tenant  derived 
his  titk'. 

A  verdict  was  found  for  the  demanchmt,  subject  to  the  opinion 
of  the  court,  on  a  case  containing  tlie  above  facts. 

Weston  for  the  plaintiff. 

Cowen,  contra. 

Si'ENCEK,  J.,  delivered  the  opinion  of  tiie  court.  The  demandant's 
right  to  recover  her  dower  dej)ends  on  the  nature  of  her  husband's 
seisin.  Timothy  Stow,  her  husband,  purchased  the  premises  in 
•  piestion  after  his  marriage  with  the  plaintiff,  and  paid  part  of  the 
<-onsideration  money;  and  for  securing  the  residue,  he,  at  the  time 
of  receiving  his  conveyance,  executed  to  the  grantor  a  mortgage; 
of  tlie  same  premises.  After  his  death  the  premises  were  sold 
under  a  power  contained  in  the  mortgage,  and  the  defendant  liolds 
under  that  sale.  The  question  to  bo  decided  is  whether  there  was 
such  a  seisin  of  the  husband  of  the  demandant  as  to  entitle  her 
to  dower.  This  depends  on  the  single  ])oint  whether  the  seisin  of 
the  husband  was  an  instantaneous  seisin  or  not.  If  it  was  an 
instantaneous  seisin,  then,  according  to  all  the  authorities,  the  wife 
is  not  endowable.  This  general  position  is  met  witii  in  all  our 
books,  that  the  husband's  .^eisin  for  an  instant  does  not  entitle  the 
wife  to  dower.  This  is  excmi)liiied  by  the  case  of  Arncotts  v.  Cathe- 
nrk,  Cro.  Jac.  G15.  There  the  husband,  who  was  seisetl  in  special 
tail,  made  a  deed  of  feofTment  to  the  use  of  himself  for  life,  and 
after  to  the  use  of  his  son  in  tail,  and  made  a  letter  of  attorney  to 
make  livery.  Before  livery  he  took  the  demandant  to  wife,  and 
after  livery  was  made  to  those  uses  the  husband  died,  and  the 
<|uestion  was,  wiiether  the  wife  was  entitled  to  dower;  and  it  was 
adjudged  that  she  was  not,  for  that  the  livery  did  not  gain  to  the 
luisl)and  any  new  estate,  but  being  eodcm  in.sdtntt  drawn  out  of 
him.  he  gained  no  seisin  whereof  his  wife  was  dowable;  for  that 
having  no  estate  before  the  feofTment  whereof  tlie  wife  was  dow- 
al)le.  he  gained  none  by  the  feoffment  of  which  his  wife  could  l>e 
^•ndowed.  Three  cases  were  there  put  in  which  the  wife  would  not 
ite  entitled  to  dower:  as  where  a  tenant  for  life  or  a  joint  tt'uant 
makes  a  feofTment  ;  so  where  a  married  man  took  a  fine  and  by  the 
MUie  fine  rendered  the  land  to  another  in  tail,  his  wife  shall  not  l)e 
ndowed  ther-of.  Ixn-ause,  although  he  took  it  in  ftv.  yet  it  i-» 
m^iantlv  out  of  him;  so  if  ;i   feofTment  be  made  to  one  and  his 


353  COMMOX    LAW    RELATIONS.  [chap.   i. 

heirs,  to  the  use  of  another  and  his  heirs,  the  wife  of  the  trustee 
shall  not  be  endowed,  for  he  was  the  mere  instrument  and  had  but 
an  instantaneous  seisin  (2  Co.  77). 

The  case  of  Nash  v.  Preston,  Cro.  Car.  190,  would  seem,  at  first 
view,  to  be  opposed  to  the  proposition  that  a  deed  to  the  purchaser 
and  a  mortgage  given  back  by  him  to  the  grantor  at  tlie  same  time, 
would  not  entitle  the  wife  of  the  purchaser  to  her  dower ;  yet  it  is 
observable  that  the  principle  is  admitted  that  an  instantaneous 
seisin  of  the  husband  does  not  entitle  the  wife  to  dower.  Croke 
admits  that  if  a  husband  take  a  fine  sur  cognisance  de  droit  come 
ceo  and  render  arrear,  although  it  was  once  the  husband's,  yet  his 
wife  shall  not  have  dower,  for  it  is  in  him  and  out  of  him  quasi 
uno  flatu  and  by  one  and  the  same  act.  That  case  does  not  state 
that  the  redemise  was  made  at  the  same  time  with  the  bargain  and 
sale,  and  I  presume  it  was  not.  That  case,  therefore,  does  not  bear 
on  the  general  principle. 

I  am  authorized  to  say,  by  the  decision  of  this  court  in  Jackson 
V.  Dunsbagh,  1  Johns.  Cas.  95,  that  where  two  instruments  are 
executed  at  the  same  time  between  the  same  parties  relative  to  the 
same  subject  matter,  they  are  to  be  taken  in  connection,  as  forming 
together  the  several  parts  of  one  agreement.  I  entirely  agree  in 
the  opinion  expressed  by  Ch.  J.  Parsons  in  the  case  of  Holhrool: 
V.  Finney,  4  Mass.  Rep.  569,  that  where  a  deed  is  given  by  the 
vendor  of  an  estate,  who  takes  back  a  mortgage  to  secure  the  pur- 
chase money  at  the  same  time  that  he  executes  the  deed,  that  there 
the  deed  and  the  mortgage  are  to  be  considered  as  parts  of  the  same 
contract,  as  taking  effect  at  the  same  instant,  and  as  constituting 
but  one  act;  in  the  same  manner  as  a  deed  of  defeasance  forms, 
with  the  principal  deed  to  which  it  refers,  but  one  contract,  although 
it  be  by  a  distinct  and  separate  instrument. 

The  substance  of  a  conveyance  where  land  is  mortgaged  at  the 
same  time  the  deed  is  given,  is  this.  The  bargainor  sells  the  land 
to  the  bargainee  on  condition  that  he  pays  the  price  at  the  stipu- 
lated time,  and  if  he  does  not  that  the  bargainor  shall  be  reseised 
of  it,  free  of  the  mortgage ;  and  whether  this  contract  is  contained 
in  one  and  the  same  instrument,  as  it  well  may  be,  or  in  distinct 
instruments  executed  at  the  same  instant,  can  make  no  possible 
difference.  It  is  true  that  courts  of  equity  have  interposed  to  relieve 
the  mortgagor  against  the  accident  of  his  nonpayment  of  the  price, 
at  the  stipulated  period.  It  is  also  true  that  courts  of  law  have 
considered  the  interest  of  the  mortgagor  as  liable  to  be  sold  on 
execution.  This,  however,  does  not  interfere  with  the  question  as 
to  how  the  eontract  between  the  original  parties  is  to  be  viewed 
as  between  themselves  when  the  equity  of  redemption  is  gone  and 
forfeited. 


SK<".  III.]  STOW    r.    TIFFT.  :J"»;i 

The  opinion  which  the  court  has  formed  receives  decisive  suji- 
j)ort  from  the  declaratory  act  of  the  '^Htli  sess.  ch.  00.  It  recites 
tliat  wliereas  doubts  have  arisen  whethiT  mortga<;es  tjiven  to  secure 
the  j)urcha>>je  money  of  hind  .^old  and  conveyed  at  the  time  of  the 
execution  of  such  mortgages,  are  to  be  preferred  to  judgments 
previously  obtained  against  the  mortgagors,  for  the  removal 
whereof  it  is  enacted  and  declared  that  whenever  lands  are  sold 
and  conveyed  and  a  mortgage  is  given  by  the  purciiaser  at  the  same 
time  to  secure  the  payment  of  the  j)urchase  money,  such  mortgagi* 
shall  be  preferred  to  any  previous  judgment  which  may  have  been 
obtained  against  such  purchaser. 

This  statute  conveys  the  sense  of  the  legislature  that  the  seisin 
of  the  mortgagor,  under  the  circumstances  statt-d  in  the  act,  was 
a  seisin  for  an  instant  only ;  for  it  cannot  be  doubted  that  a  judg- 
ment will  attach  on  lands  of  which  the  judgment  debtor  becomes 
seised  at  any  time  posterior  to  the  judgment;  and  nothing  could 
prevent  a  judgment  creating  a  lien  on  the  subsequently  acquireil 
lands  of  the  judgment  debtor  but  the  circumstance  that  his  seisin. 
in  the  given  case,  was  instantaneous.  Surely,  then,  the  analogous 
case  of  dower  cannot  stand  on  a  hetter  footing  than  a  judgment 
unsatisfied.  As  a  declaratory  act,  this  statute  is  entitled  to  high 
respect;  and  it  fortifies  and  suj)ports  the  position  that  the  demand- 
ant's husband  acquired,  by  the  deed  to  him,  a  seisin,  which  he 
parted  with  eo  instanli  he  ac({uired  it,  and  that  his  wife  is  not 
endowable  of  the  premises.  The  court  are  very  well  satisfied  that 
the  law  is  so,  for  it  would  be  extremely  inequitalde  in  most  cases 
to  claim  dower  on  such  purchases.  We  are,  therefore,  of  opinion 
that  there  must  be  judgment  for  the  defendant. 

Thompson,  Ch.  J.,  dis.sented.  The  demandant,  as  the  widow  of 
Timothy  Stow,  deeeased.  claims  her  dower  in  lands  )>uroliased  by 
her  late  husl)and  after  their  intermarriage.  He  jniid  jiart  of  the 
consideration  money  and,  for  securing  the  residue,  mortgaged  the 
lands.  After  his  death,  the  mortgaged  premises  were  sold  pur'^umt 
to  the  statute,  and  j>urehased  by  tiie  person  under  whom  the  defend- 
ant claims;  and  the  only  question  is  whether  the  imsl)and  was  so 
seised  as  to  entith'  his  wife  to  dower. 

In  the  case  of  Hitchcock  v.  Harrington,  G  Johns.  Hep.  240,  this 
point  was  stated,  but  not  decided  by  the  court.  It  has  long  been 
considered  the  settled  law  in  this  State,  that  a  mortgage  is  a  men' 
security  for  money,  and  the  mortgagor  is  to  he  deemed  seised,  not- 
withstanding the  mortgage,  as  to  all  persons  except  the  mortgagee 
and  his  representatives.  The  seisin  of  the  husband,  in  this  case, 
cannot  be  considered  that  mere  instantanrnus  seisin  which  the 
books  speak  of  as  jiot  being  sulhcient  to  entitle  the  wife  to  dower. 
Those  are  cases  where  the  husband  is  a  mere  conduit  pipe,  or 


354  COMMON    LAW    RELATIONS.  [CHAP.  I. 

instrument  of  conveyance.  This  is  evidently  the  meaning  of  Lord 
Coke,  where  the  rule  is  laid  down  (Co.  Lit.  31  6).  It  is  more  fully 
illustrated  by  Sir  Wm.  Blackstone,  in  his  Commentaries  (vol.  2, 
131),  where  it  is  said  that  the  seisin  of  the  husband,  for  a  transi- 
tory instant  only,  when  the  same  act  which  gives  him  the  estate 
conveys  it  also  out  of  him,  as  where  by  a  fine  land  is  granted  to 
a  man  and  he  immediately  renders  it  back  by  the  same  fine,  such 
a  seisin  will  not  entitle  his  wife  to  dower,  for  the  land  was  merely 
in  transitu  and  never  rested  in  the  husband,  his  grant  and  render 
being  one  continued  act.  But  if  the  land  abides  in  him  for  tho 
interval  of  but  a  single  moment,  the  wife  shall  be  endowed  thereof. 
Where  a  title  is  conveyed  to  a  person  and  he  gives  back  a  mort- 
gage, the  fee  is  certainly  vested  in  him,  substantially  and  bene- 
ficially, and  not  nominally;  otherwise  the  mortgage  back  would 
convey  no  title.  The  case  of  Nash  v.  Preston,  Cro.  Car.  190,  is 
very  much  in  point,  to  show  that  the  widow  is  entitled  to  her  dower. 
There  was  a  bargain  and  sale  of  land  to  the  husband,  under  an 
agreement  that  the  bargainee  was  to  redemise  it  to  the  bargainor 
and  his  wife,  during  their  lives.  The  bargainee  redemised  and 
died,  and  his  widow  was  considered  entitled  to  dower.  For,  say  the 
court,  by  the  bargain  and  sale  the  land  is  vested  in  the  husband, 
and  thereby  the  wife  is  entitled  to  her  dower.  This  question  of 
instantaneous  seisin  is  well  considered  by  Gwillim,  in  a  note  to  the 
late  edition  of  Bacon,  2  Bac.  Ab.  371,  note.  It  is  there  said  that 
the  proposition  that  in  the  case  of  an  instantaneous  seisin  the  wife 
shall  not  be  endowed,  though  laid  down  broadly  by  Coke,  is  by  no 
means  general ;  he  confines  it  to  cases  where  the  husband  is  a  mere 
instrument  of  passing  the  estate.  Tho  transitory  seisin  gained  by 
such  an  instrumentality  is  not  enough  to  entitle  the  Avife  to  dower; 
])ut  Avhen  the  land  abides  in  the  husband  for  a  single  moment,  as 
is  said  by  Sir  Wm.  Blackstone,  or,  as  a  later  writer  explains  it 
(Preston  on  Estates,  tit.  Dower),  when  he  has  a  seisin  for  an 
instant  beneficially  for  his  own  use,  the  title  to  dower  shall  arise 
in  favour  of  his  wife.  The  case  of  IIolhrooTc  v.  Finney,  4  Mass- 
Rep.  566,  has  been  cited  and  relied  upon  as  in  point  against  the 
claim  of  dower.  Whatever  respect  may  be  due  to  the  opinion  of 
Ch.  J.  Parsons,  he  certainly  stands  unsupported  by  any  adjudged 
cases  to  be  found  in  the  English  books,  or  by  any  elementary 
writer  when  fairly  explained.  In  none  of  the  cases  referred  to 
by  him  in  his  opinion  was  the  husband  ever  beneficially  seised  for 
an  instant ;  and  the  distinction  which  he  attempts  to  make  between 
the  case  of  Nash  and  Preston  and  the  one  before  him,  is  certainly 
not  well  founded.  In  the  case  of  Nash  and  Preston,  the  redemising 
was  a  part  of  the  original  agreement ;  yet  the  wife  of  the  bargainee 
was  held  entitled  to  dower.    So  in  IlolbrooJc  and  Finney,  the  deed 


>*'•«••   "'1       ,  STOW    C.    TIKIT.  35J 

;iji(l  iiiortfrafro  wore  oxcoiitcMl  in  jtursiiancc  of  a  provious  a^ccment 
to  till'  saiiu'  cirect  made  hi'twccii  the  parties.  Thf  two  cases,  there- 
fore, in  this  respect  are  alike.  Ch.  .1.  Parsons  seems  fully  to  admit 
the  law  as  laid  down  in  Xdsh  and  I'rrsluti.  and  it  is  a  little  ditlieult 
to  understand  what  he  means  \)\  .saying  that  the  giving  the  deed 
and  taking  the  mortgage  hack  constitute  hut  one  aet,  unless  the 
two  deeds,  heing  j)arts  of  the  same  contract,  are  hut  one  act.  But 
whatever  importance  may  be  attached  to  this  circumstance,  the 
argument  cannot  be  applied  to  the  case  before  us,  becau.sc  it  formed 
no  part  of  the  original  agreement  that  a  mortgage  was  to  be  given 
back. 

I  do  not  see  how  our  statute  to  j)revent  judgments  having  a 
preference  to  mortgages  given  to  secure  the  purchase  money,  can 
in  any  manner  affect  this  question.  It  is  true  that  the  first  act 
(soss.  28,  ch.  !»!))  contained  a  recital  purjjorting  that  doubts  had 
iiri.<en  whether  mortgages  given  to  secure  the  i)urcha.se  money  of 
lands  sold  and  conveyed  at  tiie  time  of  the  execution  of  such  mort- 
gages, are  to  be  preferred  to  judgments  previously  obtained  against 
the  mortgagors,  and  then  provides  for  giving  a  preference  to  mort- 
gages tlius  taken.  But  this  act  has  no  relation  to  mortgages  in 
any  otiier  respect  than  to  give  them  a  preference  to  judgments  in 
that  particular  case.  And  it  is  to  be  observed  that  the  right  to  sell 
land  under  a  judgment,  the  lien  created  by  such  judgment,  and  the 
time  such  Ijen  is  to  take  effect,  are  all  matters  of  statute  regulation. 
This  act  only  modifies  the  former  statute  and  suspends  the  lien  of 
judgments  in  such  particular  cases.  But  the  right  to  dower  depends 
on  ditferent  princijjles.  It  would,  no  doubt,  be  competent  to  the 
legislature  to  take  away  or  regulate  the  claim  to  dower  in  cases 
like  the  jjresent ;  but  until  that  is  done,  we  must  l»e  governed  by  the 
<'omnion  law  rules  on  this  subject,  according  to  which  I  see  no 
grounds  uj)on  Mhich  the  claim  to  dower  in  this  case  can  be  resisted. 
I  am,  accordingly,  of  opinion,  that  the  demandant  is  entitled  to 
judgment. 

^('d  per  Curidin 

Juihjmenl  for  the  defendant} 

'  Tlio  t-nsos  m>nornlIy  are  accord:  Thomas  v.  llansnn,  44  lowii,  IVi] 
ilH7(l)  ;  pvpn  wtieie  llic  Tnortj;a;;o  is  iiimlo  to  ii  third  jiorson :  Clark  v.  Mun- 
r<"\  14   Mas.s.  351    (1S17)  ;  Jours  v.  I'arkcr.  CA   Wis.  218    (ISSl). 


356  COMMON    LAW    RELATIONS.  [CUAP.  U 


POPKm  V.  BUMSTEAD. 

Supreme  Judicial  Court  of  Massachusetts,  1813. 
{S  Mass.  491.) 

This  was  a  writ  of  dower,  to  which  the  tenant  pleaded  in  bar  that] 
Thomas  Popkin,  husband  of  the  demandant,  in  his  lifetime,  viz.  oi 
the  30th  of  April,  1806,  mortgaged  the  premises,  in  which  the  sale 
Mary  demands  her  dower,  to  one  Thomas  Capen  for  the  payment] 
of  3000  dollars,  and  that  the  demandant  in  and  by  the  mortgagoj 
deed,  for  a  valuable  consideration,  released  to  the  said  Capen  alLJ 
her  right  of  dower  in  the  mortgaged  premises,  and  did  thereby 
lawfully  bar  and  exclude  herself  from  all  her  right  of  dower  thereinj 
forever;  that  Capen  entered  and  became  seized;  that  on  the  9th 
of  November,  1807  (the  said  Thomas  Popkin  having  before  that 
time  died  intestate),  John  D.  Dyer  was  appointed  administrator  oi 
said  Popkin's  estate,  and,  having  obtained  license  to  sell  the  real^ 
estate  of  his  intestate  for  the  payment  of  his  debts,  sold  the  equity 
of  redemption  to  Abel  Wheelock,  by  whom  the  same  was  conveyed] 
to  Bumstead  the  tenant;  that  he,  the  said  Bumstead,  on  the  19th  of^ 
Sept.,  1810,  paid  to  Capen,  the  mortgagee,  the  whole  sum  due  by  the 
mortgage,  the  same  never  having  been  paid  by  the  mortgagor  or  his 
administrator;  and  that  the  said  Thomas  Popkin  was  never  seizec 
of  the  premises,  or  any  part  thereof,  since  the  execution  of  the  sait 
mortgage  deed. 

To  this  plea  the  demandant,  after  oyer  of  the  several  conveyances 
mentioned  therein,^  replies  that  on  the  19th  of  September,  1810,, 
before  she  demanded  her  dower,  and  more  than  one  month  before 
the  commencement  of  this  action,  the  said  Capen,  the  mortgagee^ 
then  having  the  sole  right  and  interest  in  the  said  mortgage  deed,j 
did  personally  repair  to  the  office  of  the  register  of  deeds  for  the 
county  of  Suffolk,  where  the  said  mortgage  deed  was  recorded, 
having  received  satisfaction  and  payment  of  all  the  sums  due  on 
the  mortgage,  and  did  then  and  there,  in  the  margin  of  the  record 
of  said  mortgage  deed,  acknowledge  that  he  had  received  full 
satisfaction  and  payment  for  the  premises  therein  mortgaged,  and 
did  quitclaim  all  his  right,  title  and  interest  therein,  and  did  then 
and  there  desire  that  the  said  record  might  be  discharged,  and  did 
then  and  there  sign  said  discharge  and  acknowledgment;  and  said 

'  The  deeds  from  Dyer  to  Wheelock  and  from  him  to  Bumstead  purport 
a  conveyance  of  tlie  land,  "  subject  to  a  mortgage  made  thereon  by  said 
deceased,  and  other  rights  claimed — viz.,  dower  by  the  widow  of  said 
Thomas  Popkin  deceased." — Rep. 


-K-.  Ill.l  I'ol'KIN    r.    m  MSTKAD.  357 

iiiortgngo  (locil  was  thereupon  cancelled  and  discharged  according 
to  the  law  in  that  case  made  and  provided. 

To  this  replication  the  tenant  demurs  generally,  and  the  <l('mand- 
ant  joins  in  demurrer. 

Parker,  for  the  tenant,  cited  the  case  of  Fowler  v.  Shearer, 
',  ^fass.  Rep.  11.  in  whieh  it  was  de(nded  hy  this  court  that  a  wife 
may  har  herself  of  dower,  hy  joining  her  hushand  in  a  deed  of 
conveyance,  ri-linquishing  her  claim  to  dower,  and  putting  her  seal 
to  the  deed;  and  to  shew  that  such  a  release  in  a  mortgage  shall 
«'nure  to  the  purchaser  of  the  equity  of  redemption  he  referred  to 
the  case  of  .l/asv/r//  v.  Putnam.  Story's  Pleadings,  359,  300,  decided 
l>y  this  court  in  the  county  of  Esse.x,  Xovcnd)er  term.  1'('03. 

Thurston,  for  the  demandant,  agreed  that  the  relea.'^e  hy  her,  set 
iorth  in  the  plea,  would  har  her  as  respects  the  mortgagee,  and  as 
long  as  the  mortgage  deed  was  in  force.  But  the  release  of  the 
dower  was  conditional,  as  well  as  the  principal  conveyance,  and  the 
di.-jcharge  of  the  mortgage  hy  the  mortgagee  or  his  assigns  was 
a  fulfdment  of  the  condition  and  a  cancelling  of  the  mortgage 
(see  Stat.  1703,  c.  37,  §  G).  The  tenant's  claim  is  as  the  assignee 
of  the  administrator  of  the  mortgagor;  as  such  his  right  was  to 
redeem  the  land  hy  paying  the  money  due  and  thus  extinguishing 
the  mortgage.  This  he  did,  and  at  the  same  time  annulled  the 
effect  of  the  demandant's  release  of  her  right  of  dower,  which  was 
collateral  and  co-cxtensive  with  the  mortgage.  But  if  the  tenant 
were  considered  as  the  assignee  of  the  mortgagee,  still  the  demand- 
ant has  a  right  to  redeem  (Finch's  Free,  in  Chan.  137,  133;  2  P. 
Will.  71G;  1  Eq.  Ca.  Abr.  219,  220).  Neither  does  it  appear  that 
the  tenant  ever  entered  under  the  mortgage.  The  tenant,  however, 
was  not  the  assignee  of  the  mortgagee. 

The  conveyances  under  which  alone  the  tenant  claims  both 
rt'cognize  the  claim  of  dower  now  set  up  by  the  demandant.  He 
jjurchascd  the  land  subject  to  it,  and  he  paid  a  consideration 
accordingly.  In  fact,  he  redeemed  as  the  assignee  of  Dyer,  the 
administrator  of  the  mortgagor;  and  if  Dyer  had  j)aid  the  mort- 
gage, would  it  be  contended  that  the  demandant's  claim  would  not 
have  revived?  The  tenant  resists  that  claim  against  all  equity,  since 
by  the  terms  of  his  own  purcha.>^e  it  was  reserved;  and  if  his  plea 
is  supported,  great  injustice  is  done  to  the  demandant. 

By  the  court.  It  has  been  contended  for  thi'  demandant,  upon 
the  facts  exhibited  by  the  pleadings  in  this  ca.^',  that  her  titl»>  to 
dower  has  revived  and  is  as  if  she  had  never  released  it  in  the  deed 
of  mortgage.  It  would  Ix?  singular  if,  when  the  tenant  had  paid 
the  money  due  on  the  mortgage,  and  supposed  that  he  had  thus 
perfected  his  estate  by  extinguishing  the  only  inctnnbrnncN'  he 
knew  to  exist  upon  it,  he  should  by  that  act  revive  the  claim  of  the 


358  COMMON    LAW    RELATIONS.  [CHAP.   I. 

demandant,  which  she  had  before  solemnly  renounced  under  her 
hand  and  seal,  and  which,  as  he  was  under  no  obligation,  it  cannot 
be  presumed  he  meant  to  do. 

But  the  facts  produce  no  such  absurdity.  When  the  tenant 
purchased  the  equity  of  redemption,  it  belonged  to  him  to  pay  the 
money  due  on  the  mortgage,  and  thus  rid  his  estate  of  that  incum- 
brance. Having  all  the  equitable  interest  in  himself,  wlien  he  had 
paid  the  money  due  by  the  mortgage  the  legal  estate  followed  the 
equitable  interest,  and  he  became  seized  of  the  whole  fee  simple. 
If  this  were  not  the  plain  legal  operation  of  the  transaction,  the 
law  would  construe  the  discharge  of  the  mortgage  by  the  mortgagee 
a  release  of  the  legal  estate  by  him  to  the  tenant,  who  had  become 
lawfully  possessed  of  the  equitable  interest,  and  from  whom  the 
consideration  for  that  discharge  flowed,  rather  than  such  a  mischief 
should  follow. 

Replication  adjudged  bed. 


EATON  V.  SIMONDS. 

Supreme  Judicial  Court  of  Massachusetts,  1833. 

(14  Pick.  98.) 

This  was  a  bill  in  equity  to  redeem  certain  mortgaged  real  estate 
in  Boston. 

The  bill  alleged,  that  the  complainant  was,  on  May  16,  1805, 
married  to  Nathan  Eaton  of  Boston ;  that  during  the  coverture  ho 
became  seised  of  the  premises,  and  on  October  23,  1819,  mortgaged 
them  to  Lucy  Eidgway,  in  order  to  secure  the  re-payment  of  the 
sum  of  $1000  borrowed  of  her  and  which  was  payable  in  two  years 
with  interest ;  that  the  complainant  became  a  party  to  the  convey- 
ance, so  far  as  related  to  her  right  of  dower;  that  on  or  about 
April  26,  1823,  the  sum  so  borrowed  not  having  been  fully  repaid, 
the  equity  of  redemption  was  attached  by  a  deputy  sheriff  upon  an 
execution  issued  on  a  judgment  recovered  against  the  mortgager, 
and  by  virtue  of  such  execution  was  sold  by  auction  to  the  respond- 
ent; that  the  respondent,  having  on  May  26,  1823,  obtained  a 
conveyance  thereof  from  the  deputy  sheriff,  took  possession  of  the 
premises,  and  has  ever  since  continued  to  take  the  rents  and  profits 
thereof;  that  on  or  about  January  3,  1824,  the  respondent  obtained 
an  assignment  of  the  mortgage  from  Lucy  Eidgway;  that  on 
August  31,  1828,  the  mortgager  died;  that  upon  his  death,  the 
complainant  became  entitled  to  dower  in  the  premises,  subject  only 
to  such  mortgage,  and  had  lawful  right  to  redeem  upon  tendering 


SKC.  III.]  EATON     r.    SIMUNDS.  35!> 

payment  of  the  amount  due  thereon;  that  on  April  3,  18*^9,  tht? 
comphiinant  demanded  of  the  respondent  an  aeeount  of  the  rfum 
due  on  the  mortgage  and  of  tlie  rents  and  profits,  in  order  that  she 
might  nuike  sueh  tender,  but  that  the  respond(nit  had  unreasonably 
refused  to  render  any  account  whatever;  that  although  the  respond- 
ent entered  into  possession  of  the  jiremises  under  the  purchase  of 
the  ecpiity,  yet  he  never  made  known  that  he  had  taken  j)ossession, 
in  the  presence  of  two  credible  witnesses,  for  a  breach  of  the  condi- 
tion of  the  mortgage  and  for  the  purpose  of  foreclosing,  and  that 
no  notice  was  ever  given  to  her  of  any  intention  on  his  part  to 
make  such  entry;  that  the  respondent  sometimes  pretends  that 
in  Xovember,  1811,  Xathan  ]']aton  mortgaged  the  premises  to 
William  Eaton,  to  secure  the  payment  of  divers  promissory  notes 
payable  by  Xathan  to  William,  and  that  afterwards,  three  of  the 
notes  remaining  unpaid,  the  same  were  assigned  together  with  the 
mortgage  to  (Jeorge  Blake,  Esq.,  a  counsellor  of  tliis  Court,  and 
that  the  complainant,  by  joining  in  such  mortgage  and  thereby 
relinquishing  her  right  of  dower,  is  now  barred  therefrom,  as  well 
as  from  any  right  of  redeeming  the  premises;  but  the  complainant 
charges  that  all  the  sums  due  upon  sucli  mortgage  were  paid  by 
Xathan  Eaton,  and  that  afterwards  Blake  discharged  the  same  in 
the  margin  of  the  record  in  the  registry  of  deeds,  and  that  the 
mortgage  was  thereby  extinguished.  Wherefore  the  complainant 
prays  that  the  respondent  may  state  the  amount  of  the  mortgage 
to  Hidgway  and  of  the  sums  paid  thereon  ;  that  an  account  may  be 
taken  of  the  rents  and  profits,  and  if  it  shall  appear  that  they  have 
been  more  than  suflicient  to  satisfy  the  principal  and  interest  of 
sudi  mortgage,  that  the  residue,  or  her  just  proportion  thereof,  may 
be  paid  over  to  tiie  eomjilainant ;  that  the  complainant  may  be 
permitted  to  redeem  the  jiremises,  and  have  her  dower  set  out 
therein,  she  hereby  offering  to  pay  such  sum  as  shall  be  due  to  the 
respondent ;  that  he  may  be  ordered  to  deliver  up  possession  of  the 
premises  to  the  complainant;  and  that  she  may  have  such  other 

lid  further  relief,  ^c. 
The  answer  denies  that  the  mortgager  was  so  seised  of  the  estate 

-  is  alleged  in  the  bill,  or  that  the  complainant  has  any  right  to 
redeem  the  same,  and  alleges  that  on  Xovemlier  7.  1811,  William 
Eaton  sold  and  conveyed  the  premises  in  fee  to  Xathan  Eaton,  antl 
that  the  mortgage  to  William,  which  is  referred  to  in  the  bill,  was 
made  at  the  same  time  to  secure  the  payment  of  a  portion  of  the 
purchase  money;  that  Xathan  Eaton  died  without  ever  having  paid 
or  tendered  to  the  re-^pondeiit  the  sutu  paid  by  him  on  the  purrha>e 
of  the  equity  of  redcinjition,  amounting  to  $1T*)0  with  interest,  or 
in  any  manner  redeemed  or  attempted  to  redwm  such  equity,  and 
without  ever  having  paid  or  satisfitMl  the  sums  secured  by  either  of 


360  COMMON    LAW    RELATIONS.  [CHAP.  I. 

the  mortgages,  or  procured  them,  in  any  manner,  to  be  discharged; 
that  on  July  23,  1823,  it  was  agreed  between  Blake  and  the  respond- 
ent that  Blake  should  transfer  to  the  respondent  the  notes  and 
mortgage  so  assigned  to  Blake  by  William  Eaton,  and  that  the 
respondent  should  pay  to  Blake  the  principal  and  interest  due 
thereon,  amounting  to  $722.68;  that  on  the  same  day  the  respond- 
ent, having  paid  this  sum  in  pursuance  of  this  agreement,  expected 
and  claimed  an  assignment  of  the  notes  and  mortgage,  but  that 
Blake  declared  that  any  assignment  thereof  would  be  unnecessary, 
inasmuch  as  the  respondent  had  purchased  the  equity  of  redemp- 
tion; that  thereupon  Blake  discharged  the  mortgage  so  assigned  to 
liim,  upon  the  margin  of  the  record  in  the  registry  of  deeds,  for  the 
benefit  of  the  respondent ;  and  that  neither  Nathan  Eaton,  nor  any 
one  in  his  behalf,  ever  paid  such  sum  to  Blake,  or  any  part  thereof, 
or  in  any  manner  caused  such  mortgage  to  be  so  discharged; 
that  the  several  notes  aforesaid,  and  the  interest  accrued  thereon, 
still  remain  due  to  the  respondent ;  and  that  by  reason  of  all  these 
facts,  purchases,  &c.,  and  the  lapse  of  time  after  the  purchase  of  the 
equity  of  redemption  and  before  the  death  of  jSTathan  Eaton,  the 
respondent  had  an  absolute  and  irredeemable  estate  in  the  premises.^ 

The  court  ordered  that,  on  the  coming  in  of  the  answer,  the 
cause  should  be  referred  to  one  of  the  masters  in  chancery,  to 
examine  and  state  the  amount  due  on  the  mortgages,  with  the 
circumstances  appearing  on  record  or  otherwise,  in  relation  to  the 
discharge  or  assignment  of  them  or  either  of  them,  the  amount  of 
the  rents  and  profits  which  have  been  or  might  have  been  made 
of  the  premises,  and  the  amount  laid  out  in  necessary  repairs  and 
betterments  by  the  respondent  since  he  came  to  the  possession 
thereof. 

On  June  8,  1830,  the  master  made  his  report. 

Wilde,  J.,  delivered  the  opinion  of  the  court.  This  case  comes 
before  us  on  exceptions  taken  by  both  parties  to  the  report  of  the 
master;  but  the  principal  question  depends  upon  the  facts  appear- 
ing by  the  bill  and  answer.  The  question  is,  whether  the  plaintiff 
is  entitled  to  dower  in  the  estate  described  in  the  bill;  and  if  so, 
upon  what  terms  she  may  enforce  her  claim  in  a  court  of  equity. 
That  she  has  an  equitable  claim  of  dower  is  fully  settled  by  the 
decision  in  the  case  of  Gibson  v.  Crehore,  5  Pick.  146.  It  was 
decided  in  that  case,  and  so  it  had  been  frequently  held  before,  that 
a  widow  is  dowable  of  an  equity.  And  although  she  cannot  main- 
tain an  action  at  law  against  the  mortgagee  or  his  assignee,  after 
having  joined  her  husband  in  a  mortgage,  relinquishing  her  rightj 
of  dower,  yet  if  the  mortgage  is  not  foreclosed  a  court  of  equity  willj 
interpose  and  allow  her  to  redeem. 

'  A  portion  of  the  case,  not  relevant  to  the  main  question,  is  omittedJ 


sr.c.  III.]  j;ah)n    v.  mmonds.  361 

Tlie  question  then  is  reduted  to  this,  namely,  whether  the  plain- 
ttlT,  to  entitle  herst-lf  to  dower,  is  obliged  to  redeem,  or  to  eontribute 
iier  share  to  redeem,  both  of  the  mortgages  mentioned  in  the  bill. 
The  plaintilT  admits  in  iicr  bill  that  she  is  l)oiind  to  redeem  the 
mortgage  to  Lucy  Kidgway,  that  mortgage  having  been  regularly 
assigned  to  the  defendant.  But  she  denies  her  liability  to  redeem 
the  other  mortgage,  gi\en  to  William  Eaton,  because  this  mortgage, 
as  she  avers,  has  been  paid  and  discharged,  and  is  no  longer  an 
existing  incumbrance  on  the  premises.  The  answer  admits  that 
this  mortgage  was  assigned  to  Ueorge  lilake,  Esq.,  and  that  the 
<lefendant  has  paid  the  full  amount  due  thereon  to  Blake,  and  that 
Hlake  thereupon  discharged  the  mortgage  upon  the  margin  of  the 
record  thereof,  for  the  benefit  of  the  defendant.  But  this  discharge, 
(he  defendant's  counsel  contend,  will  operate  as  an  equitable  assign- 
ment, as  it  was  so  intended  to  operate  by  the  parties;  and  that  the 
iinion  of  the  legal  and  ecjuitable  titles  may  well  exist  without 
l>roducing  the  edect  of  a  merger,  or  the  extinguishment  of  the 
mortgage.  Perhaps  this  might  be  so,  if  the  discharge  could  be 
iinsidered  as  an  assignment  of  the  mortgage. 

The  general  principle  is  that  when  the  purchaser  of  a  right  to 
redeem  takes  an  assignment,  this  shall  or  shall  not  operate  as  an 
extinguishment  of  the  mortgage,  according  as  the  interest  of  the 
party  taking  the  assignment  may  be,  and  according  to  the  real 
intent  of  the  parties  (Gibson  v.  Crehore,  3  Pick.  -182).  But  Chief 
.lust ice  Savage  remarks,  in  the  ease  of  Coatcs  v.  Cheever,  1  Cowen, 
HIO,  "that  the  spirit  of  the  cases  seems  to  be  this;  that  where  the 
tenant  in  possession  enters  by  virtue  of  a  j)urchase  from  the  mort- 
gager, then  the  subsetiueiit  purchase  of  the  mortgage  by  him  is  an 
extinguishment."  And  that  case  was  decided  upon  that  principle. 
The  same  principle  is  laid  down  in  James  v.  Morcy,  2  Cowen,  301, 
and  in  other  ca.ses  (Forbvs  v.  Moffall,  18  Ves.  390;  Gardner  v. 
\slor.  •^  Johns.  Ch.  P.  r)3).  The  rule  at  law  is  inflexible,  that 
\liere  a  greater  and  a  less  estate  meet  and  coincide  in  the  same 
nerson,  in  one  and  the  same  right,  without  any  intermediate  estate, 
tljo  less  estate  is  immediately  annihilated  or  merged;  and  the  same 
rule  applies  to  the  union  of  the  legal  estate  with  tlu'  e<|uilable 
interest,  l^wt  this  riile  is  not  inllexii>le  with  courts  of  ecjuity.  but 
will  di'pend  on  the  inti'nlinn  and  interest  of  the  pcrvon  in  whom 
the  estates  unite. 

In  the  j)re.>Jent  case,  however,  the  doctrine^  of  merger  is  not  applic- 
il>le,  for  the  estate  in  the  mortgage  of  William  Eaton  was  never 
-signed  to  the  defendant,  an<l  never  vested  in  him;  so  that  it 
'  ould  not  unite  with  the  etpiitable  title  in  him,  so  as  to  operate  as 
1  merger.  But  this  mortgage  h:\<  been  legally  discharged,  the  debt 
lias  be(Mi  paid,  anil  can  iin  longer  be  set   \ip  a<  a  subsisting  title. 


363  COMMON    LAW    RELATIONS.  [CIIAP.  I. 

either  at  law  or  in  equity.  It  makes  no  difference  that  the  defendant 
was  advised  and  supposed  that  a  discharge  of  the  mortgage  woukl 
be  equally  beneficial  to  him  as  an  assignment.  This  was  a  mis- 
take, which,  however,  this  court  has  no  power  to  correct. 

With  regard  to  the  exceptions  to  the  master's  report  in  stating 
the  account,  we  think  two  of  them  are  well  founded  and  are  to  be 
allowed. 

The  plaintiff  excepts  to  the  allowance  of  a  commission  to  the 
defendant  on  the  rents  and  profits,  he  having  occupied  the  premises 
in  person  during  the  whole  time.  The  rule  is,  that  a  mortgagee 
in  possession,  who  manages  the  estate  himself,  is  not  to  be  allowed 
for  his  own  care  and  trouble;  otherwise,  if  he  employs  a  bailiff,  or 
lets  the  estate  to  a  tenant;  and  so  is  the  rule  in  England  {French 
V.  Baron,  2  Atk.  120;  Godfrey  v.  Watson,  3  Atk.  518;  Bonithon  v. 
Hochmore,  1  Vernon,  316). 

We  are  of  opinion  also,  that  the  master  erred  in  charging  the 
defendant  with  the  rents  and  profits  during  the  life  of  the  plaintiff's 
husband.  He  had  a  right  to  possession  and  to  the  rents  and  profits, 
as  against  the  husband,  under  his  purchase  of  the  equity,  and  it 
does  not  appear  that  he  ever  entered  under  the  mortgage  in  ques- 
tion; nor  had  he  any  right  to  enter,  the  same  having  been  dis- 
charged. Nor  does  it  appear  that  he  entered  under  the  other 
mortgage.  The  plaintiff  in  her  bill  avers  that  the  defendant  entered 
under  his  purchase  of  the  equity  and  never  gave  any  notice  of  his 
entry  under  the  last-mentioned  mortgage.  This  case,  therefore,  on 
this  point,  materially  differs  from  that  of  Gibson  v.  Crehorc. 
We  think,  however,  the  defendant  is  liable  to  be  charged  with 
the  rents  and  profits  from  and  after  the  death  of  the  husband,  for 
he  could  not  hold  under  the  purchase  of  the  equity  against  the 
plaintiff,  and  he  is  to  be  presumed  to  hold  under  his  legal  title. 
The  defendant's  charge  for  repairs  is  also  to  be  limited  to  the  time 
since  the  death  of  the  husband. 

These  two  exceptions  are  to  be  allowed,  and  the  others  are  dis- 
allowed, and  the  account  is  to  be  corrected  accordingly. 

The  court  having  made  a  decree  in  conformity  with  this  opinion,. 
a  motion  was  now  made  on  the  part  of  the  respondent,  to  vary  and 
rectify  the  minutes  of  the  decree,  on  the  following  grounds:  1. 
because  the  decree  supposes  that  the  mortgage  to  Eaton,  which 
was  allowed  by  the  master  as  a  just  charge  upon  the  estate,  was^ 
to  be  considered  as  extinguished ;  2.  because  no  exception  was  taken 
by  the  complainant  to  the  allowance  of  such  mortgage  by  the 
master;  but  on  the  contrary,  the  complainant  having  excepted  to 
the  allowance  by  the  master  to  the  respondent  of  a  commission 
for  collecting  rents,  prayed  that  the  residue  of  the  master's  report 
miffht  be  confirmed. 


v'.r.   lll.l  KATON    r.    Sl.MONDS.  363 

WiLDK,  J..  tlt'livorcHl  the  opinion  of  the  court.  Since  an  opiniou 
was  given  in  this  ca.>^t',  the  defenchml  has  moved  the  court  to 
rectify  the  minutes  of  the  decree,  on  the  suggestion  that  no  excep- 
tion was  taken  to  tlie  report  of  the  master,  in  which  the  mortgage 
to  William  I^aton  is  stated  as  a  sul)sisting  and  valid  mortgage. 

We  were  somewhat  surprised  at  this  suggestion,  heeause  not  only 
was  there  sueh  an  exception  in  the  cojjy  furnished  to  the  court,  but 
it  appears  from  the  plaintiff's  bill  that  .she  denied,  in  the  outset, 
tiiat  this  mortgage  was  a  subsisting  mortgage,  which  she  was  bound 
to  redeem;  and  it  hardly  can  be  sui)posed  that  her  counsel  would 
waive  so  important  an  exception.  How  the  fact  was,  however,  does 
not  appear,  for  the  counsel  do  not  agree,  and  we  do  not  think  it 
important  to  inquire  further,  for  if  the  plaintiff's  counsel  did  omit 
to  tile  the  exception  to  the  master's  report  in  season,  we  think  the 
question  as  to  the  discharge  of  the  mortgage,  and  whether  or  not 
it  could  be  considered  as  assigned  to  the  defenchint,  was  open  f<>r 
the  consideration  of  the  court  ujjon  the  bill  and  answer. 

The  answer  expressly  admits  all  the  facts  which  have  any  bearing 
upon  that  question;  and  although  the  master  was  authorized  to 
examine  and  state  the  facts  and  circumstances  appearing  on  record 
or  otherwise,  in  relation  to  the  discharge  or  assignment  of  the 
mortgages  mentioned  in  the  bill,  yet  he  was  not  empowered  to 
decide  upon  those  facts,  except  incidentally  by  stating  an  account 
of  the  sum  due  on  the  mortgages,  with  an  account  of  the  rents  and 
profits  and  the  repairs,  &c.  The  reference  was  nuide  out  of  the 
ordinary  course  and  before  the  answer  was  filed,  for  the  purpose 
of  expediting  tiie  final  decision  of  the  cause  ;  but  it  was  not  intendeil 
to  authorize  the  master  to  di'cide  the  (piestion  whether  the  fir>t 
mortgage  was  discharged  or  not,  but  to  report  facts.  This  then, 
we  think,  was  an  open  question,  and  was,  as  it  still  seems  to  us, 
rightly  decided.  We  have,  however,  examined  the  ca.ses  cited  by  tlu 
defendant,  bur  do  not  find  that  they  impugn,  in  any  respeet,  our 
former  decision,  exee]tling  jierhaps  the  case  of  I'ltpkin  v.  lininalcail . 
8  Mass.  It.  101  ;  and  that  is  distinguished  from  this,  in  an  impor- 
tant partieular.  'i'he  defemlant  in  that  ease  had  purchased  of  the 
administrator  of  thf  mortgager,  and  thereby  a((|uired  the  same 
rights  which  the  administrator  would  have  iiad  if  he  hail  paid  olT 
the  mortgage  for  the  benefit  of  the  heirs,  'i'he  mortgage  was  paid 
off  after  the  death  of  the  mortgager,  when  tlu*  widow's  right  of 
dower  had  become  perfect,  and  it  might  therefore  be  supposed 
iiat  she  was  not  entitled  to  dower  without  contributing  her  share 

f  the  redi-mjition  money,  and  that  the  case  came  within  the 
'rinciple  laiil  dowTi  in  (tihsnn  v.  Creliorr.  that  where  several  are 
interested  in  an  ecpiity  of  redemption  and  one  only  is  willing  to 
redeem,  he  must  pay  the  whole  mortgage  debt ;  and  in  such  case 


364  COMMON    LAW    RELATIONS.  [CHAP.  I. 

he  is,  in  a  court  of  equity,  considered  as  assignee  of  the  mortgage 
and  as  standing,  after  such  redemi^tion,  in  the  place  of  the  mort- 
gagee in  relation  to  the  other  owners  of  the  equity. 

Unless  the  case  of  Pophin  v.  Bumstead  can  be  supported  on  some 
such  distinction,  it  is  difficult  to  perceive  any  legal  or  equitable 
ground  on  which  it  can  stand.  It  is  difficult  also  to  say  how  that 
case  could  be  decided  on  rules  of  equity,  it  being  an  action  at  law; 
but  unless  the  principle  of  contribution  does  apply,  the  case  seems 
opposed  to  the  whole  current  of  the  authorities. 

In  the  present  case,  the  plaintiff  clearly  was  not  bound  to  con- 
tribute to  the  redemption  of  the  first  mortgage  when  it  was  paid 
off  and  discharged.  That  was  done  during  the  life  of  the  husband, 
and  clearly  the  wife  then  was  not  bound  to  contribute,  and  the 
husband  was  not  bound  to  repay  the  mortgage  debt,  unless  he  saw 
fit  to  redeem  the  equity.  The  defendant  therefore  redeemed  in  his 
own  right.  He  bought  the  equity  subject  to  these  mortgages,  and 
there  seems  to  be  nothing  inequitable  in  holding  him  bound  to 
redeem  them. 

In  the  case  of  Sivaine  v.  Ferine,  5  Johns.  Ch.  E.  482,  it  is  decided 
by  Chancellor  Kent  that,  if  the  heirs  pay  a  mortgage,  the  wife  shall 
contribute  as  to  the  amount  paid  by  the  heirs,  but  that,  as  far  as  the 
husband  had  reduced  the  mortgage  in  his  lifetime,  that  was  doubt- 
less so  far  a  reduction  for  the  benefit  of  the  wife  as  well  as  himself. 
The  same  rule  will  hold  where  payment  is  made  by  the  assignee  of 
the  husband  during  his  lifetime ;  and  this  is  decisive  in  the  present 
case. 

Motion  to  vary  the  minutes  overruled} 


VAX    DYNE  V.  THAYRE. 

Supreme  Court  of  Judicature  of  New  York,  1838. 

(19  Wend.  1G2.) 

This  was  an  action  of  ejectment  for  dower,  tried  at  the  Yates 
circuit  in  November,  183G,  before  the  lion.  Daniel  Moseley,  one 
of  the  circuit  judges. - 

'I"'he  plaintiff  claimed  to  recover  dower  in  the  premises  in  ques- 

'  See  Snoic  v.  Stcrcns,  15  Mass.  278  (1818)  ;  McCahe  v.  Sicap,  14  Allen 
CMass.)  188  (1867)  ;  Carter  v.  floodin,  3  Oh.  St.  75  (1853),  and  compare 
Uroum  V.  Lapham,  3  Cush.    (Mass.)    551    (1849). 

•'  Only  so  much  of  tlie  case  and  opinion  as  liave  to  do  witli  llie  question  of 
dower  are  liore  given. 


^^■<■•   '"  ]  VAN    DYNE    f.    TIIAVHK.  oGj 

tion,  as  tho  widow  of  Dennis  Viin  Dyne,  witli  wlioni  she  inlt.M- 
niarricd  in  lH2t.  On  tlio  l.")tli  December,  181H,  the  premi.■^ert  in 
which  dower  was  chiinied  were  conveyed  to  her  husband  by  one 
Morris  >Seely;  her  husband  took  possession  and  remained  in  until 
1829,  when  he  quit,  leaving  a  person  in  possession  as  his  tenant  ; 
her  husband  died  in  1832.  The  defence  set  up  was  thai  Van  Dvnc, 
on  taking  iiis  deed,  executed  a  mortgage  of  the  premises  in  question 
to  one  George  D.  Stewart,  as  part  consideration  of  the  purchase, 
conditioned  for  the  payment  of  $2,512  in  instalments,  the  last 
instalment  falling  due  in  June,  1824;  that  the  possession  of  the 
premises  had  been  surrendered  by  the  mortgagor  in  his  lifetime  to 
the  heirs  of  George  D.  Stewart,  and  that  the  present  defendant 
held  under  them.  .  .  .  The  question  of  fact  principally  controverted 
was  in  relation  to  a  release  of  the  equity  of  redemption  alleged 
by  the  plaintiff  to  have  been  executed  l)y  her  husband  to  the  heir> 
of  Stewart  in  consideration  of  a  discharge  from  the  mortgage  debt ; 
whereby  she  contended  that  the  mortgage  was  extinguished,  thai 
the  heirs  of  Stewart  were  in  possession  as  purchasers  and  not  under 
the  mortgage,  and  that  consequently  she  was  dowable.  On  the  other 
hand,  it  was  strenuously  insisted  by  the  heirs  of  Stewart  that  sucli 
release  had  not  been  executed.  The  court,  as  will  be  seen  in  tho 
opinion  pronounced  in  this  case,  assume  that  such  release  was 
executed  by  the  husband  of  the  plaintiff.  The  judge  charged  th<.' 
jury  that  it  was  immaterial  whether  the  heirs  of  Stewart  entered 
under  a  deed  or  not,  if  they  entered  claiming  under  tiie  subsisting 
lieu  of  the  mortgage;  and  instructed  them  that  if  they  were  satisfied 
that  the  alleged  mortgage  had  been  executed  by  Van  Dyne,  that 
the  same  had  become  forfeited,  that  the  defendant  was  in  possession 
under  Stewart's  heirs,  and  that  the  defendant  was  entitled  to  a 
verdict.  The  plaintiff  excepted  to  the  charge.  The  jury  found  for 
the  defendant,  and  the  plaintiff  now  moved  for  a  new  trial  ou 
a  case  made. 

J.  A.  Spencer  for  the  jjlaintiff. 
//.  ]|V//r.<f  for  the  defendants. 

Hy  the  Court:  Cowen,  J.   .   .   .   The  remaining  (pn'slion  respects 
the  charge  of  the  judge  that  though  Stewart's  heirs  mavhave  entered 
under  a  deed,  yet  if  they  also  claimed  under  the  mortgage,  they  are 
protected  against  this  claim  of  dower  in  the  Imsltand's  etpiity  of 
redemption.     If  a  deed  or  lease  of  the  husband's  e(|uity  of  redemp- 
tion to  the  mortgagee  or  his  heirs  have  the  i-tTect  to  destroy  jijl 
laim  under  the  former  and  paramount  fee  arising  upon  the  con- 
'  yance  by  mortgage,  there  can  be  no  doubt  that  such  mortgagee 
r   his   heirs   would   be   estopped,   like   any   other  grantee   of   the 
husband,  to  deny  the  widow's  right  of  dower.     It  is  e<|ually  clear, 
"U  the  other  hand,  that  where  one  comes  in,  cither  as  mortgagee  or 


^66  COMMOX    LAW    RELATIONS.  [CHAP.  I. 

iinder  a  foreclosure,  he  can  hold  against  the  widow;  in  the  former 
case  qualifiedly,  in  the  latter  absolutely  {Van  Diiyne  v.  Thayre, 
14  Wendell,  233).  The  case  presented  by  this  defence  is  that  of 
a  deed  and  an  entry  under  it,  aceoinj)anied  with  the  declaration 
of  an  intention  still  to  cling  to  the  mortgage  as  a  protection  against 
liens  which  might  by  priority  of  time  overreach  the  deed.  The 
power  and  right  to  accept  a  deed  and  enter  thus  qualifiedly  would 
be  perfectly  clear  in  equity  {James  v.  Morey,  2  Cowen,  246,  285, 
287,  300,  303,  4,  and  the  cases  there  cited,  with  several  cases  which 
will  be  hereafter  noticed) .  See  also  Freeman  v.  Paul,  3  Greenl.  260. 
But  we  are  sitting  in  a  court  of  law,  and  are  put  to  inquire  how 
far  we  can  sanction  the  defence  in  this  place. 

That  the  widow  is  dowable  of  an  equity  of  redemption  is  agreed 
perhaps  in  all  the  States  of  the  Union  (4  Kent's  Comm,  44,  3d  ed., 
and  the  cases  and  statutes  there  cited;  ]Yalkcr  v.  Gvisivold,  6  Pick. 
416).  When  that  is  to  be  treated  strictly  as  an  equitable  estate,  her 
proper  remedy  is  in  a  court  of  chancery.  See  4  Kent's  Comm.  44, 
3d  ed.,  and  the  cases  there  cited.  But  she  also  has  a  remedy  at  law 
in  all  those  cases  where  this  estate  can  be  properly  considered  as 
legal.  When  it  is  so,  and  to  what  extent  and  under  what  restric- 
tions the  legal  remedy  is  applicable,  it  becomes  proper  to  inquire. 

There  can  be  no  doubt  that  a  conveyance  in  any  form  of  the 
husband's  equity  of  redemption,  though  it  arose  upon  a  mortgage 
given  b}^  him  before  coverture,  would  be  altogether  ineffectual  as 
a  bar  of  dower,  when  set  up  by  his  mere  assignee  against  his  widow. 
x\s  between  the  widow  and  assignee,  the  equity  of  redemption  would 
be  looked  upon  as  a  legal  estate.  Being  disconnected  with  the  title 
of  the  mortgagee,  he  shall  never,  in  answer  to  a  claim  of  dower,  be 
allowed  to  set  up  the  mortgage  as  an  outstanding  title.  As  a 
defendant  claiming  under  the  husband  by  a  conveyance  subsequent 
to  the  coverture,  he  stands  absolutely  estopped  to  deny  the  para- 
mount right  of  the  widow.  In  short,  the  mortgage  is,  for  all 
purposes  of  defence,  to  him  a  nonentity  {Harrison  v.  Eldridge, 
2  Halst.  392;  S^ioiv  v.  Stevens,  15  Mass.  R.  278;  Barker  v.  Parlcer, 
17  id.  564).  All  this  was  held,  too,  in  UitchcocJc  v.  Harrington, 
6  Johns.  E.  290,  and  Collins  v.  Torry,  7  id.  278,  and  to  all  this 
there  can  obviously  be  no  objection.  Both  those  cases  and  all  the 
cases  at  law  agree,  however,  in  the  qualification  that,  as  against 
tlie  mortgagee,  the  husband  is  not  so  seised  that  his  widow  can 
claim  dower;  and  they  introduce,  I  think,  even  a  fartlier  qualifica- 
tion, that  if  the  mortgagee  shall  have  entered  for  condition  broken 
or  foreclosed,  the  seisin  is  destroyed  and  the  husband's  assignee 
could  then  defend  himself  on  the  ground  of  an  outstanding  title. 
Chancellor  Kent  says  (4  Kent's  Comm.  45,  3d  ed.),  "As  against 
the  title  under  the  mortgage  the  widow  has  no  right  of  dower,  and 


•**»'■•  >"1  VAN   dvm:   r.  tiiavki:.  3t)7 

the  (.'quily  of  :viU'iiij)tion  is  cnlirely  subordinate  to  that  title." 
Accordingly  when  this  cause  was  here  before,  the  deed  from  \'an 
Dvne  to  Stewart's  lieirs  bein^  out  of  <iuestion,  the  court,  after 
holding  that  \'an  Dyne's  admissions,  though  made  during  cover- 
ture, were  receivable  against  his  widow  as  secondary  evidence  of 
the  mortgage,  put  tiie  defence  on  the  simple  and  consistent  ground 
that  the  mortgagee's  heirs  having  entered  under  the  mortgage  and 
the  defenihinl  claiming  under  them,  his  title  was  clearly  the  l)ctler 
one.  Indeed,  all  seisin  in  tlu'  mortgagor  was  thus  utterly  subvertfd. 
Under  these  directions  the  cause  went  down  to  a  second  trial. 

On  the  second  trial, which  is  now  under  review,  after  the  mortgage 
was  shown,  and  that  it  was  forfeited,  and  that  the  heirs  of  the 
mortgagee  had  entered,  the  plaintifT  sought  to  defeat  the  effect  of 
this  evidence  by  j)roving  in  reply  that  not  oidy  was  there  a  mortgage 
unsatisfied  to  a  large  amount,  but  that  her  husband  had  besides 
given  to  Stewart  or  his  heirs  an  absolute  deed  in  fee  to  satisfy  the 
debt  under  a  mutual  arrangement  between  the  parties,  and  that 
the  heirs  entered  under  that  deed.  To  an  unsophisticatt'd  mind 
buch  an  answer  would  seem  to  be  a  most  extraordinary  one;  yet 
these  very  heirs  seem,  from  the  beginning  to  the  end  of  this  cause, 
to  have  shrunk  from  the  deed  as  an  instrument  of  destruction.  It 
was  kept  entirely  out  of  view  on  the  first  trial ;  and  now,  after  the 
second,  they  make  a  point  that  there  was  no  deed  in  evidence; 
and  the  plaintill"  insists,  with  apparent  triumph,  that  by  the  opera- 
tion of  this  deed  she  stands  an  unincumbered  claimant  of  that 
dower  which  she  could  have  taken  only  in  a  qualified  way  had  the 
Jiiortgage  been  left  to  stand  alone.  All  this,  too,  is  claimed  as  the 
result  of  Ililchcock  v.  Ilarriiigton.  and  Collins  v.  Torry,  or  more 
jtarticularly  of  the  latter  case,  when  taken  in  connection  with  the 
general  doctrine  of  merger  as  established  in  James  v.  Johnson. 
(i  Johns.  Ch.  4'^3,  and  recognized  in  the  s.  c.  by  the  title  of  Janirs 
V.  Morcy,  2  Cowen,  2  I  (J.  It  seems  to  me  here  has  been  some  mis- 
ajjprehension,  at  least,  of  the  decided  scope  of  the  authorities.  With 
regard  to  the  latter  ca.se  and  its  kindred  class  of  decisions,  they 
merely  hold  that  at  law  and  generally  in  equity  the  union  of  a  legal 
and  equitable  estate  in  the  sanu>  person  (like  that  of  the  estate  of 
mortgagor  and  mortgagee  in  this  instance)  extinguishes,  or.  aj» 
the  ])hra.<e  is.  merges  the  efpiitable  in  the  legal  estate  ( t  Kent's 
Connn.  101,  2,  'M  ed.  and  the  cases  there  cited).  In  otluT  words, 
as  I  understand  it,  the  legal  estate  becomes  al)solute.  This  notion 
was  a|)|)lied  exactly  in  that  way  by  Mr.  Justice  Story  in  Dexter  v. 
Ilnrris.  2  Mason,  rt'.U,  .5.10.  "  At  law,"  says  he,  "  by  the  mortgage 
a  conditional  estate  in  fee  simple  passed  to  the  mortgagtH»:  and  the 
only  operation  of  the  conveyance  of  .Mdrich  (of  the  mortgagor's 
title  to  the  mortgagee)  would  l)e  \o  extinguish  the  equity  of  reclemp- 


368  COMMON    LAW    RELATIONS.  [CHAP.  I. 

tion,  and  thus  remove  the  condition.  If  that  conveyance  was  good, 
it  had  the  effect,  not  to  enlarge  the  estate,  but  to  extinguish  a  right. 
It  was  not  the  drowning  of  a  lesser  in  a  greater  estate,  for  the  estate 
was  already  a  fee  simple ;  but  it  was  an  extinguishment  of  a  condi- 
tion or  equity."  The  same  was  held  in  Carll  v.  Buttman,  7  Greenl. 
102.  Such  an  effect,  I  should  apprehend,  would  do  very  little 
injury  to  Stewart's  mortgage  here.  It  does  not  necessarily  even 
extinguish  the  debt  (Spencer  v.  Harford's  Ex'rs,  4  Wendell, 
381).  The  upshot  is  that  the  mortgagor  released  all  his  right 
in  the  equity  of  redemption,  and  the  heirs  enter  under  an  abso- 
lute instead  of  a  qualified  title.  The  dispute  is  about  words.  All 
this  is  called  a  merger;  of  what?  of  the  legal  estate?  Who  ever 
heard  of  a  legal  estate  being  merged  in  an  equitable?  The  legal 
estate  is  always  too  strong  for  that.  No  one  will  say  that  both 
estates  are  merged.  It  would  be  still  more  extraordinary  that  ono 
holding  in  himself  all  legal  and  all  equitable  right  should  be  upset 
by  the  very  perfection  of  his  title ;  and  yet  it  is  said  that  was  held 
in  Collins  v.  Tarry.  In  that  case  the  demandant's  husband  con- 
veyed the  equity  of  redemption  to  Parsons,  who  conveyed  to 
Winston,  \\\\o  conveyed  to  the  defendant  with  warranty.  Winston's 
administratrix  purchased  and  took  an  assignment  of  the  mortgage ; 
and  the  court  do  say  that  such  an  union  worked  an  extinguishment 
of  the  mortgage.  Had  Winston  himself,  who  held  the  fee,  taken 
the  assignment,  it  would  certainly,  within  all  the  cases,  have  extin- 
guished the  equity  of  redemption  and  carried  the  title  to  him.  In 
that  sense  the  mortgage  would  have  been  extinguished,  as  the  court 
say,  because  the  fee  would  have  become  absolute.  That  very  point 
was  held  in  Gibson  v.  Crehore,  3  Pick.  475;  5  id.  146,  s.  c.  and 
s.  p.  There,  under  an  order  of  court,  the  husband's  administrators 
conveyed  his  equity  of  redemption  to  the  defendant,  who  purchased 
and  took  an  assignment  from  the  mortgagee,  and  then  the  widow 
came  for  her  dower  absolutely,  as  in  Collins  v.  Torry.  All  our 
cases  of  dower  and  merger  were  cited  in  her  support.  The  court 
repudiated  her  claim  at  law.  Parker,  Ch.  J.,  said,  in  3  Pick.  480, 
481,  if  she  were  right  in  her  claim  the  defendant  would  be  a  great 
sufferer,  and  the  widow  would  gain  an  unjust  advantage.  He  adds : 
"  Several  cases  have  been  cited  to  show  that  widows  are  entitled 
to  dower  in  the  equity  of  redemption  of  mortgaged  estates;  and 
Avithout  doubt  they  are  against  all  but  the  mortgagee  and  those 
claiming  under  him,  and  they  may  enforce  their  claims  at  law. 
So,  also,  if  the  mortgage  is  discharged  by  the  husband  in  his  life- 
time, or  by  his  executors  or  administrators  out  of  the  proceeds  of 
liis  estate,  the  right  of  the  widow,  which  had  been  suspended, 
revives,  and  she  may  proceed  to  recover  her  dower,  just  as  if  there 
liad  been  no  mortgage.    But  against  the  mortgagee  or  his  assignee. 


^*'*'     '"■]  VAN    DVNi:    C.    TIIAVUK.  ^C)9 

lier  ri{;lit  is  only  in  fruity,  ami  it  i>5  only  l)y  a  liill  in  I'ljuiiy,  .iii«l 
l>y  jmying  ht-r  duo  proportion  of  the  debt,  that  she  can  avail  lur-<'lf 
of  her  right/'  &e.  The  chief  justice  mentions  a  still  stronger  and 
more  decisive  case  from  8  Mass.  R.  J91,  Popkin  v.  Bumstead,  whicli 
I  will  also  state  in  his  words:  "  The  assignee  of  the  mortgagor  paid 
the  debt  to  the  mortgagee,  and  tiie  latter  entered  a  discharge  of  tii- 
mortgage  on  record;  but  the  widow  was  held  not  entitled  at  law  t«» 
her  dower,  because  it  would  be  to  defeat  the  very  purpose  of  the 
payment  by  the  assignee,  which  was  to  give  assurance  to  his  own 
title."  In  Coatcs  v.  Chccver,  1  Cowen,  475,  the  case  of  Collins  v. 
Torry  is  recognized  as  holding  that  a  purchase  of  the  equity  of 
redemption  and  entry  into  possession,  followed  by  an  assignment 
from  the  mortgagee  to  the  purchaser,  shall  extinguish  the  mortgage 
and  entitle  the  widow  to  dower;  and  the  court  followed  the  doctrinr 
to  that  extent  without  going  back  to  look  at  the  nature  of  the  extin- 
guishment. The  case  there  adjudged  is  not  like  the  one  now  before 
us,  but  it  certainly  shows  Collins  v.  Torry  as  well  as  itself  to  Im- 
in  conflict  with  the  cases  decided  by  the  Supreme  Court  of  Massa- 
chusetts, which  appear  to  me  to  contain  the  true  doctrine.  Tli'- 
more  Collins  v.  'Torry,  on  which  Coatcs  v.  Cheever  was  founded, 
shall  be  considered,  the  more,  I  venture  to  say,  it  will  be  found  to 
have  been  without  full  consideration.  In  truth,  there  is  no  merger 
or  extinguisliment  presented  by  that  case,  in  any  sense  of  the  term. 
The  legal  and  equitable  estates  never  were  united  in  the  same 
person,  unless  we  should  hold  that  land  descends  to  the  personal 
representative.  Winston,  an  assignee  of  the  husband,  having  con- 
veyed the  equity  of  redemption  with  warranty  to  the  defendant, 
died,  and  his  administratrix,  not  his  heir,  j)urchased  and  took  an 
assignment  from  the  executors  of  Fonda,  the  mortgagee.  I  admit 
tliis  was  probably  done  to  save  her  husband's  estate  from  liability 
on  the  warranty  to  the  defendant.  It  is  strange  that  an  act  thn- 
done  in  good  faith  and  with  intention  to  save  the  estate  should 
have  been  made  the  very  ground  of  a  recovery  against  her  deceased 
husband's  grantee.  If  there  be  anything  in  the  cases  when  they 
say  that  the  equitable  sinks  into  the  legal  estate,  and  the  latter 
thereby  becomes  strengthened  or  becomes  absolute,  then  all  the 
cases  whicli  have  ever  been  adjudged  concur  in  princi|)le  to  one 
end:  they  all  concede  that,  as  against  the  mortgagee  or  his  assignee, 
or  any  one  claiming  under  him,  tlu're  can  be  no  dower  in  an  equity 
of  redemption  (4  Kent's  Tomm.  4'),  3d  ed.  and  the  ca.ses  thep- 
cited).  What  is  the  estate  of  the  husband  at  law  as  against  the 
mortgagee,  even  while  in  actual  possession  under  this  eipiity  "i" 
redemption?  At  most  he  is  a  tenant  at  will,  and  after  he  shall  h.w- 
parted  with  all  that  right  by  assigning  his  equity  to  the  very  mort- 
gagee, it  sounds  most  extravagant  to  <ay  that  such  an  act  shall  add 


370  COMMON    LAW    RELATIONS.  [CHAP.  I. 

to  his  estate.  Such  is  the  consequence,  if  we  allow  the  plaintiflE's 
argument ;  for  the  widow  claims  out  of  that  estate.  If  the  husband 
had  done  his  worst,  the  heirs  of  Stewart,  by  entering  as  mortgagees, 
could  hold  in  despite  of  the  plaintiff.  By  doing  better,  conveying 
all  his  interest  and  turning  the  mortgage  to  the  heirs  into  an  abso- 
lute fee,  it  is  insisted  that  the  fee  thus  created  runs  back  into 
himself  and  creates  a  seisin  whereof  his  widow  is  dowable.  To  my 
mind  this  is  a  new  mode  of  conveyance,  where  a  man  in  doing  all 
he  can  to  convey  his  estate  becomes  himself  the  grantee.  I  am  sure 
that  in  parity  of  reasoning  his  heirs  might  have  ejectment;  but 
there  is  no  pretence  for  such  a  consequence.  If  it  does  not  add  to, 
it  certainly  does  not  diminish  the  estate  of  the  heirs  {Stoppelhien 
V.  ShuUe,  1  Hill's  Cas.  on  Ap.  200). 

But  the  principles,  so  well  supported  by  reason  and  authority, 
have  been  directly  applied  by  this  court  to  a  case  which  cannot  be 
distinguished  from  the  case  at  bar.  In  Jackson,  ex  dem.  Bruyn,  v. 
Dewitt,  6  Cowen,  316,  it  was  held  that  the  husband  may  release 
the  equity  of  redemption  to  the  mortgagee  or  his  assignee,  and  thus 
extinguish  the  wife's  dower.  This  court  held,  in  the  spirit  of  all 
the  cases,  that,  so  far  from  reacting  for  the  benefit  of  the  widow, 
such  a  release  to  the  assignee  of  the  mortgagee  who  held  the  legal 
estate,  did,  to  be  sure,  extinguish  the  mortgage,  but  it  made  the 
legal  estate  absolute.  It  is  true  the  case  is  slightly  distinguishable 
in  its  details.  The  husband  had  purchased  and  given  back  the 
mortgage  to  secure  the  purchase  money  before  coverture,  and  the 
court  say,  on  the  authority  of  Stow  v.  Tifft,  15  Johns.  E.  458,  that 
he  was  seized  but  for  an  instant.  The  simple  amount  of  the  case 
is,  however,  precisely  like  all  others  which  are  raised  against  the 
mortgage.  The  husband  was  disseised.  How?  By  a  conveyance 
of  the  legal  estate  to  the  mortgagee.  What  possible  difference 
whether  he  was  seised  and  disseised  the  same  day,  or  seised  one 
day  and  disseised  ten  years  after,  if  both  seisin  and  disseisin  were 
before  coverture?  None  at  all,  and  so  it  was  held  in  Bird  v. 
Gardner,  10  Mass.  E.  364.  I  repeat  again,  on  all  the  authorities, 
that,  as  against  the  mortgagee,  there  is  no  seisin.  Entry  or  fore- 
closure is  a  bar,  and  the  two  cases  last  cited  hold  that  a  release  of 
the  equity  of  redemption  by  the  husband  is  equivalent  to  a  fore- 
closure. Strange  he  should  not  be  allowed  to  do  thus  voluntarily 
what  a  court  of  chancery  would  decree.  My  deduction  from  this 
and  other  cases  I  state  in  the  words  of  Chancellor  Kent,  4  Comm. 
45,  3d  ed. :  "The  wife's  dower  in  an  equity  of  redemption  only 
applies  in  case  of  redemption  of  the  incumbrance  by  the  husband 
or  liis  representatives ;  and  not  when  the  equity  of  redemption  is 
released  to  the  mortgagee  or  conveyed."  And  see  Bolton  v.  Ballard, 
13  Mass.  E.  227,  and  Beed  v.  Morrison,  12  Serg.  &  Eawle,  18. 


'^'•''-  '"1  KVKKsox  V.  m'mii.i.ia.  :',;] 

lu'im-nilRT.  we  are  sju'akin*,'  in  a  court  of  law,  to  wlikh  we  pro- 
fi'ssod  in  tlie  outset  to  limit  our  in(|uiri(S.  If  tlicrt'  Ik-  a  romody  for 
•  lower  a^Minst  the  niort<,'a^M'e  in  any  ease,  or  those  elaimin;;  under 
liini,  it  is  extremely  proper  that  the  widow  should  he  confim-d  to 
a  court  of  equity;  and  that  distinction  lui.s  recently  been  held  in 
the  case  of  Smith  v.  Eustis,  7  CJreenl.  41,  13.  upon  a  consideration 
of  many  authorities;  ajjain  in  (')irll  v.  Ihittinan,  id.  10*3.  And  in 
<!ilisun  V.  CtrJiorc  the  j)Iaintiir,  failin<,'  at  law  (3  Pick.  475)  was 
afterwards  relieved  in  equity  (5  id.  M(i).  That  a  case  of  this  kind 
nuiy  often  be  open  to  very  complicated  equities  and  altogether  unfit 
for  a  court  of  law,  is  jjlain  enou^di  on  the  least  reflection  ;  and  it  is 
-trikin<,dy  illustrated  l>y  the  last  cited  case.  See  also  Enton  v. 
.'^iinonds,  14  Pick.  OS. 

It  follows  that  in  any  view  the  charge  of  the  circuit  judge  was 
altogether  unobjectionable  on  the  part  of  the  plaintifT.  I  entertain 
no  doubt  that  he  would  have  been  right  in  putting  the  matter  to 
the  jury  without  regard  to  the  entry  being  under  the  mortgage. 
The  case  is  all  which  it  was  when  here  before.  ;Mr.  Justice  Xelson 
then  said:  "I  have  no  doubt  it  was  competent  for  the  heirs  to  set 
up  their  possession  as  representing  the  legal  estate  in  the  mortgaged 
]»remises.''  I  add,  such  a  right  in  the  heirs  is  made  stronger — it  is 
not  necessary  to  say  precisely  how  much  stronger — bv  the  deed 
which  the  plaintiff  now  insists  upon. 

A  new  tridi  jnust  be  denied. 


EVERSOX  v.  .McMULLEX. 

CoiUT  OK  ArrK.VLs  of  Xew  York,  1SS9. 

(113  N.  y.  203.) 

Appeal  from  judgment  of  the  (ieneral  Term  of  the  Supremo 
i'ourt  in  the  third  judicial  dej)artment,  entered  upon  an  order 
made  September  13,  1887,  which  alfirmed  a  final  judgment  in  favor 
f  plaintiff,  entered  upon  a  decision  of  the  court  confirming  the 
report  of  a  referee,  and  also  nKMlilicd  and  ntlirmed,  as  modified,  an 
interlocutory  judgment. 

This  action  was  brought  by  plaintiff,  as  the  widow  of  M()ri:an 
E.verson,  to  recover  dower  in  certain  ])remises. 

On  the  trial  the  court  held  that  plaintiff's  dower  interest  should 
be  cbargt>d  with  its  just  proportion  (»f  a  mortgage  in  which  she 
joined  with  her  liusband.  which  is  set  forth   in   the  opinion,  and 


372  COMMON    LAW    RELATIONS.  [CHAP.  I, 

an  interlocutory  judgment  was  entered  accordingly,  referring  it 
to  a  referee  to  admeasure  the  dower.  The  General  Term,  on  appeal 
from  the  interlocutory  judgment,  modified  it,  adjudging  that  the 
mortgage  was  not  to  be  considered  in  the  admeasurement. 

The  material  facts  are  stated  in  the  opinion. 

Finch,  J,  We  are  required  to  settle  on  this  appeal  the  disagree- 
ment between  the  trial  court  at  the  first  hearing  and  the  General 
Term,  and  determine  which  decision  was  correct. 

The  property  in  question  was  owned  originally  by  Morgan 
Everson,  who  mortgaged  it  to  the  Rondout  Savings  Bank  for 
$12,000 ;  his  wife,  who  is  the  present  plaintiff,  joining  with  him  in 
the  mortgage  to  cover  her  inchoate  right  of  dower.  Everson  died 
soon  thereafter,  and  his  execiitor  sold  the  equity  of  redemption  at 
public  auction  for  one  dollar.  The  case  does  not  disclose  the 
authority  upon  which  he  acted,  but  nobody  disputes  it,  and  the 
action  was  tried  upon  the  assumption  that  a  valid  title  existed  in 
the  purchaser.  That  purchaser  was  Coykendall,  who  assigned  his 
bid  to  Preston,  to  whom  the  executor's  deed  was  made.  Preston 
took  title  before  August,  1877,  and  thereupon  gave  a  new  mortgage 
to  the  savings  bank  upon  the  property  for  $2,000  to  further  secure 
an  accumulation  of  interest  upon  the  original  mortgage.  It  appears 
that  Preston  gave  a  bond  accompanying  the  mortgage,  and  so 
became  personally  liable  for  a  possible  deficiency,  and  the  bank 
gained  that  additional  security  for  its  unpaid  interest;  but  while 
it  is  said  generally  that  the  mortgage  was  given  to  pay  the  interest, 
it  is  not  shown  that  the  mortgagee  accepted  the  new  securities  as 
a  payment  pro  tanio  upon  the  original  incumbrance  by  any  indorse- 
ment or  equivalent  action,  or  held  them  in  any  other  way  than  as 
collateral  to  the  original  debt.  In  August,  1877,  Preston  and  his 
wife  conveyed  to  Crosby  by  a  quit-claim  deed,  but  containing  a 
provision  by  which  the  latter  assumed  and  agreed  to  pay  the  $2,000 
mortgage  given  by  Preston  to  the  bank,  as  a  part  of  the  considera- 
tion for  the  purchase.  The  consideration  named  in  the  deed  was 
$221.  Preston  did  not  on  his  purchase  assume  or  become  liable 
to  pay  any  part  of  the  original  mortgage,  but  took  title  merely 
subject  to  its  lien.  When  he  gave  his  $2,000  bond  and  mortgage 
it  was  in  aid  of  his  own  title,  and  not  in  pursuance  of  any  duty  duo 
to  the  representatives  of  the  mortgagor.  Probably  his  obligation  was 
merely  collateral  to  the  primary  lien,  and  so  both  he  and  his  land 
became  sureties  for  the  unpaid  interest;  but  if  not,  and  the  new 
mortgage  was  a  payment  of  so  much  of  the  old  debt,  it  was  entirely 
voluntary,  and  he,  and  Crosby  who  took  his  place,  stood  in  the 
attitude  of  sureties  after  paying  the  unpaid  interest,  entitling  them 
to  subrogation  as  against  the  land.  Crosby  thereafter  conveyed 
a  portion  of  the  property  to  McMullen  by  a  warranty  deed,  free 


^"-  '"1  KVKKsoN    /•.    M".\iri.i,K\.  37;} 

;iiul  dear  of  all  iiuiiiiihrancv.  He  \va>  tnabk'tl  lo  ilo  tins  \>y  an 
arrangeiiR'nt  at  tlu-  time,  to  wiiiih  his  grantct'  and  tin-  bank  wero 
liartios.  The  substantial  point  of  that  arran-^iMnont  was  a  distribu- 
tion of  the  original  mortgage  in  agreed  proportions  between  the 
two  parcels  into  whieh,  by  McMullen's  purehase,  the  land  was  to 
be  divided.  To  effect  this  sej)arati<)n  and  severance  of  the  lien, 
.McMullen  gave  the  bank  a  mortgage  on  his  parcel  for  $.">,500  as 
a  substitute  for  $1,000  of  the  principal  of  the  original  mortgage, 
and  of  the  unpaid  interest  collaterally  secured  by  the  bond  and 
mortgage  of  Preston,  $500  of  the  interest  liaving  been  paid  in  cash 
by  Crosby.  Tlie  bank  on  its  part  formally  released  .McMullen's 
parcel  from  the  lien  of  its  original  mgrtgage,  indorsing  thereon 
a  payment  of  $4,000,  and  cancelled  and  discliarged  the  $2,000 
mortgage  of  Preston,  and  Crosby  was  thus  enabled  to  mak.-  his 
•■onveyance  free  from  incumbrance. 

On  this  state  of  facts  the  widow  demanded  dower  in  McMullen's 
jiarcel.  The  Special  Term,  on  the  first  trial,  held  that  she  was 
bound  to  allow^  as  against  her  dower  a  just  proportion  of  the  original 
mortgage  and  its  interest,  and  sent  tlic  case  to  a  referee  to  ascertain 
that  just  proportion,  with  a  direction  that  the  McMullen  mortgage 
should  be  recognized  and  allowed  in  ascertaining  tlie  amount  of 
!-uch  indebtedness.     The  General  Term,  on  the  contrary,  were  of 

[tinion  that  the  widow  was  not  bound  to  contribute,  and  should 
iiave  dower  in  the  wliole  parcel  without  allowance  or  diminution; 
and  it  is  tiiat  controversy  which  awaits  our  judgment.  It  is  not 
dtnibtful  on  which  side  the  equity  exists.  The  widow  subordinated 
her  dower  to  the  payment  of  the  husbands  debt.  Whoever,  in  the 
room  of  a  foreclosure  by  the  mortgagee,  pays  that  debt  to  him 
when  under  no  juTsonal  liability  for  its  discharge,  is  entitled  in 
««|uity  to  the  protection  of  the  mortgagee's  right  as  against  the 
dower  which  it  covered  and  charged.  The  purchaser  from  the 
husband  acquired  only  the  equity  of  redemj)tion.     While,  techni- 

illy,  he  took  the  fee,  in  truth  he  took  it  subject  to  the  interest  of 
the  mortgagee  carved  out  of  it  by  the  mortgage  as  a  lien.  Payment 
to  the  mortgagee  in  an  equitable  sen.se,  is  a  purchase  of  that  interest 
from  him,  and  in  equity  the  owner  of  the  fee  holds  it  under  the 
mortgagee  as  to  that  interest,  and  under  the  husband  only  as  to  the 
"[uity  of  redemption.  That  is  an  answer  to  the  doctrine  invoked 
l»y  the  respondent  that  a  release  of  dower  is  availabK'  only  to  one 
who  claims  under  the  very  title  which  was  created  by  the  convey- 

Mce  with  which  the  release  is  joined  {Mttlloney  v.  Iloran,  19  N.  Y. 

18).     That  would  be  a  good  answer  to  the  appellant's  claim  in 

I  ourt  of  law.  possibly,  but  does  not  govern  his  ease  in  etjuity.  since 
ibere  the  truth  of  his  holding,  outside  of  the  legal  form,  is  under 
ilie  mortgage  to  the  extent  of  the  mortgage  debt.     For  his  payment 


374  com:mox  law  relatioxs.  [chap.  i. 

of  that  debt  is  not  a  duty  which  he  owes  to  the  husband's  estate  or 
to  any  one,  but  a  transaction  in  his  own  interest,  the  exact  and 
obvious  purpose  of  which  is  to  add  the  right  of  the  mortgagee  ta 
the  right  bought  of  the  husband.  The  widow  is  left  where  her  own 
voluntary  act  placed  her.  By  joining  in  the  mortgage  she  postponed 
her  dower  to  the  equity  of  redemption.  She  has  that  right  still,  and 
seeks  to  enlarge  it  because  of  a  payment  made  not  by  her  husband, 
or  in  performance  of  a  duty  due  to  him  or  those  representing  him, 
but  by  one  acting  wholly  in  his  own  interest  and  seeking  to  add  to 
that  as  acquired  from  the  husband  the  further  right  held  by  the 
mortgagee.  The  purchaser  in  the  present  ease  took  his  land  charged 
as  surety  for  the  husband's  debt.  While  he,  personally,  was  not 
bound  to  pay  it,  his  land  was  held,  and  paying  the  debt  of  husband 
and  wife,  as  represented  by  the  mortgage,  he  had  a  right,  as  against 
them,  to  be  subrogated  to  the  position  of  the  mortgagee  and  to  stand. 
in  equity  as  the  purchaser  and  holder  of  his  security. 

Thus  far  I  have  assumed  that  the  giving  of  the  new  mortgage 
operated  as  a  payment,  pro  tanto,  of  that  held  by  the  bank.  That 
is  a  needless  concession,  because  the  finding  in  this  case  rebuts 
any  intention  of  payment,  and  establishes  that  a  severance  of  the 
original  lien  was  all  that  was  contemplated  by  the  parties,  and  the 
giving  of  the  new  mortgage  was  meant,  in  its  practical  effect,  to- 
serve  as  a  transfer  of  so  much  of  the  original  lien  to  the  severed, 
parcel.  Equity  may  look  through  the  form  of  the  transaction  to- 
ascertain  its  substance,  and  so  looking  cannot  fail  to  see  that  the 
new  mortgage  is  so  much  of  the  old  one  in  a  changed  form,  but 
secures  the  old  debt  as  did  its  predecessors.  The  finding  is  justified 
by  the  facts,  and  upon  that  basis  the  dower  remains  subject  to  the 
proportionate  part  of  the  original  lien. 

I  think  these  views  are  fully  sustained  by  the  authorities.  In 
Swaine  v.  Perrinc,  5  Johns.  Ch.  491,  the  mortgage  given  by  the 
husband  and  wife  was  outstanding  at  his  death;  the  equity  of 
redemption  passed  to  the  heir  who  redeemed  the  land  by  paying 
the  mortgage,  and  the  widow  who  claimed  dower  was  required  to- 
contribute  her  ratable  proportion  of  the  redemption  money.  In 
PopJcin  V.  Bumstead,  8  Mass.  491,  the  husband  and  wife  joined 
in  a  mortgage  to  one  Capen,  and  after  the  death  of  the  husband 
his  administrator,  under  the  order  of  the  probate  court,  sold  tbe 
equity  of  redemption  to  Wheelock,  who  conveyed  it  to  Bumstead. 
The  latter  paid  off  the  mortgage  and  it  was  discharged  of  record. 
The  widow  thereupon  demanded  her  dower,  but  the  court  held 
she  was  barred.  This  case,  which  is  very  like  the  one  at  bar,  was 
cited  in  Van  Dyne  v.  Thayre,  19  Wend.  171,  with  apparent  approval. 
Judge  Cowen  reviews  many  of  the  cases  and  holds  that  Collins  v. 
Tornj,  7  Johns.  378,  and  Coates  v.  Cheever,  1   Cow.  475,  were 


^•••♦•'"•i  KVKicsoN    c.   .M  Ml  i,i.i:n.  .{75 

dt'cidt'd  wiihoul  full  tonsidrration.  Near  the  close  of  his  opinion 
he  says:  "My  deduction  from  this  and  other  cases,  I  state  in  the 
words  of  Chancvllor  Kent  (  I  C'onun.  A'),  M  ed.),  the  wife's  dow.-r 
in  the  eciuity  of  ridtinption  only  applies  in  case  of  redemption  of 
the  incumbrance  by  the  husband  or  ids  representatives,  and  not 
when  the  equity  of  redemption  is  released  to  the  mort;:a<,'ee  or 
I onveyed."  I  am  not  aware  that  the  authority  of  that  case  has  been 
overthrown. 

The  cases  cited  in  behalf  of  the  widitw  eonlirm  rather  than  ques- 
tion the  views  we  have  expressed.  Jn  Bartlelt  v.  MiLsUner,  28  Hun, 
235,  the  purchaser  had  assumed  and  a^/recd  to  pay  the  m()rt^'a;,'e 
debt  as  a  condition  of  his  purchase,  and,  having  come  under  that 
obligation,  might  be  deemed  to  have  paid  in  behalf  of  ihe  husband 
or  his  estate.  The  distinction  is  referred  to  in  Jones  on  Mortgages, 
vol.  1,  §  866,  where  it  is  said  that,  if  the  mortgage  "  be  redeemed 
by  the  heir  or  purchaser,  or  by  any  one  interested  in  the  estate  who 
is  not  bound  to  pay  the  debt,  to  avail  herself  of  this  right  she  must 
contribute  her  proportion  of  the  charge  according  to  the  value  of 
her  interest."  In  Runijan  v.  Stewart,  12  Barb.  537,  the  action  was 
at  law,  and,  while  a  majority  of  the  court  sustained  the  claim  of 
dower,  it  was  explicitly  said  that  the  result  would  be  ditftTcnt 
in  ecjuity.  In  that  case  Runyan  and  his  wife  gave  a  mortgage,  and 
thereafter  the  luisband  gave  a  conveyance  to  Baker,  who  assumed 
the  payment  of  the  mortgage.  The  court  question  the  case  of 
Popkin  v.  Bumstead  (supra),  but  add  that,  in  equity.  Baker  might 
be  subrogated  and  liave  a  decree  for  contribution.  No  reference 
was  made  to  the  assunijjtion  of  the  mortgage  by  Baker.  In  Jackson 
V.  Deu'itt,  6  Cow.  316,  tiiere  was  a  release  to  the  mortgagee  and 
dower  was  denied.  In  Wedge  v.  Moore.  6  Cusli.  8,  the  whole  argu- 
ment is  founded  upon  an  assumption  of  the  mortgage  debt  bv  the 
purchaser,  which  is  argued  out  from  the  facts.  In  Piatt  v.  Jirick-. 
35  llun,  127,  the  action  was  by  the  purchaser  of  the  equity  of 
redemption,  who  was  not  bound  to  pay  tlie  mortgage  debt,  to  compel 
the  mortgagee  to  assign  his  mortgage  for  the  protection  of  the 
l)urchaser's  title  against  dower,  its  amount  having  been  tendered. 
The  court  lield  that  the  assignment  could  be  compelled  ;  that  there 
was  a  right  of  subrogation;  that  the  assignment  would  not  work 
a  merger,  and  the  mortgage  could  be  interposed  against  the  claim 
of  dower.  Of  course,  the  technical  or  formal  assignment  is  material 
only  as  showing  a  transfer  rather  than  a  paym»>nt,  and  where  no 
payment  was  intended  or  made,  but  the  mortgage  debt  subsisted 
in  the  new  mortgage  given,  the  result  must  be  the  same. 

On  the  whole,  I  am  satisfi(>d  that  where  the  purcha.xer  of  the 
equity  of  n'demption  is  not  bound  to  pay  the  m<irfgage  debt.  I)ut 
doi's,  in  fact,  pay  it  in  aid  of  his  own  title  and  estate,  whereby  it  is 


376  COMMON    LAW    RELATIONS.  [CHAP.  I. 

discharged,  the  claim  of  dower  is  subject  to  a  just  contribution. 
And  the  case  is  stronger  where,  as  here,  the  technical  payment 
consists  in  the  substitution  of  a  new  mortgage  intended  to  operate 
as  and  take  the  place  of  so  much  of  the  old  one.  The  debt  to  which 
the  dower  was  subordinated  is  changed  in  form,  but,  in  fact, 
remains,  and  the  discharged  security  may  be  revived  when  equity 
so  requires  {Gans  v.  Thieme,  93  N".  Y.  235). 

The  judgment  of  the  General  Term  and  of  the  Special  Term 
should  be  reversed  and  a  new  trial  granted,  costs  to  abide  event. 

All  concur. 

Judgment  reversed. 


New  York  Real  Prop,  Law,  §  172.  Where  a  person  seized  of 
an  estate  of  inheritance  in  lands  executes  a  mortgage  thereof,  before 
marriage,  his  widow  is,  nevertheless,  entitled  to  dower  of  the  lands 
mortgaged,  as  against  every  person  except  the  mortgagee  and  those 
claiming  under  him.^ 

§  173.  Where  a  husband  purchases  lands  during  the  marriage, 
and  at  the  same  time  mortgages  his  estate  in  those  lands  to  secure 
the  payment  of  the  purchase-money,  his  widow  is  not  entitled  to 
■dower  of  those  lands,  as  against  the  mortgagee  or  those  claiming 
under  him,  altliongh  she  did  not  unite  in  the  mortgage.  She  is 
<.'ntitled  to  her  dower  as  against  every  other  person. - 

§  175.  A  widow  shall  not  be  endowed  of  the  lands  conveyed 
lo  her  husband  by  way  of  mortgage,  unless  he  acquires  an  absolute 
estate  therein,  during  the  marriage.^ 

'  Similar  provisions  are  contained  in  the  statute  law  of  other  States. 
Maine,  Rev.  Stat.  (1883),  c.  103,. §  12;  Mass.  Pub.  Stat.  (1882),  c.  124,  §  5; 
Verm.  Stat.  (1894),  §  2529;  111.  Ann.  Stat.  (1896),  c.  41,  §  3;  Mich.  Stat. 
(1882),  §  5735;  Wis.  Ann.  Stat.  (1889),  §  21G2.  And  see  Ind.  Ann.  Stat. 
(1894),  §  2052. 

^Ind.  Ann.  Stat.  (1894),  §  2656;  111.  Ann.  Stat.  (1896),  c.  41,  §  4; 
Mich.  Stat.   (1882),  §  5736;  Wis.  Ann.  Stat.   (1889),  §  2163,  accord. 

'111.  Ann.  Stat.  (1896),  c.  41,  §  6. 


«*^«^-  1^]  WALMSLKV    J-.    MILM:.  ^i^  7 


CTTAl'TIlK"     I.    (Cunllniir,!). 


Section   1\'.     Fixtiicks. 

\val.\isij:v  v.  milnk. 

C'oiRT  OF  Common    I'i.kas,   18r>'). 
(;  C.B.  |N-.  S.J   11.-,.) 

Crowder,  J.,  now  delivered  the  judgment  of  the  court: 

This  was  an  action  by  the  a.-signecs  of  a  bankrupt,  to  recover 
from  the  defendant  certain  articles  alleged  to  be  part  of  the  bank- 
rupt's estate.  It  was  tried  before  my  Brother  Byles  at  the  last 
Spring  Assizes  at  Liverpool,  when  a  verdict  was  found  for  the 
jtlaintiir,  with  liberty  to  move  to  enter  a  verdict  for  the  defendant. 

The  facts  were  these:  Moore,  the  bankrupt,  being  the  owner  of 
a  vacant  plot  of  ground,  in  1853  mortgaged  it  in  fee  to  one  Oswald, 
who,  in  August,  1858,  sold  to  the  defendant  the  mortgaged  premises. 
Moore  became  bankrujit  in  .September,  1858.  Subsecjucntly  to  the 
mortgage,  and  before  the  .sale  in  1858,  Moore,  who  had  always  con- 
tinued in  possession,  erected  various  buildings  upon  the  plot  of 
ground,  and  set  up  all  the  articles  sought  to  be  recovered  in  this 
aclion.  They  consisted  of  a  steam-engine  and  boiler  used  for  the 
]»urpose  of  supi)lying  with  sea-water  the  baths  which  had  been 
<rected  on  the  premises;  also  a  hay-cutter  and  nuilt-mill  or  corn- 
rnishcr,  and  grinding-stones,  all  (except  the  grinding-stones)  being 
screwed  with  bolts  and  nuts,  or  otherwise  firmly  afTi.xed  to  the  several 
buildings  to  which  they  were  attached,  i)ut  still  in  such  a  manner 
as  to  be  removable  without  damage  to  the  buildings  or  to  the  things 
themselves.  The  upper  mill-stone  lay  in  the  usual  way  upon  the 
l«)wer  grinding-stonc.  All  these  fixtures  were  put  up  for  the  pur- 
)K)ses  of  trade. 

The  rule  was  argued  before  my  IJrother  Willes  and  Hyles  and 
ntyself ;  and  in  the  course  of  the  argument  a  great  many  cases  were 
<ited,  which  we  desired  time  to  consider  before  delivering  our  judg- 
tiH'nt. 

On  the  )»art   of  the  i)laintilTs  it   was  contended,   lirst.   that   the 

irticles  in  (juestion  were  not  fixtures  at  all.  because  not  permanently 

ittached  to  the  freehold,  but  simply  movable  chattels,  which  there- 

iore  passed  to  the  assignees  of  tlie  bankrupt;'  or.  secondly,  that,  if 

'  This  portion  of  the  opinion  is  omitted. 


378  COMMON    LAW    RELATIONS.  [CHAP.  I. 

fixtures,  they  were  trade  fixtures,  and  therefore  removable  by  the 
bankrupt,  and  so  would  pass  to  his  assignees. 

But,  secondly,  it  Avas  contended  on  the  part  of  the  plaintiffs  that, 
assuming  the  articles  in  question  to  have  been  so  affixed  as  not  to  be 
removable  according  to  the  general  rule  of  law,  yet  that,  as  they 
were  trade  fixtures,  they  might  be  removed,  and  so  would  pass  to 
the  bankrupt's  assignees. 

The  whole  of  the  plaintiffs'  argument  upon  this  head  was  founded 
upon  the  well-established  exception  to  the  general  rule,  that,  where 
a  tenant  puts  up  fixtures  for  the  purpose  of  trade  during  his  term, 
he  may  before  its  expiration,  without  the  consent  of  his  landlord, 
disunite  them  from  the  freehold.  The  defendant's  counsel  were 
quite  ready  to  admit  the  validity  of  the  numerous  authorities  sup- 
porting that  proposition,  and  to  concede  to  the  plaintiffs,  that,  if  the 
bankrupt  had  been  tenant  to  the  mortgagee  for  a  term,  and  the 
bankruptcy  had  happened  before  its  expiration,  the  fixtures  in 
question  were  such  as  would  have  passed  to  the  assignees.  But  they 
denied  that  any  such  tenancy  existed  in  the  present  case.  And  this 
leads  us  to  the  consideration  of  the  peculiar  relationship  existing 
between  a  mortgagor  in  possession  and  the  mortgagee,  which  it  is 
really  difficult  to  express  in  any  other  legal  terms.  A  mortgagor 
in  possession  has  been  called  sometimes  a  tenant  at  will  to  the 
mortgagee,  or  a  tenant  at  sufferance,  or  like  a  tenant  at  will :  but  he 
has  never  been  designated  as  tenant  for  any  term.  Lord  Ellen- 
borough,  in  Thunder  d.  Weaver  v.  Belcher,  3  East,  449,  called  him 
a  tenant  at  sufferance;  and  Lord  Tenterden,  in  Doe  d.  Rohey  v. 
Maisey,  8  B.  &  C.  767  (E.  C.  L.  E.  vol.  15),  3  M.  &  R.  107,  said— 
"  The  mortgagor  is  not  in  the  situation  of  tenant  at  all,  or,  at  all 
events,  he  is  not  more  than  tenant  at  sufferance;  but  in  a  peculiar 
character,  and  liable  to  be  treated  as  tenant  or  as  trespasser,  at  the 
option  of  the  mortgagee."  He  is  clearly  not  a  tenant  at  will,  because 
he  may  be  ejected  without  any  notice  or  demand  of  possession,  and 
is  not  entitled  to  the  growing  crops. 

All  the  cases,  therefore,  which  show  that,  where  a  tenant  for 
years  has  put  up  trade-fixtures,  he  may  remove  them  before  his 
tenancy  expires,  have  no  application  to  the  case  at  Bar.  But  two 
cases  of  mortgagee  and  mortgagor  in  possession  were  cited  by  the 
plaintiffs'  counsel  as  strongly  supporting  their  clients'  title  to  the 
verdict.  One  was  Trappes  v.  Harter,  2  C.  &  M.  177,  decided  by 
the  Court  of  Exchequer,  in  which  Lord  Lyndhurst  delivered  the 
judgment  of  the  Court;  and  the  other  was  Waterfall  v.  Peningstone, 
G  Ellis  &  B.  876  (E.  C.  L.  R.  vol.  88),  in  which  our  present  Chief 
.Justice,  then  Mr.  Justice  Erie,  delivered  the  judgment  of  the  Court 
of  Queen's  Bench. 

Trappes  v.  Ilarter  was  a  decision  in  favour  of  the  assignees  of 


SKC.   IV.J  WALMSLKY    /•.    MII.M:.  HTD 

a  bankriii»t  luort^a^or  in  possession,  upon  the  ^^'roiind  that  tin- 
mortgage  did  not  pass  the  fixtures  in  (piestion.  and  was  not  intended 
hy  tlie  parties  to  jjass  tlieni.  The  mortgage  enumerated  various 
fixtures,  but  did  not  refer  to  the  fixtures  in  dispute;  and  this  omis- 
sion, togetlier  with  oilier  cireumstanees  in  the  ease,  induced  th(! 
court  to  he  of  opinion  that  they  were  intentionally  omitted  in  the 
mortgage  deed,  and  therefore  did  not  pass  hy  it.  'I'hat  case,  tlien, 
"must  be  regarded  as  having  been  decided  on  its  own  peculiar 
circumstances,"  as  stated  in  the  note  apjicnded  to  it,  and  cannot  he 
taken  as  an  authority  to  govern  us  in  the  case  before  us.  The  other 
case,  of  Waterfall  v.  PeuiiKjsionc,  was  also  that  of  a  bankrui)t  mort- 
gagor in  possession  and  a  mortgagee,  where  the  (juestion  was, 
whether  the  bill  of  sale  of  the  fixed  machinery,  drawn  in  the  shape 
of  a  mortgage,  re(|uired  registration  under  the  17  &  IS  Vict.  c.  3G. 
This  partly  involved  the  consideration  as  to  whether  the  fixtures 
were  to  he  deemed  goods  and  chattels  within  that  act,  and  IIcUaivcH 
V.  Eastwood^  was  cited  in  the  argument,  and  recognised  as  a  valid 
authority  by  the  court.  But  the  species  of  mortgage  was  of  a  peculiar 
description.  There  had  been  a  jirior  mortgage  of  {ho  premises  with 
the  fixtures  then  thereon.  Afterwards,  for  a  further  consideration, 
a  mortgage  was  made  of  the  fixtures  which  had  been  subsequently 
annexed,  by  themselves,  and  the  court  was  of  opinion  that  they  did 
not  pass  by  the  prior  mortgage  "because  the  tenor  of  the  instru- 
ment shows  that  the  parties  did  not  so  intend;"  and  they  held  that 
the  separate  mortgage  of  these  fixtures  was  witliin  the  17  &  18  Vict. 
c.  3G,  requiring  the  deed  to  be  registered;  and,  for  want  of  such 
registration,  they  decided  that  the  fixtures  passed  to  the  assignees. 
In  the  present  case,  however,  there  do  not  appear  any  circumstances 
tending  to  show  an  intention  existing  between  Moore,  the  bankrupt, 
and  his  mortgagee,  that  the  fixtures  annexed  subse(|uently  to  the 
date  of  the  mortgage  should  not  become  part  of  the  mortgaged 
estate ;  and,  in  the  absence  of  such  intention,  the  current  of  authori- 
ties in  the  bankruptcy  court  shows  that  such  an  annexatitm  of 
fixtures  would  enure  to  the  benefit  of  the  mortgagee. 

In  Ex  purlc  lielchcr,  1  Deac.  &  Ch.  703,  which  was  dccitled  in  the 
Court  of  Review  in  1835,  it  was  held  that  fixtures  annexed  to  the 
freehold  after  the  mortgage  by  the  mortgagor  in  jxissession,  and 
which,  as  between  landlord  and  tenant,  would  have  lu'cn  removable 
if  put  uj)  by  the  tenant,  became  |)art  of  the  freehold,  and  did  not 
pass  to  the  assignees  of  the  bankrupt  mortgagor.  The  Chief  Judge 
(afterwards  Mr.  Justice  Krskine)  there  says,  after  adv«>rting  to 
the  relaxatifin  of  the  general  rule  of  law  in  favour  of  trade  fixtures 
put  up  by  th(>  tenant,  '*  Hut  that  is  not  the  present  case.  Again,  it 
is  said  that  the  propi-rty  in  (piestion  did  not  pass  by  the  mortgage 

'  (■>  K\(li.  20.'.. 


380  COMMON    LAW    RELATIONS.  [CIIAP.  I. 

deed.  Xow.  it  always  appeared  to  me  that,  where  the  owner  of  the 
inheritance  affixes  property  to  it,  it  becomes  a  fixture  in  the  general 
sense  of  the  term,  and  part  of  the  freehold ;  and,  if  the  inheritance 
be  afterwards  sold  or  let,  it  goes  with  the  freehold;  and  I  confess 
I  see  no  distinction,  for  this  purpose,  whether  the  deed  be  one  of 
absolute  conveyance,  lease,  or  mortgage.  A  mortgage,  therefore, 
made  by  the  owner  of  the  inheritance,  will,  without  naming  them, 
pass  all  the  fixtures  thereon."  And,  in  another  part  of  his  judg- 
ment, he  says :  "  Again,  it  is  urged  that,  as  to  those  articles  which 
were  attached  after  the  execution  of  the  mortgage  deed,  they  could 
not  pass  to  the  mortgagee.  But  there  has  not  been  cited  any  author- 
ity, or  even  dictum,  for  such  a  proposition.  I  confess  I  know  no 
case  which  goes  so  far  as  to  determine,  or  even  to  intimate  an 
opinion,  that,  where  a  mortgagor  in  possession  alters  the  premises 
by  addition  or  otherwise,  the  mortgagee  shall  not  take  the  benefit 
of  such  alteration.  I  can  find  no  distinction,  therefore,  substan- 
tially, between  those  which  were  affixed  before  and  those  affixed 
after  the  date  of  the  mortgage  deed.  In  that  point  of  view  also,. I 
am  of  opinion  that  all  the  fixtures  alike  passed  to  the  mortgagee. 
There  is  also  a  very  elaborate  and  learned  judgment  of  Mr.  Com- 
missioner Holroyd,  reported  in  2  Mont.,  D.  &  De  G.  443  (1841),  in 
which  the  whole  subject  is  fully  considered,  and  a  similar  opinion 
very  clearly  expressed.  To  the  same  purport  are  the  decisions  in 
the  Court  of  Review,  Ex  imrtc  Broadwood,  1  Mont.,  D.  &  De  G.  631 
(1841)  ;  Ex  parte  Price,  2  Mont.,  D.  &  De  G.  518  (1842)  ;  Ex  parte 
Bentley,  2  Mont.,  D.  &  De  G.  591  (1842)  ;  Ex  parte  Cotton,  2  Mont., 
D.  &  De  G.  725  (1842),  and  Ex  parte  Tagart,  1  De  Gex,  531 
(1847).    .    .    . 

We  think,  therefore,  that,  when  the  mortgagor  (who  was  the  real 
owner  of  the  inheritance)  after  the  date  of  the  mortgage  annexed 
the  fixtures  in  question  for  a  permanent  purpose  and  for  the  better 
enjoyment  of  his  estate,  he  thereby  made  them  part  of  the  freehold 
which  had  been  vested  by  the  mortgage  deed  in  the  mortgagee ;  and 
that,  consequently,  the  plaintiffs,  who  are  assignees  of  the  mort- 
gagor, cannot  maintain  the  present  action. 

The  verdict,  therefore,  must  be  entered  for  the  defendant. 

Rule  absolute} 

'  Winslow  V.  Merchants'  Insurance  Co.,  4  Met.  (Mass.)  300  (1842)  ;  Rob- 
erts V.  Dauphin  Bank,  19  Pa.  St.  71  (1852)  ;  Foote  v.  Oooch,  96  N.  C.  265 
(1887)  ;  McFadden  v.  Alle7i,  134  N.  Y.  489  (1892),  accord.  So  are  the  cases 
generally.     But  see  Clore  v.  Lambert,  78  Ky.  224   (1879),  contra. 


Kfi .  IV.]  CLAKV    r.   «)\\  i;N.  381 

('i.Ai;^   \.  ()\\i:n. 

SLTKEME   JlDKIAI.    Col  i;i    <>l     M  \ssA(  II I  >i:  1  Ts.    I  Slid. 
(  l."»  dm  I/.  .")•.*•.'. ) 

Action  of  lort  liy  llu'  assij^quH-  in  iiiMilvciicy  (tf  Ilciii.iii  D.  Bur^'- 
hardt,  for  tlu*  conversion  of  four  walcr-wliccls.  with  the  shafts, 
couplings  and  other  machinery  connected  with  them.  At  the  trial 
in  the  suju'rior  court  the  plaintiff  introduced  evidence  of  the  follow- 
ing fads  : 

In  18.J1  lUirgliardi  contracted  with  .lolm  K.  I'otter.  who  tluii 
owned  certain  real  estate  in  Harrington,  to  furnish  the  water-wheeln 
and  machinery,  and  to  set  them  up  in  wheel-jnts  to  he  prepared 
hv  I'otter  on  the  premises,  for  the  sum  of  .^.■{..'jOO,  of  which  ^oOO  was 
paid  at  once,  and  the  halanee  was  to  be  paid  on  the  completion  of 
the  work,  in  notes  secured  i)y  a  mortgage  of  the  property,  or  hy  a 
mechanic's  lien.  In  the  latter  part  of  IHo  I,  Burghardt,  in  pursuance 
'f  this  contract,  constructed  the  wIkm-Is  in  ([uestion.  which  were  matle 
>(  cast-iron  and  placed  in  pairs  upon  cast-iron  shafts,  and  set  them 
up  in  penstocks  and  a  ilumc.  the  frame  of  which  reste(l  on  a  stone 
foundation  built  hy  Potter  in  all  res])ects  like  the  foundation  <»f 
a  building.  The  wheels  were  intended  for  the  purpose  of  driving 
a  j)ai)er-niill  on  the  premises;  they  were  outside  of  th<'  paper-mill 
building,  but  the  mill  could  not  be  used  without  them. 

In  January,  1855,  before  the  completion  of  the  wheels  and  liv- 
tures,  the  mill  was  destroyed  by  fire;  I'otter  failed  and  al)andone<l 
the  work;  and  Burghardt  never  fuKilled  his  contract  and  never  n- 
(civcd  any  payment  or  security,  except  the  $')()(>  j)aid  at  the  time  nf 
making  the  contract ;  never  delivered  the  wheels,  except  in  so  far  a-; 
setting  them  uj)  as  above  described  aniounicd  to  a  delivery;  lU'Vrr 
ofTered  to  return  the  money  wliich  he  had  received,  and  never  called 
on  I'otter  for  any  j)aymcnt.  When  the  contract  was  made  the  prem- 
ises were  subject  to  certain  mortgages,  which  were  afterwards 
assigned  to  the  defendants,  who  had  previously  hail  notice  that 
Burghardt  claimed  to  own  the  wheels  and  machinery,  and  wh<».  a 
vear  after  the  fire,  took  ])ossession  of  tin*  premises,  which  wen-  in  iho 
ondition  in  which  the  lire  had  left  them,  to  foreclose  the  mortgage-;, 
ind  afterwards  purchased  the  equity  of  redemption. 

rpon  this  evidence  Putnam,  .1.,  ruled  that,  the  wheels  having 
been  placed  on  the  premises  after  the  execution  of  the  mortgage^, 
the  action  could  not  be  niaintainrd.  'i'he  plaint itT  then  olTend  t  > 
show  that,  by  tiie  agreement  between  l^urgbardt  and  Poller,  tl  ■• 
wheels  were  to  remain  the  property  of  the  former  tmlil  complete  I 
and  paynitMit   fi>r  them  secured  by  mortgage;  but  the  judge  ru!'  1 


388  COMMON    LAW    KELATIONS.  [CIIAP.  I. 

tliat,  even  if  ^hat  were  proved,  the  plaintiff  could  not  maintain  his 
.action,  and  directed  a  verdict  for  the  defendants,  which  was  re- 
turned, and  the  plaintiff  alleged  exceptions. 

Hoar,  J.  It  is  conceded  in  the  argument  of  the  plaintiff's  counsel, 
that  the  mill-wheels,  for  the  value  of  which  this  action  was  brought, 
must  be  considered,  as  between  mortgagor  and  mortgagee,  fixtures 
belonging  to  the  realty.  They  were  essential  to  the  operation  of  the 
mill,  and  were  intended,  when  completed  and  paid  for,  to  be  perma- 
nently attached  to  the  land.  If  the  mortgagor  had  himself  annexed 
them  to  the  freehold,  there  could  be  no  doubt  that  the  mortgagee 
would  hold  them  under  his  mortgage,  and  that  they  could  not  be 
severed  without  his  consent  (WmsJoiv  v.  Merchants'  Ins.  Co.,  4  Met. 
306).  But  it  is  contended  that  the  mortgagor  being  in  possession, 
and  having  agreed  with  Burghardt  that  the  wheels  should  remain 
tlie  personal  property  of  the  builder  until  they  were  completed  and 
provision  made  for  paying  for  them,  the  wheels,  having  been  set  up 
under  this  agreement,  could  not  be  claimed  and  held  by  the  mort- 
gagee. 

If  this  position  were  tenable,  it  would  follow  that  the  mortgagor 
could  convey  to  another  a  right  in  the  mortgaged  premises  greater 
than  he  could  exercise  himself.  But  it  is  well  settled  that,  although 
the  mortgagor,  for  some  purposes,  and  as  to  all  persons  except  the 
mortgagee,  may  be  regarded  as  the  absolute  owner  of  the  land,  yet 
the  title  of  the  mortgagee  is  in  all  respects  to  be  treated  as  para- 
njount.  The  mortgagor  cannot  make  a  lease  which  will  be  valid 
against  the  mortgagee;  and  if  the  mortgagee  enter,  neither  the 
mortgagor  nor  his  lessee  will  be  entitled  to  emblements  (Pow. 
Mortg.,  c.  7 ;  Keech  v.  Hall,,  1  Doug.  21 ;  Lane  v.  King.  8  Wend.  584 ; 
Mayo  V.  Fletcher,  14  Pick.  525).  And  we  think  it  is  not  in  the 
power  of  the  mortgagor,  by  any  agreement  made  with  a  third  person 
after  the  execution  of  the  mortgage,  to  give  to  such  person  the  right 
to  hold  anything  to  be  attached  to  the  freehold,  which  as  between 
mortgagor  and  mortgagee  would  become  a  part  of  the  realty.  The 
entry  of  the  mortgagee  would  entitle  him  to  the  full  enjoyment  of 
the  premises,  with  all  the  additions  and  improvements  made  by  the 
mortgagor  or  by  his  authority. 

Whether  a  person  putting  a  building  upon  land  by  license  of  the 
mortgagor,  under  such  circumstances  that  it  would  remain  his 
personal  property  as  against  the  mortgagor,  would  be  allowed  in 
equity  to  maintain  a  bill  to  redeem,  if  the  mortgagee  should  enter, 
is  a  question  involving  very  different  considerations.  A  tenant 
under  a  lease  may  redeem,  to  protect  his  interest  (Rev.  Sts.,  c.  107, 
§  13;  Bacon  v.  Bowdoin,  22  Pick.  401). 

It  has  been  suggested  that  the  defendants  cannot  avail  themselves 
of  their  title  as  mortgagees,  because  they  acquired  the  title  of  the 


•^Kr.   IV. 1  Cliiri'lA     /•.    MoltKISON.  383 

inortgagor  also,  and  tluTcforc  tlic  morlgnges  are  to  be  regarded  as 
paid  or  merged.  But  it  has  been  often  deeided  that  the  purchaser 
<ir  an  equity  of  redemption  may  take  an  assignment  of  the  mortgage, 
and  may  keep  tlie  legal  and  e(iuital)lc  titles  distinct,  at  his  election, 
if  lu!  has  any  interest  in  so  doing,  so  that  they  shall  nut  merge 
by  unity  of  possession.  And  a  release  of  an  equity  of  redemption 
operates  as  an  extinguishment  of  the  ecpiity  of  redemption,  and  not 
as  a  merger  of  the  estate  conveyed  by  the  mortgage  (Loud  v.  Larip, 
•s  Met.  517). 

Exceptions  overruled.^ 


CKIPPEX  V.  MORRISON. 

SUPUK.MK    ("orWT    OF    MirilKI.VX,    1864. 

(i;;  Mi<h.  ■!:].) 

Error  to  Branch  Circuit. 

Trover  for  steam  engine,  etc.  The  case  wa.s  tried  bV  the  Court, 
who  found  the  facts,  and  rendered  judgment  upon  the  finding  for 
the  plaint iirs.  The  facts  are  sulllcicntly  stated  in  the  opinion  of  the 
Court. 

C.VMi'BKLL,  J.  Defendants  in  error  brought  ar.  action  of  trover 
for  the  conver.=!ion  of  a  steam  engine  and  its  appurtenances,  which 
tbev  claimed  under  the  following  circumstances:  Francis  A.  Hall 
mortgaged  certain  lands  in  Batavia,  Branch  County,  amounting 
to  572  acres,  to  one  ]Ii.<cock,  October  22,  1850,  for  $4,000;  and 
this  money  was  borrowed  under  a  verbal  agreement  that  Hall 
should  erect  a  saw-mill  on  the  premises.  On  the  same  day.  Hall 
eontraete(l  with  defendants  in  error  to  build  and  put  up  the 
engine  in  (piestion,  he  agreeing  to  ])uf  up  a  suitable  mill-frame 
and  engine-hou.<e  to  receive  it,  and  upon  its  acceptance  to  execute 
back  a  chattel  mortgage  on  the  engine,  and  a  mortgage  upon  the 
land,  which  was  already  subject  to  the  Iliscock  mortgage.  It  was 
expressly  agreed  that  the  engine  and  aj>purtenances  should  eon- 
tin\ie  to  be  the  property  of  defendants  in  error,  until  they  slioubl 
receive  the  mortgage  securities  on  the  chattels  and  on  the  real 
estate.  On  .\pril  15,  1S57,  the.se  securities  were  delivered,  the 
machinerv  having  I)een  acce|)led.  They  W(>re  properly  filed  and 
re((M<leil,  and  kept  alive  Ijlj  suit.     Oetol)cr  10.   IS.*)7.  Iliscock  com- 

'  Mutjilur  V.  II  a  firs.  1.">J  Mass.  2-2H  (1S!»0)  ;  H,iss  Fnumlit/  Works  v.  (hit- 
Irntinr.  '.>!)  Iiid.  .'".•J.'i  (1SS4)  :  runninijhitm  v.  CiiiitoH,  9G  Cln.  48'.)  (185>5). 
nrconl. 


384  COMMON    L.\.W    RELATIONS.  [CII.VP.   1. 

menced  a  foreclosure  suit^  making  defendants  in  error  parties  with 
the  other  persons  interested  in  the  land.     A  decree  was  obtained 
December  31,  1858,  for  the  amount  of  $820,  then  due ;  and  June  25, 
1860,  a  further  decree  was  obtained  for  installments  subsequent  to 
the  first  decree.    Before  the  first  decree,  and  in  October,  1857,  about 
two  weeks  after  the  foreclosure  suit  was  commenced,  Hiscock  as- 
signed $3,800.4-1  of  the  mortgage  money  to  one  William  P.  Morloy, 
who  was  not  a  party  to  the  bill.    August  24,  1858,  and  before  any 
decree,  Morley  assigned  to   Crippen    (the  defendant  below,   and 
plaintiff  in  error),  informing  Crippen  that  he  had  no  interest  in 
the  machinery.    December  31,  1859,  Hiscock  assigned  the  remaining 
interest  in  the  mortgage  to  Crippen.     Prior  to  July  26,  1858,  and 
before  Crippen  obtained  any  interest  in  the  mortgage,  the  machinery 
was  taken  down  and  stored  in  the  mill  building.     One  Laman  then 
became  owner  of  the  property  and  machinery  mortgaged,  and,  in 
Crippen's  presence,  promised  to  pay  the  Hiscock  mortgage  and  the 
claim  of  defendants  in  error.     Laman  subsequently  put  up   the 
machinery  again  in  the  mill.     October  4,  1860,  Crippen  bid  in  the 
lands  on  the  foreclosure  sale,  and  the  sale  was  confirmed  October 
30th.    He  took  possession  of  everything,  and  subsequently  took  down 
the  machinery,  using  a  part  in  another  mill,  and  storing  the  rest. 
In  November,  1860,  a  demand  was  made  for  the  machinery  by 
defendants  in  error,  at  the  mill.    In  February,  1861,  a  further  de- 
mand was  made  at  Crippen's  barn,  where  some  of  the  property  was 
then  stored.     He  made  no  reply  whatever  to  either  demand.     The 
Circuit  Court  gave  judgment  against  Crippen  for  a  conversion. 

The  rules  which  apply  to  personal  property  after  it  has  been  put 
to  any  use  in  connection  with  land  are  not  uniformly  agreed  on,  and 
any  attempt  to  harmonize  all  the  authorities  would  be  idle.  We 
must,  in  all  these  cases,  adopt  such  conclusions  as  appear  most  in 
accordance  with  the  general  doctrines  of  the  law. 

At  the  common  law,  personal  property,  as  a  general  rule,  never 
lost  its  identity  in  realty,  unless  so  closely  incorporated  with  it  that 
it  could  not  be  separated  without  injury  to  the  freehold.  And  evfn 
under  the  peculiar  preference  given  by  the  English  law  to  trade 
over  agricultural  improvements,  buildings  erected  for  farming 
uses,  although  resting  upon  foundations  of  masonry,  were  not  con- 
sidered as  real  estate  as  against  the  tenant,  if  capable  of  being 
removed  without  injury.  In  Wanshrough  v.  Maton,  4  Ad.  &  El.  884,. 
it  was  held  expressly  that  a  barn  resting  upon  a  masonry  foundation 
and  capable  of  removal,  was  no  part  of  the  freehold,  and  was  there- 
fore, in  all  respects,  the  chattel  of  the  tenant  who  built  it.  This 
case  is  based  upon  a  former  decision  in  Rex  v.  Ollei/,  1  B.  &  Ad,  161, 
where  the  question  did  not  arise  between  landlord  and  tenant,  but 
was  decided  upon  the  nature  of  the  property  itself.    There  a  person 


''^•''-  '^1  CHiri'KN   c  MoKKisoy.  385 

owning  lanil  upon  wliitli  was  a  windmill,  consisting,'  of  a  wooden 
mill  and  its  niacliint-ry,  resting  upon,  but  not  fastened  to,  a  brick 
foundation,  leased  the  land  and  the  mill  to  a  tenant.  The  rental 
value  of  the  whole  property  was  thirty  pounds,  of  which  more  than 
twenty  pounds  represented  the  rent  of  (he  mill.  It  was  held  that 
the  mill  was  no  i)art  of  the  realty,  and  that  the  tenant  could  not  U- 
regarded,  therefore,  as  holding  a  tenement  of  the  value  of  ten 
pounds. 

In  regard  to  erections  made  by  tenants  for  purposes  of  trade  or 
manufacture,  an  exception  was  early  raised  in  their  favor,  allowing 
them  to  remove  erections  made  for  those  purposes,  although  actually 
annexed  to  the  freehold  in  a  substantial  way.  But  inasmuch  as  these 
erections  had,  during  the  tenancy,  become  actual  parts  of  the  free- 
hold, it  was  usually  necessary  for  the  tenant  to  remove  them  before 
restoring  the  possession  to  the  landlord,  as  he  could  not  afterwards 
enter  upon  and  remove  that  which  had  become  part  of  the  land ; 
although,  during  his  possession,  he  was  not  liable  for  such  waste  as 
would  arise  by  such  removal  of  what  he  had  himself  erected.  If. 
however,  the  estate  of  the  tenant  was  indeterminate,  the  property  in 
the  improvements  was  not  divested  by  the  lapse  of  the  tenancy,  and 
they  might  be  removed  afterwards  (Bennett  v.  Nichols,  12  Mich.  R. 
22 ;  Onhbony  v.  Jones,  19  X.  Y.  234 ;  Taylor.  Landl.  and  Ten.,  g  552  ; 
Van  Ness  v.  Pacard,  2  Pet.  137;  Penton  v.  Rohnrt,  2  East  R.  88). 
And  in  Holmes  v.  Trempcr,  20  J.  R.  29,  it  was  held  that  if  a  tenant, 
after  his  term  expired,  entered  upon  the  land  and  removed  a  cider 
mill,  although  he  was  liable  in  trespass  for  the  entry,  he  was  not 
liable  in  replevin  for  the  ])roperty,  because  the  property  was  not 
relinquished  by  his  giving  up  possession  of  the  land,  unless  such 
was  his  design.  A  similar  rule  was  laid  down  in  Lmrrencr  v.  Knni). 
1  Duer  R.  3G3. 

There  can  be  no  dispute  l)ut  thai,  in  this  country  and  in  England, 
many  cases  have  been  deeided  (and  we  are  not  disposed  to  question 
their  propriety)  which  hold  that  personal  chattels,  although  sever- 
able without  material  injury  to  the  freehold,  may  yet  pass  as  realty 
if  apparently  suitable  and  actually  designed  to  be  permanently 
attached  to  the  land.  These  cases  are  many  of  them  founded  upon 
the  change  of  business,  whereby  motive  j)ower,  which  formerlv 
depended  on  the  freehold  itself  by  the  imj)rovement  of  water 
privileges,  has  now  become  dependent  on  steam  engines,  which  are 
l)er.sonal  chattels.  The  doctrine  that  held  all  the  machinery  of 
a  water-mill  to  be  fixtures  was  based  upon  the  idea  that  it  was 
all  designed  to  obtain  the  b(>ne(lcial  u.se  of  the  realty.  This  jirinciple 
cannot  strictly  apply  to  steam  machinery,  where  everything  is 
•ally  dependent  on  that  which  is  in  its  natiire  personal;  and  it  is 
not  surprising  that  in  seeking  to  apply  old  rules  to  new  circum- 


386  '  COMMON    LAW    KELATIOXS.  [cilAr.  L 

stances,  courts  should  not  have  always  been  consistent.  Mills  and 
factories  are  generall}'  set  up  as  entireties  for  the  purpose  of  grind- 
ing, sawing  and  manufacturing;  and  3'et,  according  to  the  current 
of  modern  decisions,  the  ultimate  purpose  is  disregarded ;  and  while 
the  steam  engine,  which  is  but  an  incident  to  the  main  purpose,  and 
which  is  often  removed  and  replaced  without  disturbing  the  rest, 
is  presumed  to  be  realty,  the  looms  and  other  permanent  machinery, 
for  the  accommodation  of  which  the  building  was  chiefly  erected, 
<ire  at  the  same  time  regarded  as  mere  chattels.  Such  an  arbitrary 
rule  is  unreasonable,  and  contrary  to  the  general  usage  of  business, 
andj  if  allowed  to  prevail  over  the  actual  agreements  of  parties, 
would  work  great  injustice. 

But  we  think  that,  with  very  few  exceptions,  the  authorities 
-agree  that  there  is  no  inflexible  rule  on  the  subject,  and  that  every 
presumption  which  might  arise  in  the  absence  of  an  agreement 
may  be  defeated  by  the  agreement.  In  Wood  v.  Heivctt-,  8  Q.  B. 
913,  the  whole  doctrine  is  put  upon  an  intelligible  and  sensible 
basis.  In  that  case,  a  fender,  or  water-gate,  was  built  in  masonry 
upon  the  lands  of  a  party,  who  removed  it,  and  who  was  sued  in 
trespass  by  the  proprietor  of  a  mill  upon  other  lands,  on  the  ground 
that  it  was  his  property.  The  defendant  claimed  that  it  was  a  part 
of  his  freehold.  Lord  Denman  said :  "  The  question  is  whether, 
because  the  fender  in  this  case  had  been  placed  on  the  defendant's 
soil,  it  became  his  property  as  a  necessary  consequence  of  its  posi- 
tion. I  am  of  opinion  that  such  a  consequence  never  follows  of 
necessity  where  the  chattel  is  separable."  ..."  The  decision  in 
Mant  V.  Collins  is  so  far  an  authority  in  point  of  law  as  it  shows 
that,  in  a  case  of  this  kind,  it  is  always  open  to  inquiry  how  the 
article  came  to  be  in  the  place  in  which  it  is  found,  and  what  the 
parties  intended  as  to  its  use;  and  the  respective  rights  may  be 
determined  by  the  evidence  on  these  points."  ..."  The  argument 
from  the  nature  of  the  thing  decides  nothing."  Patteson,  J.,  said : 
"  The  question  does  not  turn  upon  any  general  doctrine  of  law,  but 
upon  the  evidence  in  the  case.  The  general  rule  respecting  annexa- 
tions to  the  freehold  is  always  open  to  variation  by  agreement  of 
parties;  and  if  a  chattel  of  this  kind  is  put  up  so  that  the  owner 
can  remove  it,  I  do  not  see  why  it  should  necessarily  become  part 
of  the  freehold,  or  why  it  should  not  be  removable  when  the  owner 
thinks  fit,  if  it  appear  to  have  been  so  agreed."  The  case  of  Mant 
V.  Collins  decided  that  a  pew  door  was  not  of  necessity  a  part  of  the 
inheritance.  In  Waterfall  v.  Fenistone,  37  Eng.  L.  &  Eq.  156, 
Avhere  the  owner  of  a  mill  mortgaged  the  mill,  and  some  years  after- 
wards made  a  second  mortgage  of  the  mill  and  other  machinery 
since  put  up  in  it  to  the  same  person,  and  subsequently  made  a 
transfer  of  machinery  io  another  person,  and  l)ecame  l)ankrupt,  it 


^^'-   '^1  C'UII'I'KN    r.    MOKItlSOV.  387 

was  held  till-  iiiacliiiicrv  did  licit  pass  Ity  (lit-  real  cdtate  mortgages, 
and,  till'  Ijill  of  sale  licini^  iiu'ireclual  for  non-compliance  with 
statute  re^'ulatioiis,  the  assi^Miecs  in  liankruptc y  took  the  property 
as  undisposed  of.  It  was  iiiacliinery  put  up  for  trade  j)urposes  by 
llie  landowner,  and  sueli  as  would  have  been  presumed  lixtures  had 
not  the  party  shown  a  dilferent  intent. 

In  Molt  V.  rnliin'r.  1  X.  V.  Hep.  r.r>l.  it  was  ludd  that  rails  huilt 
into  a  fence,  with  the  untlerstanding  that  they  might  be  removed. 
<lid  not  pass  to  the  vendee,  altiiougli  j)urchasing  and  taking  posses- 
sion without  notice.  And  many  cases  are  cited  to  show  that  owner- 
ship of  the  soil  by  one  is  not  incompatible  with  ownership  of  any 
<'rection  ujion  it  l>y  another.  In  this  case,  also,  the  owner  of  the 
rails  was  allowed  to  recover  against  the  purchaser  of  the  land  for 

nverting  them  the  year  after  ho  purchased.  There  seems  to  be 
iio  limitation  concerning  the  kind  of  severable  chattel  which  may 
be  owned  l)y  one  person  upon  another's  land.  See  Dame  v.  Dame. 
,^S  X.  ir.  h\):  Lamnstn-  v.  Eve,  5  (*.  B.  (x.  s.)  717;  Duck  v. 
liradilyU,  13  Price,  l."),")-.  Tvappcs  v.  Ilnrler,  2  ('.  &  M.  153;  Rogers 
x.WoocWitri/,  1")  Piek.  K.  i:>(;;  Smilli  v.  Benson,  1  Hill  R.  170; 
r.nsscn  V.  Eirhnnh,  1  Fairf.  131  :  Van  Xess  v.  Pacard.  2  Pet.  137. 

The  ca.se  of  Ford  v.  Cobb,  '.?0  X'.  Y.  314,  in  some  of  its  principal 

atures.  resembles  the  case  now  before  us.  Salt  kettles  and  grates 
iid  arch  fronts  were  purcha.sed  to  be  set  up  in  brick  arches,  and 

rhattel  mortgage  was  given  Itack  reciting  these  facts,  and  was 
duly  recorded.  The  land  was  then  sold  to  a  jnirchaser  without 
notice.  It  was  held  that  the  kettles  nevi-r  became  realty,  and  that 
the  chattel  mortgage  title  must  pn-vail.  The  case  of  Godard  v. 
Oonld.  11  Barb.  S.  ('.  R.  (>(i2,  was  entirely  similar  in  principle. 

There  are  cases  in  some  States,  particularly  in  Massachusetts, 
uhich  are  not  consistent  with  these  decisions.  But  when  we  con- 
sider the  original  common  law  doctrine,  re(|uiring  an  actual  incor- 
poration into  the  freehold,  and  tlu'  jjcculiar  rules  of  policy  which 
have  since  allowed  articles  which  are  personal  in  their  nature  to  l)e 
annexed  by  construction,  we  think  that  Y\\\i'  is  the  safest  which 
allows  personal! V  to  conlinne  as  su<h  until  changed  by  design  into 
realty. 

So  long  as  a  chattel  nuiy  be  removed  as  such  from  real  estate,  and 

-  in  a  condition  to  be  removed  withoiit  material  injury  to  the 
leehold,  it  is  dillicult  to  see  by  what  process  the  title  to  it  can  be 
ivested  from  its  ori<:inal  owner  without  some  sale  or  transfer,  or 
■me  acquiescence  in  the  sale  or  transfer  nuide  by  another,  under 
rcumstances  going  to  create  an  esto|>pi'l.  The  cases  in  Xew  York 
old  distinctly  that  the  chattel  doi^s  not  (Case  to  be  a  chattel,  and 
''>es  not  therefore  pass  to  a  Jtnna  fide  j)urcha.ser  of  the  land.     T\\U 

-  in  accordance  with  thc^  usual  rub>  contxrning  separate  chattels, 


388  COMMON    LAW    RELATIONS.  [CHAl-.  I. 

a  bona  fide  purchaser  having  no  claim  against  Ihc  true  owner. 
Whether  this  rule  should  be  universal  is  not  material  in  the  case 
before  us,  for  there  has  been  no  bona  fide  purchase,  and  therefore 
it  is  not  necessary  to  express  an  opinion  on  it.  The  machinery  was 
not  put  up  when  the  original  mortgage  was  given,  and  Crippeu,, 
when  he  first  obtained  his  assignment  from  Morlcy,  was  informed 
there  was  no  claim  on  the  machinery.  He  could  not  divest  himself 
of  the  force  of  this  notice. 

It  is  claimed,  however,  that,  by  the  rules  of  law,  fixtures  made 
after  a  mortgage  belong  to  the  mortgagee,  and  that  the  mortgagor 
has  not  such  an  estate  as  will  authorize  any  one  to  make  an  agree- 
ment with  him  touching  the  use  of  the  land.  Under  the  English 
rule,  which  gives  the  mortgagee  an  immediate  right  of  possession, 
the  mortgagor  cannot  give  others  a  right  he  does  not  possess  him- 
self ;  and  should  he  erect  improvements  which  could  not  be  severed 
without  injury,  they  must  undoubtedly  continue  on  the  premises. 
Improvements  made  by  him  would  be  presumed  to  be  made  for  the 
benefit  of  the  inheritance.  But  we  think  those  cases  which  make 
this  presumption  absolute,  not  only  as  against  him,  but  as  against 
other  owners  of  chattels  placing  them  on  the  premises,  go  beyond 
reason,  and  divest  property  without  any  necessity  or  propriety, 
when  its  nature  has  not,  in  fact,  been  changed  {Waterfall  v.  Peni- 
stone,  supra). 

Neither  do  we  consider  the  position  of  a  mortgagor  the  same  now 
as  it  was  before  the  statutes  forbidding  possessory  actions  against 
him.  Cases  have  been  cited  to  us  which  hold  that  this  statute  only 
takes  away  a  remedy,  but  leaves  the  right  of  possession  unimpaired 
in  the  mortgagee.  With  great  respect  for  the  tribunals  so  deciding, 
we  cannot  accept  this  interpretation.  It  destroys  all  the  value  of 
the  provision,  if  it  allows  a  right  of  entry  against  the  will  of  the 
mortgagor.  In  Miuuhj  v.  Munroe,  1  Mich.  E.  G8,  it  was  held  the 
statute  was  void  as  to  former  mortgagees;  a  ruling  which  would 
have  been  out  of  place,  had  the  law  not  reached  something  more 
than  a  mere  remedy.  This  decision  has  been  afhrmed  on  numerous 
occasions  since.  In  Baker  v.  Pierson,  5  Mich.  R.  456,  it  was  held 
by  this  court  that  a  prior  mortgagee,  who,  during  a  foreclosure  suit 
of  a  subsequent  mortgage,  obtained  possession  from  the  mortgagor,, 
could  not  retain  possession  after  a  sale  on  that  foreclosure.  To 
this  opinion  we  adhere,  as  in  accordance  with  the  statute.  The 
mortgagor,  therefore,  until  actual  foreclosure,  is  in  possession 
by  right,  and  not  by  sufferance,  and  may  make  such  arrangements 
for  the  use  of  the  property  as  any  other  person  could  during  his^ 
term.  The  machinery  never  became  any  part  of  the  realty :  Crippon 
was  not  misled  l)y  appearances,  and  had  no  right  to  dispose  of  it. 

It  is  also  objected  that  defendants  in  error  are  barred  of  their 


-»'  •   IV.]  CRiri'KN    r.    MoUltlSON'.  38'J 

<  laiins  iM'c-ausi'  tlicy  weio  parties  to  the  forodosun'  suit.  But  as 
llicy  had  niorl'^'agcs  on  the  real  estate,  they  were  j)n)|M'r  d(-'feii(hints 
oil  that  ground.  Wi-  cannot  presume  the  l)ill  in  tliat  case  was  filed 
for  any  other  ])ur])osc  than  a  simple  foreclosure.  The  ordinary 
allegations  of  a  foreclosure  suit  would  not  authorize  a  decree  de- 
.  laring  these  chattels  to  belong  to  the  realty.  The  decree,  under 
ordinary  circumstances,  would  simply  allow  the  land  to  ije  sold, 
leaving  all  questions  concerning  its  appurtenances  to  be  dispo.'^cd 
of  as  they  should  arise.  To  determine  them  in  advance  would 
require  sju'cial  averments  in  tin*  hill  (Wtirclicn'r  v.  Hewitt,  10 
Mich.  \\.  I .-.:]). 

.Judgment  should  hi'  allirmcd,  with  costs. 

Maiitin',  Ch.  J.  Whatever  may  he  the  rule  of  the  common  law 
respecting  fixtures,  in  the  absence  of  any  agreement  of  parties,  it 
is  well  settled  at  this  day  that  the  contract  of  i)arties  will  fi.\  the 

<  haractcr,  and  control  the  disposition  of  jiersonal  ])ropi'rty,  which, 
in  the  absence  of  a  contract,  would  be  held  to  he  a  fixture;  in  other 
words,  the  parties  interested  may  control  the  legal  effect  of  any 
transaction  respecting  such  property  by  exj)ress  agreement.  Such 
was  done  in  the  case  before  us.  The  property  which  is  the  subject 
of  this  litigation  was  only  erected  upon  the  premises  upon  the 
agreement  that  it  should  be  subject  to  a  chattel  mortgage  for  its 
]turchasc  price.  By  this  the  parties  kept  it  separate  from  the  realty, 
and  it  never  became  i)art  of  it.  Such  mortgage  was  given,  and 
kept  good  up  to  the  bringing  of  this  suit,  and  all  the  evidence 
allows  that  all  the  parties  through  whose  hands  the  property  has 
been  transmitted  knew  of  such  original  agreement,  and  of  the 
•  xistence  of  such  mortgage;  and,  as  I  think,  it  shows  further  that 
ihe  land  was  purchased  by  all  with  this  property  excluded.  Crip- 
pen  certainly  never  purchased  it,  for  he  bought  with  full  knowledge 
of  the  property,  and  the  claims  of  the  defendants  in  error  to  it. 
ilis  ownershij)  of  the  decree  does  not  aid  him,  for  he  bought  the 
decree  with  such  knowledge,  and  could  not  hold  it,  or  ilaim  under  it 
with  any  rights  superior  to  those  from  whom  he  purchased.  His 
purchase  at  the  sale  barely  confirmed  his  title  to  the  land,  as  he 
acquired  it  by  purchase  of  the  decree — notliing  more. 

The  jndtjmcnt  of  the  court  lirlow  us  affirmed,  irith  costs.^ 
CllRiSTiANCY,  J.,  did  not  sit  in  this  case. 

'But  compare  Culcinan  v.  tilcarn.s  M(g.  Co.,  38  Miili.  30   ^1878). 


390  COMMON    LAW    RELATIONS.  [CIIW.  U 


BRENNAN  v.  WHITAKER. 

Supreme  Court  of  Ohio,  1864. 

(15  Oh.  St.  446.) 

Error  to  the  district  court  of  Lucas  County. 
The  original  action  was  prosecuted  by  the  Brennc.ns,  plaintiffs, 
in  the  Court  of  Common  Pleas  of  Lucas  County,  to  recover  from 
Whitaker  and  Phillips,  defendants,  damages  for  the  alleged 
wrongful  conversion  by  the  defendants  of  two  steam  engine  boilers, 
one  large  steam  engine,  a  quantity  of  mill  shafting,  one  drum,  one 
balance  wheel,  the  gearing  for  an  upright  saw,  one  muley  saw  and 
the  gearing,  and  one  poney  engine. 

The  facts,  as  they  appear  in  the  record,  are  substantially  as 
follows : 

On  the  9th  of  July,  1857,  Farley  &  Ketcham,  parties  of  the  first 
part,  executed  a  mortgage  to  the  plaintiffs,  parties  of  the  second 
part,  by  which  "  the  said  parties  of  the  first  part,  for  and  in  con- 
sideration of  the  sum  of  $1231.51,  to  them  in  hand  paid  by  the  said 
parties  of  the  second  part  ...  do  grant,  bargain  and  sell  unto 
the  said  parties  of  the  second  part,  all  and  singular  the  goods  and 
chattels  hereinafter  described,  that  is  to  say:  The  steam  engine 
boilers  now  in  the  possession  of  said  parties  of  the  first  part,  designed 
to  be  used  in  their  saw-mill  in  Oregon  township,  Lucas  County, 
Ohio,  being  the  same  purchased  by  them  of  the  said  J.  &  J.  Bren- 
nan  this  day,  together  with  the  engines  and  machinery  attached  to 
said  boilers.  To  have  and  to  hold  all  and  singular  the  said  goods 
and  chattels  hereinbefore  bargained  and  sold,  or  mentioned,  or 
intended  so  to  be,  unto  the  said  parties  of  the  second  part  forever ; 
said  goods  and  chattels  now  remaining  and  continuing  in  the  pos- 
session of  the  said  parties  of  the  first  part,  in  said  Lucas  County, 
Ohio." 

The  mortgage  was  given  to  secure  tHc  payment  of  the  note  of 
Farley  &  Ketcham  to  the  plaintiffs,  bearing  the  date  of  the  mort- 
gage, for  the  sum  of  $1231.51,  payable,  with  the  interest,  in  one 
year,  it  being  the  amount  due  for  the  purchase  money  of  the  boilers 
mortgaged,  and  was  subject  to  the  condition  that  if  default  was 
made  in  the  payment  of  the  note  according  to  its  tenor,  the  plain- 
tiffs might  "  enter  upon  the  premises  of  the  said  parties  of  the  first 
part  at  any  place  or  places  where  the  said  goods  and  chattels  or 
any  part  thereof  may  be,  and  take  possession  thereof,  whether  the 
same  shall  have  been  attached  to  the  freehold,  and  in  law  become 


•'^*'^-    '^1  HKKNNAN     C.     WIIITAKKU.  391 

;i  j)art  of  tlii'  realty  <»r  not,  ami  tn  rt'iiiovc  (he  saiiu'  to  any  i»la»t? 
<>r  jdaces  they  may  (kviii  best,  and  to  soil  and  dispose  of  the  same.** 

Tlie  mort^'a^'t'  was  filed  in  the  olVicc  of  the  recorder  of  Lucas 
("ounty,  on  the  i)th  of  July,  18')7,  and  copies,  witli  the  requisite 
statements,  again  filed  hy  the  plaintiffs  in  the  same  place  eadi  year 
thereafter  up  to  the  time  of  the  commencement  of  this  action. 

After  the  execution  of  the  mortgage,  the  boilers  were  put  hy 
Farley  &  Ketcham  into  a  saw-mill,  erected  by  them  on  land  of 
which  they  were  the  owners  in  f«'e.  They  were  placed  in  an  engini' 
house,  built  ])rincii)ally  of  brick,  on  one  side  of  and  attached  to  the 
main  building  of  the  mill.  The  roof  of  the  mill  extended  over  and 
formed  the  covering  of  the  engine  house.  The  boilers  were  placed 
— one  end  on  a  cast-iron  frame,  called  the  fire-front,  which  formed 
the  front  of  the  furnace,  and  stood  upon  brick,  tlu'  other  end  i>n 
iron  stands  also  resting  on  the  brick.  Under  the  boilers  were  built, 
to  suj)port  them,  piers  of  brick,  and  the  whole  was  inclosed  in  brick 
arches  nearly  .surrounding  the  boilers,  one  end  of  which  came  up 
to  the  fire-frame,  and  the  other  was  built  into  the  end  brick  wall 
of  the  building.  Usually  the  boilers  are  attached  to  the  firc-fmnt 
and  brick  work  by  stay  bolts,  but  the  witnesses  were  not  able  t<> 
-ay  whether  that  was  done  in  this  case.  The  boilers  could  not  be 
removed  without  taking  down  the  brick  work  around  them  and 
a  part  of  the  building  to  make  room  for  them  to  be  taken  out.  To 
take  the  boiU'rs  out  through  the  mill  would  not  recpiire  the  walls 
of  the  building  to  be  taken  down,  but  they  could  be  taken  nut  by 
removing  a  part  of  the  wood  work  in  front,  or  by  making  a  hole 
in  the  lean-to  or  engine  hou.se,  at  the  rear  end  of  the  boilers. 

The  engines  were  ])lace<l  on  wooden  foundations  and  fastened 
to  them  with  l)olts.  The  large  engine  was  in  the  brick  building 
with  the  boilers,  the  other  inside  the  main  building.  They  were 
<  onnected  with  the  boilers  by  steam  pipes.  The  main  shaft  wa- 
connected  with  the  large  engine  by  a  connecting  rod  fastened  witli 
keys.  The  drum  and  i)alance  wheel  were  j)laced  on  the  main  shall 
and  run  with  if.  The  gearing  for  the  upright  saw  was  connecteil 
by  a  belt  running  on  the  drum.  The  other  saw  connected  tlinclly 
with  the  shaft  without  any  belt.  The  engines  coulil  be  taken  out  : 
liut  there  was  no  opening  large  enough  to  take  out  tlu'  fly  wheel  ; 
and  jx'rhaps  the  drum  would  i)e  loo  large  for  the  doors. 

The  mill  was  completed  in  the  fall  of  1S.")7,  and  was  after  that 
time  occupied  by  Karley  (.V  Ketcham  as  a  saw-mill,  the  motive 
power  being  furnisheil  by  the  engine  and  boilers.  The  building 
'\as  designe(l  for  a  saw-mill,  and  in  its  form  and  struetun'  wa< 
idapted  to  the  business  of  such  a  mill ;  and,  as  ap|)ears  from  a 
description  of  tiie  building  eontaiued  in  the  record,  it  would,  wiih- 


392  COMMOX    LAW    EELATIOXS.  [CIIAP.  I. 

out  material  alterations  and  additions,  be  comparatively  of  little 
value  for  any  other  purpose. 

There  was  no  M-ater  power  connected  with  the  mill,  and  it  de- 
pended wholly  on  steam  for  its  power. 

On  the  14th  of  January,  1859,  Farley  &  Ketcham  executed  to 
the  defendants  a  mortgage  upon  the  real  estate  on  which  the  mill 
was  located  and  all  its  appurtenances,  to  secure  an  indebtedness 
owing  by  them  to  the  defendants.  The  mortgage  was  duly  recorded 
in  the  record  of  mortgages  of  Lucas  County.  This  indebtedness 
was  unpaid  at  the  time  of  the  commencement  of  this  action,  and 
the  defendants  were  in  the  possession  of  the  mill.  The  plaintiffs 
demanded  possession  of  the  property,  but  the  defendants  refused 
to  permit  them  to  take  it  away. 

The  plaintiffs  claim  that,  at  the  time  of  receiving  their  mort- 
gage, the  defendants  had  notice  of  the  mortgage  to  the  plaintiffs. 
This  is  denied  by  the  defendants.  On  the  trial  the  Court  of  Com- 
mon Pleas  found  this  issue  in  favor  of  the  defendants. 

Upon  this  state  of  facts  and  finding,  the  Court  of  Common  Pleas 
gave  judgment  for  the  defendants. 

To  reverse  this  judgment  a  petition  in  error  was  filed  by  the 
plaintiffs  in  the  district  court,  where  the  judgment  was  affirmed, 
and  the  plaintiffs  now  seek  in  this  proceeding  to  reverse  this  action 
of  the  district  court. 

White,  J.  I.  The  plaintiffs  seek  to  recover  for  a  tort  arising 
from  the  conversion  of  the  property  in  controversy;  and,  in  order 
to  establish  their  title  to  such  property,  as  against  the  defendants, 
Whitaker  and  Phillips,  rely  upon  the  chattel  mortgage.  In  order 
to  ascertain  the  relation  in  which  Whitaker  and  Phillips  stand  to 
this  mortgage,  it  is  proper,  in  the  first  place,  to  determine  whether 
they  had  notice  of  its  existence  at  the  time  tliey  received  their  real 
estate  mortgage.  The  issue,  upon  this  question  of  notice,  has  been 
twice  found  in  favor  of  the  defendants,  by  the  Court  of  Common 
Pleas,  and  this  finding  we  are  now  asked  to  review,  on  the  ground 
that  it  is  against  the  evidence.  On  this  point,  we  only  deem  it 
necessary  to  state  that  the  testimony  in  the  court  below  was  con- 
flicting; and  while,  as  original  triers  of  fact,  we  would  have  been 
inclined  to  find  differently,  yet  we  cannot  say  that  the  finding  is 
so  manifestly  wrong  as  to  warrant  this  court  in  reversing  the 
judgment  on  this  ground. 

II.  The  next  question  is  whether,  as  between  Farley  &  Ketcham, 
the  mortgagors,  and  Whitaker  and  Phillips,  the  mortgagees,  in 
the  real  estate  mortgage,  the  property  in  controversy  became  a  part 
of  the  freehold?  We  are  of  opinion  that  it  did.  A  discussion  of 
the  general  principles  to  be  regarded  in  determining  when  addi- 
tions of  personal  property  become  a  part  of  the  realty,  is  here 


«•■:«'•  IV.]  BKKNNAN'     C.     W  II I  lAK  KH.  39:? 

tloc'iiu'J  unnoeossary.  Tlu-  only  dilliculty  arises  in  the  application 
of  these  principles  to  the  solution  of  particular  controversies  as 
they  arise;  and  whether  an  article  has  hecn  annexed  to  the  realty  so 
as  to  hecome  a  ])crnjani'nt  accession  to  it,  must,  in  a  great  degree, 
be  determined  by  llie  circumstances  of  each  jjarticular  case. 

Parley  &  Ketcham,  who  made  the  annexations  in  the  present 
case,  were  the  owners  of  the  fee ;  and  the  (juestion  we  are  now 
considering  arises  between  them,  as  mortgagors,  and  their  mort- 
gagees, Whitakcr  and  Phillips,  who,  for  the  purposes  of  their 
security,  are  to  be  regarded  as  purchasers. 

The  building  was  erected  for  a  saw-mill,  and  in  the  form  and 
nature  of  its  structure  was  adapted  to  the  business  of  a  mill  of  that 
description.  The  boilers  and  engines  were  the  only  motive  power, 
and  were  designed  so  to  be  when  tlie  mill  was  built.  They  per- 
formed the  ollice  of  a  wheel  and  water-power,  and  their  adaptation 
to  the  structure  and  the  uses  for  which  it  was  designed,  as  well  as 
the  mode  of  their  annexation,  show  that  they  were  intended  to  be 
permanent.  They  could  not  be  removed  without  leaving  the  saw- 
mill incomplete.  The  building  itself  for  any  other  purpose  would, 
without  material  alterations  and  additions,  be  comparatively  of 
little  value.  The  shafting,  drum,  balance  wheel,  gearing  for  the 
upright  saw,  and  the  muley  saw  and  gearing,  though  differing 
from  the  boilers  and  engines  in  the  mode  of  annexation,  yet  are 
to  be  regarded  as  fixtures. 

The  mode  of  annexation  alone  does  not  determine  the  character 
of  the  property  annexed;  but  the  appropriateness  of  the  articles 
named  to  the  mill,  and  their  necessity  to  its  completeness,  are  also 
to  be  looked  to. 

III.  The  remaining  question  is,  whether  the  chattel  mortgage 
to  the  plaintiffs,  as  against  the  real  estate  mortgagees,  deprives 
the  i)roperty  in  controversy  of  the  character  of  fixtures?  The 
plaintilTs  claim  that  this  is  the  effect  of  the  chattel  mortgage;  and 
that  they  have  the  same  right  to  recover  the  property  from  the 
mortgagees  (Whitaker  and  Phillips),  without  notice,  as  they  would 
have  had  against  Farl(\v  i^-  K«'t<ham.  if  tin-  real  estate  mortgage 
had  not  been  given. 

It  is  not  necessary  to  iiKpiire  what,  as  against  mortgagei-s  without 
notice,  would  have  been  the  rights  of  a  i)arty,  other  than  the  owner 

ihc  freehold,  who  might  kue  placed  in  the  same  manner  upon 
premises  the  |)ropcrty  in  (piestion,  under  some  agriH-ment  with 
owner,  for  a  temporary  purp(»se.  and  with  the  right  of  removal; 

y  as  to  what  would  have  be<'n  the  effect  if  th«>  property  had  l)eon 

nexed  by  the  tortious  act  of  Farley  I't   Ketcham.     Tlu*  facts  in 

■^  case  raise  neither  of  ibe<»'  (|ue<ti(in<,  and  we  forl>ear  entering 
nto  an  examination  of  the  aulborilic^  cilfd   bearing  upon   them. 


394  COMAION    LAW    RELATIONS.  [cilAi-.   i. 

Here  it  was  not  only  the  intention  of  Farley  &  Ketcham  to  annex 
the  property  to,  and  make  it  a  part  of,  the  freehold,  but  their  so 
doing  was  according  to  the  understanding  of  the  parties  when  the 
mortgage  to  the  plaintiffs  was  executed.  In  the  mortgage  it  said 
the  boilers  are  "  designed  to  be  used  in  their  (F.  &  K.'s)  saw-mill," 
and  power  is  given  the  plaintiffs,  on  default  of  payment,  "  to  take 
possession  thereof  (mortgaged  property)  whether  the  same  shall 
be  attached  to  the  freehold  and  in  law  become  a  part  of  the  realty 
or  not."  The  right  given  to  the  plaintiffs  by  the  mortgage  to  enter 
upon  the  premises  and  sever  the  property  would,  doubtless,  have 
been  effectual  as  between  the  parties.  But  the  defendants  were 
purchasers  without  notice  of  this  agreement.  The  filing  of  chattel 
mortgages  is  made  constructive  notice  only  of  incumbrances  upon 
goods  and  chattels.  The  defendants  purchased  and  took  a  convey- 
ance of  real  estate  of  which  the  property  now  in  question  was,  in 
law,  a  part;  and,  in  our  opinion,  it  devolved  upon  the  plaintiffs 
who  sought  to  change  the  legal  character' of  the  property  and  create 
incumbrances  upon  it,  either  to  pursue  the  mode  prescribed  by  law 
for  incumbering  the  kind  of  estate  to  which  it  appeared  to  the 
world  to  belong,  and  for  giving  notice  of  such  incumbrance,  or, 
otherwise,  take  the  risk  of  its  loss  in  case  it  should  be  sold  and 
conveyed  as  part  of  the  real  estate  to  a  purchaser  without  notice. 
It  is  true  that  in  the  case  of  Ford  v.  Cohh,  20  N.  Y.  Rep.  344,  it 
was  held  that  an  agreement  which  was  evidenced  by  a  chattel  mort- 
gage was  effectual  against  a  subsequent  purchaser  of  the  land, 
without  notice.  But  it  seems  to  us  to  be  the  sounder  rule,  and  more 
in  accordance  with  principle,  and  the  policy  of  our  recording  laws, 
to  require  actual  severance,  or  notice  of  a  binding  agreement  to 
sever,  to  deprive  the  purchaser  of  the  right  to  fixtures  or  appur- 
tenances to  the  freehold  {Fortman  v.  Goepper,  14  Ohio  St.  Rep. 
565;  2  Smith's  L.  C.  259;  Frijatt  v.  Sullivan  Co.,  5  Hill  IIG; 
Richardson  v.  Copeland,  6  Gray,  536;  FranMand  et  al.  v.  Moullon 
et  al.,  5  Wisconsin  Rep.  1). 

In  the  case  last  named,  the  owner  of  a  steam  engine  sold  and 
assisted  to  annex  the  same  to  the  realty,  reserving  a  chattel  mort- 
gage on  the  same  for  a  part  of  the  purchase  money;  and  it  was 
held  that  the  chattel  mortgage  was  inoperative  as  against  a  prior 
mortgagee  of  the  real  estate.  The  mode  of  annexation  was  very 
similar  to  that  existing  in  the  case  under  consideration;  and  the 
holding  that  the  chattel  mortgage  was  inoperative  as  against  a 
prior  mortgagee  of  the  real  estate,  as  was  likewise  done  in  Copeland 
V.  Richardson,  supra,  restricts  the  operation  of  agreements  to  sever 
what  would  otherwise  be  regarded  as  fixtures,  more  than  is  required 
to  be  done  for  the  decision  we  make  in  tlie  present  case.  Whether 
the  restriction  upon  the  right  of  removal  that  was  applied  in  these 


-"     '^I  iirNT  r.   iiAV  sT.\Ti:  ii;on  ro.  I{!>*» 

,i:!(.'.N  can  be  i)roj)iily  ai>|tlH'<l  in  favor  of  a  niort^a^cc  of  tlu;  real 
-tate  claiming  the  i»roiitrly  added  (o  llic  premises  after  Ins  mort- 
age as  fixtures,  and  a<^ain<t  a  ]iart y  claimin;;  the  same  property  as 
jiersonal  chattels  under  a  chattel  mortgage  from  the  owm-r,  when 
the  removal  would  leave  the  realty  claimed  hy  the  mortgagee  as 
a  security  in  as  good  i)light  as  when  his  mortgage  was  taken,  it  is 
unnecessary  now  to  iiKpiire;  and  ujion  this  rpiestion  we  t-xprcss  no 
l»inion. 

I'lic  judtjmcnt  uf  the  districl  court   uill  hv  nffirmvd} 
Bbinkeiuioff,  C.  J.,  and  Scott,  Day,  and  Welch,  ,]J.,  con- 
curred. 


HUXT  V.  BAY    STAT1-;    1K<)\    co. 

Supreme  Jidk  i.\i.  Coikt  of  Massachusetts.  18G7. 

(!»:  Mn><s.  'iV.).) 

Bill  in  equity,  tiled  in  August.  18(iM.  by  one  of  the  guarantors 
of  a  certain  promissory  note  of  the  Boston  and  New  York  Central 
Bailroad  Company,  to  compel  the  execution  hy  Horatio  N.  Slater, 
one  of  the  resjiondents,  of  a  trust  concerning  certain  iron  rails  laid 
down  and  fastened  upon  the  road-bed  of  that  railroad  company 
between  Boston  and  Dedham,  prior  to  January  1,  IS.")'),  and  con- 
tinuing so  attached  to  the  road-bed  from  that  time  to  the  time  of 
bringing  this  bill;  which  trust  was  alleged  to  he  raised  by  the 
following  instrunu>nt  executed  hy  Slater  on  September  18,  18')}  : 

''Whereas  1  have  this  day  purchased  of  the  \\,\\  State  Iron 
t'ompany  ten  hundred  and  fifty-three  tons  of  iron,  paying  therefor 
with  the  note  of  the  Boston  and  New  York  Central  K'ailroad  Com- 
pany I  for  sixty-eight  thousand  four  hundred  and  lifty-lixc  dollars], 
secured  by  thirty  of  their  mortgage  bonds,  and  also  secured  to  th«' 
amount  of  forty  thousand  dollars  of  the  personal  guaranty  of  (here 
followed  a  list  of  the  guarantors]  ;  and  whereas  the  said  Boston 
and  New  York  Central  Hailroad  Company  have  promised  to  pay  to 
Tne  five  thousanil  dollars  per  month  after  the  Isl  day  of  March, 
vD.  18r)r),  out  of  the  recei|)ts  of  their  snitl  railroad,  which  sun\.  if 
•  ccived  by  me.  I  intend  to  aj)ply  to  their  saiil  n«»te  giv(>n  to  me 
lul  by  me  sold  to  the  Bay  State  Iron  (\)mpany,  the  said  five 
thousand  dolhirs  to  be  applic^l  in  part  to  reducing  the  guaranty  of 
the  said   abov(>-name<l   jiersons :      Now.   therefore.    1    herebv   agni* 

'  lUit  SCO  I'onl  V.  i'iibb,  20  N.  V.  ;i » I  i  is:)'.l).  and  Sunnl  v.  /.oir.  Ml  '!1. 
I'^;    (ISST^,  rnntm. 


396  COMMON    LAW    RELATIONS.  [CHAP.  I. 

with  the  said  guarantors  that  I  will  hold  the  said  iron  to  indemnify 
them  for  all  their  liability  as  such  guarantors,  it  being  understood, 
however,  that  in  consideration  of  the  pledge  of  their  receipts  to 
me,  I  may  either  or  both  loan  or  sell  said  iron  to  said  company  to  be 
used  by  them  upon  their  said  road.  In  testimony  whereof  I  have 
hereunto  set  mv  hand  and  seal  this  18th  day  of  September,  a.d. 
1854/' 

It  was  further  alleged  in  the  bill,  and  it  appeared  at  the  hearing, 
that  on  September  23,  1854,  an  agreement  under  seal  was  entered 
into  between  Slater  and  the  railroad  company,  in  pursuance  of 
which  the  iron  thus  bought  was  leased  to  the  company  and  laid 
down  and  fastened  upon  their  road-bed.  the  material  parts  of 
which  agreement  were  as  follows : 

"  The  said  Slater  agrees  to  lease  and  by  these  presents  doth  lease 
to  the  said  company  ten  hundred  and  fifty-three  tons  of  railroad 
iron,  compound  rail,  to  be  laid  down  and  used  by  said  company  on 
their  railroad. 

"  The  said  company  agree  to  pay  to  said  Slater  for  the  use  of 
said  iron  five  thousand  dollars  per  month,  the  first  payment  to  be 
made  on  the  first  day  of  March,  a.d.  1855,  and  so  on  upon  the  first 
day  of  each  succeeding  month  till  they  shall  have  paid  to  him 
sixty-eight  thousand  four  hundred  and  fifty-five  dollars  and  the 
interest  on  the  same  from  the  IGth  day  of  September,  a.d.  1854. 

"  If  there  shall  be  any  default  of  said  payments  to  said  Slater 
the  said  company  hereby  authorize  said  Slater  to  take  up  and 
remove  the  said  iron  leased  by  him  to  them,  though  the  same  be 
put  down  and  used  upon  their  railroad. 

"  If  there  shall  be  no  default  of  said  payments  the  said  Slater 
agrees,  when  the  said  sixty-eight  thousand  four  hundred  and  fifty- 
five  dollars  and  the  said  interest  shall  have  been  paid  to  him  as 
aforesaid,  that  then  he  will  sell  and  deliver  to  said  company  the 
said  iron  leased  by  him  as  aforesaid,  giving  them  a  receipt  in  full 
of  all  demands  for  the  use  of  said  iron  and  a  release  of  all  his 
interest  in  and  to  the  same  without  further  consideration." 

And  it  was  further  alleged  and  was  proved  at  the  hearing  that 
the  railroad  company  failed  to  pay  its  note  at  maturit}',  March  1, 
1856,  and  accordingly  certain  of  the  guarantors,  including  the 
complainant,  were  called  upon  to  pay  and  did  pay  the  amounts 
guaranteed  by  them  severally  thereon. 

The  prayer  of  tlie  bill  was  for  a  decree  to  compel  Slater  to  take 
possession  of  the  iron  and  dispose  of  it  and  out  of  the  proceeds 
reimburse  to  such  guarantors  the  amounts  of  their  several  pay- 
ments. 

Among  the  parties  cited  as  respondents,  who  appeared  and  con- 
tested the  prayer  of  the  bill,  was  tlie  Southern  Midland  Railroad 


SB<^.  IV.]  HUNT    V.    BAY    STATK    IIJON    CO.  'o'*\' 

Company  (incorporated  hy  St.  18(51,  c.  155,  as  tlic  Midland  L.iud 
Damage  Com])any  and  changed  in  name  by  St.  18G3,  c.  IKJ),  whicli 
alleged  title  to  tlie  iron  in  disj)vite  by  virtue  of  a  conveyance  by  the 
Boston  and  New  York  Central  Kailroad  Company  on  November  1, 
1858,  of  its  "  railroad  and  ail  its  other  property,"  specifying  '"'  the 
road-bed  and  all  lanil  taken  or  purchased  by  said  grantor,"  and 
also  ''all  rails,  timber,  iron,"  "fixtures  and  other  e<iuii)ment,'" 
"belonging  to  said  grantor,"  to  the  ^lidland  Kailroad  Company 
(incorjiorated  by  St.  1858,  c.  GO)  ;  and  of  a  subsefpient  conveyance 
of  the  same  by  the  Midland  Railroad  Company  on  June  11,  ISG",', 
to  the  Midland  Land  Damage  Company:  and  which  further  con- 
tested the  prayer  of  the  bill,  as  being  the  assignee  of  unsettled 
claims  for  land  damages,  to  an  amount  more  than  the  value  of  the 
iron,  of  the  owners  of  the  land  over  which  the  railroad  was  located. 

Another  party,  cited  as  rcs])ondents,  who  ai)peare<l  and  contested 
the  complainant's  prayer,  was  the  trustees  for  the  holders  of  bonds 
of  the  I3oston  and  New  York  Central  Kail  road  Company,  under 
a  mortgage  deed  (alleged  in  the  bill  to  be  invalid)  given  by  that 
company  to  secure  those  bonds,  and  dated  March  7,  1854,  of  its 
railroad  and  franchise,  "including  all  liie  land  and  real  estate  used 
and  intended  to  be  used  by  said  company  for  their  said  road,  and 
all  rights,  easements,  privileges  and  appurtenances,"  and  also  ''  all 
articles  of  personal  property  whatsoever  now  owned  or  used  by  said 
corporation  or  which  they  may  hereafter  own  or  use." 

And  the  trustees  for  the  holders  of  bonds  of  the  Southern  Mid- 
land Railroad  Company,  under  a  like  mortgage  deed  given  by  that 
company,  were  also  made  a  party  to  the  bill. 

The  case  M'as  reserved  for  determination  by  the  full  court. 

FosTEH,  J.  There  can  be  no  doubt  that  the  rails  when  laid  upon 
the  road-bed  and  fastened  there  so  that  engines  and  ears  could  pa^- 
over  them  would  have  become  annexed  to  the  realty  and  ceased  t'» 
be  personal  property  in  the  absence  of  any  agreement  ehangin_' 
the  ordinary  ruk'  of  law. 

It  was  held  in  Pierce  v.  Emery.  '3'-i  N.  11.  181,  and  Ilmcn  \. 
Emery,  33  X.  II.  6G,  that  rails  delivered  under  an  agreement  th.ii 
they  should  be  laid  down  on  a  specific  part  of  the  railroad  and 
continue  the  jjroju'rty  of  the  vendors  until  a  specified  price  wa^ 
paid  for  them  remained  the  personal  property  of  the  vendors  until 
payment,  and  were  not  when  laid  so  in.'^eparably  annexed  to  an<l 
incorporated  with  the  realty  that  they  could  n<)t  be  removed  for 
non-payment  of  the  prii-e.  The  agreement  of  the  parties  was  held 
to  supersede  the  general  rule  of  law.  and  to  be  binding  likewi-- 
upon  subsecpient  mortgagees  with  notice.  Notice  to  the  trusin- 
was  held  to  be  notice  to  the  bondholders  under  such  a  mortgage. 
Rut  without  notice  it  was  considered  that  the  mortgagees  would  n't 


398  COMMOX    LAW    RELATIONS.  [CHAP.  I. 

be  affected  by  a  private  agreement  changing  the  natural  and  legal 
character  of  the  property  from  real  to  personal,  but  would  have 
a  right  to  suppose  that  they  acquired  all  the  incidents  and  appur- 
tenances which  by  the  general  rules  of  law  would  result  from  such 
a  purchase.  We  are  satisfied  with  the  principles  and  follow  the 
authority  of  these  cases  {Strickland  v.  Parker,  54  Maine,  263). 

Our  own  adjudged  cases  fully  support  the  position  that  the  rails 
when  laid  became  a  part  of  the  realty  in  the  absence  of  any  agree- 
ment to  the  contrary  (Peirce  v.  Goddard,  22  Pick.  559 ;  Winslow 
V.  Merchants'  Insurance  Co.,  4  Met.  306;  Butter  v.  Page,  7  Met. 
40;  Richardson  v.  Copeland,  6  Gray,  536).  They  likewise  recognize 
the  doctrine  that  buildings  and  other  erections  or  fixtures  so 
attached  to  the  realty  as  to  become  ordinarily  a  part  thereof  may, 
by  agreement  between  the  parties,  remain  personal  property 
(Curtis  v.  Riddle,  7  Allen,  185).  Both  of  these  propositions  seem 
to  be  everywhere  accepted  as  sound  law. 

Upon  the  question  whether  the  character  of  property  can  be 
changed  by  agreement  from  realty  to  personalty  as  against  a  l)ona 
fide  purchaser  without  notice,  there  is  not  entire  harmony  of  the 
authorities;  but  we  regard  the  better  opinion  as  being  that  such 
a  purchaser  must  have  notice  of  the  agreement  before  he  acquires 
title,  or  he  will  be  entitled  to  claim  and  hold  everything  which 
appears  to  be  and  by  its  ordinary  nature  is  a  part  of  the  realty 
(Etwes  V.  Mawe,  3  East,  38;  2  Smith  Lead.  Cas.  99,  and  notes). 
To  hold  otherwise  would  contravene  the  policy  of  the  laws  requir- 
ing conveyances  of  interests  in  real  estate  to  be  recorded,  seriously 
endanger  the  rights  of  purchasers,  afford  opportunities  for  frauds, 
and  introduce  uncertainty  and  confusion  into  land  titles. 

Xor  do  we  suppose  that  a  mortgagor  in  possession  is  competent 
to  bind  existing  mortgagees  by  any  arrangement  to  treat  as  per- 
sonalty annexations  to  the  freehold.  The  legal  character  of  the 
rails  when  once  laid  down  is  determined  by  the  law  to  be  that  of 
real  estate.  Mortgagees,  as  well  as  all  other  parties  in  interest,  are 
entitled  to  the  benefit  of  this  rule  of  law,  which  can  be  taken  from 
them  only  by  their  own  waiver.  Landowners  having  a  lien  upon 
the  location  for  their  damages  and  a  right  to  take  possession  for 
default  of  payment  stand  in  the  same  position  so  long  as  their  right 
remains  to  enforce  payment  by  entering  on  the  land. 

Whether  the  mortgage  of  the  railroad  executed  before  these  rails 
Avore  laid,  but  then  invalid,  and  afterwards  confirmed  by  the  legis- 
lature, should  be  treated  as  a  security  prior  or  subsequent  to  the 
laying  of  the  rails,  will  probably  not  prove  a  material  question  in  this 
case.  By  the  agreement  of  the  parties  it  must  be  sent  to  a  master 
to  ascertain  all  the  facts  as  to  notice ;  upon  the  coming  in  of  his 
report    we    can    more    conveniently    and    intelligently    determine 


•^"-  '^1  D.vvi:NiM)i;r  /•.  sn.wTs.  399 

wIkiIkt   the  a^'nTiiifiit    willi    Mr.   Slater   is  >till   capaljlr  of  being 
ciifonrd. 

It  is  valid  lit'twctii  the  parties,  Slater  ami  the  original  corpora- 
iiDn,  but  l)inding  ii|)(iu  prior  mortgagees  and  the  landowners  (if 
tliey  remain  entitled  to  jxjssession  as  security  for  their  damages) 
bo  far  only  as  they  have  consented  (hat  the  rails  shall  renmiu 
personalty.  It  is  binding  \\]mn  such  subseiiuent  incumbrancers 
and  grantees  as  had  notice  of  it  when  they  acquired  title,  but  upon 
110  others.^ 


DAVKXPoirr  V.  SIIAXTS. 

SUPKEMi:    CoiItT    Of    \i;iiMONT,    1871. 
(43   17.  54G.) 

Petition  for  foreclosure  of  a  mortgage.  The  petition  sets  forili 
a  mortgage,  executed  by  John  (J.  Shants  &  Co.,  to  the  petitioner, 
October  13,  ISGO.  of  a  mill  and  factory  and  tannery  in  Searsburg, 
with  '^(M)  acres  of  land,  and  three  dwelling-houses  thereon.  "And 
also  the  factory,  liun  in  j)rocess  of  erection  on  the  site  of  said 
Searsburg  tannery,  with  the  saw-mill,  water-wheels,  and  all  the 
machinery  and  shafting  in  said  factory,"  to  secure  a  note  of  $1000. 
The  ])etition  then  sets  forth  the  execution  by  Shants  &  Co.,  and 
the  purcha.'^e  l)y  the  petitioner,  of  another  mortgage  on  the  same 
I>remises,  except  the  machinery,  and  also  sets  forth  that  the  defend- 
ants, other  than  Shants  &  Co..  claim  an  interest  in  said  property. 

The  petition  was  taken  as  confes.sed  by  all  the  defendants,  except 
Henry  (J.  Koot,  who  appeared  and  answered,  admitting  the  facts 
^' t  forth  in  the  petition,  or  not  denying  them,  except  as  follows: 

That  between  the  3d  day  of  .\ugust  and  the  v'Tth  day  of  October. 
l.SCO,  this  defendant,  by  his  agent,  Olin  Scott,  sold  to  the  said 
John  (i.  Shants  it  Co.  various  articles  of  machinery,  consisting 
of  a  circular  saw-inill  and  saw.  and  the  belts  to  drive  the  same; 
llie  gears  on  two  water-wheels;  the  ujtper  piece  of  a  large  water- 
whiH'l  shaft  and  box  to  the  same:  the  counter-shafts  to  two  water- 
wheels;  the  drum  llanges  and  boxes  to  the  said  ct)unter-shafts ; 
and  one  extra  saw  collar;  upon  the  condition  that  said  machinery 
."hould  be  and  remain  the  property  of  this  defendant  until  the  sanu- 
HJioidd  be  paid  for  by  said  .John  (J.  Shants  it  Co.;  the  whole  of 
wiid  machinery  amounting  in  value  to  the  sum  of  of  $910. 8r..  which 
thoy  agreed  to  j>ay  this  defendant    for  the  same.       .Ml  of  which 

'  I'ortrr  v.  PHtshurqh  StrrI  Co.,  Vll  V .  S.  2(57    (ISSC.t.  accord. 


400  COMMON    LAW    RELATIONS.  [CHAP.   I. 

inacliincry,  excepting  the  gears  and  upper  shaft  to  the  large  water- 
wheel,  and  the  counter-shaft  and  boxes  to  the  same,  were  in  place 
in  the  factory  mentioned  in  said  petition  at  the  time  of  the  alleged 
execution  of  the  mortgages  set  forth  in  said  petition,  and  the  said 
excepted  articles  have  since  said  time  been  placed  in  said  factory. 
That  there  has  been  paid  to  this  defendant  towards  the  purchase 
of  said  machinery  the  sum  of  $191  only,  the  remainder  being  still 
due  with  the  interest  thereon. 

And  this  defendant  claims  and  insists  that  his  title  to  ^aid 
machinery  is  paramount  to  that  of  the  said  John  G.  Shants  &  Co., 
and  to  that  of  the  petitioner,  and  that  the  petitioner  has  no  right 
to  a  foreclosure  as  to  said  machinery  or  any  part  thereof  against 
the  defendant. 

The  petitioner  replied,  saying  that  he  never  at  any  time,  until 
long  after  the  execution  of  the  several  mortgages  sought  to  be 
foreclosed  by  this  petition,  had  any  knowledge  or  notice,  actual  or 
constructive,  of  any  contract  or  understanding  between  the  defend- 
ant and  the  said  John  G.  Shants  &  Co.,  by  which  the  defendant 
had  or  claimed  to  have  any  right  or  claim  to  the  saw-mill,  water- 
wheels,  and  the  machinery  and  shafting  in  the  factory  described 
in  said  mortgage ;  that  he  did,  on  the  13th  day  of  October,  18G6,  in 
good  faith,  and  relying  upon  the  fact  that  no  claims,  liens  or 
incumbrances  existed  of  record  upon  any  of  the  property  or  estate 
described  in  said  mortgage,  and  upon  the  promise  and  assurance 
of  both  the  members  of  said  firm  of  John  G.  Shants  &  Co.  that 
none  existed  in  fact,  loan  to  said  firm  the  full  sum  of  one  thousand 
dollars,  and  took  said  mortgage  in  good  faith  to  secure  the  payment 
thereof;  that  if  it  is  true  that  the  defendant  did  reserve  such  a  lien 
upon  the  several  articles  named  in  his  answer  to  said  petition  for 
foreclosure,  as  is  in  said  answer  stated,  yet  it  is  also  true  that  the 
defendant  well  knew  the  purpose  for  which  John  G.  Shants  &  Co. 
purchased  the  same,  and  the  defendant  then  and  afterwards  con- 
sented that  they  might  attach  and  annex  said  water-wheels,  saw- 
mill, shafting  and  machinery  to  their  freehold,  and  make  the  same 
a  part  of  and  appurtenant  to  said  freehold,  and  did  by  his  agents 
and  workmen  assist  the  said  John  G.  Shants  &  Co.  in  so  doing; 
and  insists  that  the  lien  created  by  his  said  mortgage  is  paramount 
to  any  lien  or  claim  of  the  defendant  to  the  saw-mill,  water-wheels, 
machinery  and  shafting  in  said  factory. 

Stipulation. — It  is  hereby  stipulated  that  this  cause  shall  stand 
for  hearing  upon  petition,  answer,  replication,  affidavits  of  Olin 
Scott  and  H.  W.  Scott,  statement  of  facts,  and  notes  and  mortgages 
set  forth  in  the  petition.  The  facts  stated  in  the  answer  are  admitted 
to  be  true,  excepting  as  varied  or  qualified  l)y  the  replication  in  con- 
nection with  the  affidavits  and  statement  of  facts.    The  facts  stated 


"I^*'-   "1  DAVKM'OHT    r.    SIIANTS.  1<)| 

in  tlu'  n'|)lication  are  admitted  (o  ho  true,  excepting  as  varied  or 
(lualified  by  tlie  allidavits  and  jjtatenient  of  facts,  and  excepting; 
that  the  averment  respecting  annexing  *' to  the  freehold  of  th<! 
said  Jolin  (i.  Shants  &  Co.,  and  niake  the  same  a  part  of,  and 
appurtenant  to  said  freeliold,"  is  not  to  be  taken  as  an  averment 
of  facts,  but  as  a  conclusion  of  l;i\v.  The  facts  stated  in  tlie 
allidavits  and  statement  arc  admitted  to  be  true' 

At  the  Si'ptember  term,  KstiH,  decree,  pro  fonnn.  foreclosing 
mortgage  against  all  defendants,  excej)t  Henry  CI.  Itoot,  and  dis- 
missing the  j)etition  as  to  Koot,  with  costs.     Appeal  by  petitioner. 

//.  //.  Wheeler  and  Charles  N.  Davenport,  for  the  petitioner, 
insisted  that  the  machinery  in  question  lost  its  identity  as  personal 
property,  and  would  ])ass  to  any  owner  of  the  freehold  who  was  not 
a  wrongdoer,  and  cited  Justinian  2,  Tit.  1,  >$  30;  Year  Book,  ."» 
lien.  VII.  15;  Brooke's  Abr.,  Tit.  Prop.,  pi.  23*;  2  Black.  Com.  40}  ; 
2  Kent  Com.  3G1 ;  Cross  v.  Marston,  17  Vt.  533;  White  v.  Twil- 
chell,  25  Vt.  G20;  Powers  v.  Dcnnison,  30  Vt.  T52 ;  1  Washburn, 
Keal  Prop.,  pp.  3,  542;  2  Kent,  2(;i  ;  1  Leading  Cases  in  Equity, 
360-3G1 ;  Davis  et  al.  v.  Bradley  ei  al..  21  Vt.  5.");  Winsloir  v.  Ins. 
Co.,  4  Mctcalf,  306;  Harris  v.  Ilaynes,  34  Vt.  220;  2  Smith,  L.  C. 
211-212  etseq. 

The  opinion  of  the  court  was  delivered  by 

IMxK,  J.  The  bill  having  been  taken  as  confessed  as  to  all  tiie 
defendants,  except  Henry  (J.  IJoot.  and  he  alone  defending,  the 
only  question  is  as  to  the  right  of  the  orator,  under  his  mortgage 
from  Shants  &  Co.,  to  that  portion  of  the  property  sold  condition- 
ally by  Koot  to  the  said  mortgagors. 

The  bill,  and  answer  of  Koot,  in  connection  with  the  written 
stipulation  of  the  parties  on  file,  leave  no  dispute  as  to  the  material 
facts  in  the  case,  and  no  time  need  l)e  spent  in  repeating  the  facts 
thus  agreed. 

It  must  be  regarded  as  settled  as  a  general  rule  in  this  Stale  that 
a  i)arty  nu)y  sell  and  deliver  personal  property  under  a  condition 
that  it  shall  remain  the  property  of  the  vendor  until  the  j)rice  is 
paid;  and  that  undi-r  such  contract  the  titU'  will  remain  in  the 
vendor  until  the  condition  is  complied  with,  both  as  between  the 
vendor  aiul  such  conditional  vendee,  and  also  as  lx>tween  the  origi- 
nal vendor  and  a   hona  fide  purchaser  without   notice   froni  such 

'  Tin-  aflitlavits  and  foniial  >lat<'iiH'iit.  dcaliii;;  with  tlir  inotlo  of  nnnrxation 
of  tlic  lixtmcs,  aro  i>inittt>(l.  Tlu'  stalniu-iit  romlmlos  (liat  "all  tlio 
iiiacliiiicry  niriilioncil  nlM)V«',  incliidiii^  tlio  wator-wliorls  aiuI  ii|>prinla;;i»*. 
wore  placed  in  th(v  facloiy.  wliich  is  n  larjrt'  Iwo-stnry  hiiililinj;.  .Ill  \  !)0  ftvt. 
l>y  .Tnlin  (J.  Shants  A  Co.,  for  ttip  purpoop  of  proswiitinp  tho  hinincss  of 
innniifartiirin);  liinibor.  rhnir  stfwk.  «-tr..  and  i->  I'onnertrd  with  and  nttnchcU 
to  tho  l)uilding,  as  machinery  of  that  character  u>iially  is." 


402  COMMON    LAW    RELATIONS.  [CHAP.  I. 

conditional  vendee.  The  only  question  is  whether  the  facts  of  this 
case  take  it  out  of  the  general  rule. 

The  proposition  of  the  counsel  of  the  defendant  Eoot  is,  that  the 
whole  property  sold  conditionally  by  Eoot  to  Shants  &  Co.  was 
personal  property  as  well  after  as  before  the  sale,  and  cannot 
properly  be  claimed  as  fixtures  or  as  parts  of  the  realty.  But  we 
think  as  between  mortgagor  and  mortgagee,  if  the  title  of  the 
mortgagor  were  absolute,  the  defendant's  proposition  is  not  correct ; 
and  that  under  the  recent  decisions  in  this  State,  on  being  put  in 
place  in  the  mill  and  factory,  as  shown  in  this  case,  it  became  so  far 
annexed  to  the  realty  as  to  pass  under  a  mortgage  of  the  real  estate. 
But  still  the  question  remains  as  between  the  mortgagee  under  his 
mortgage,  and  the  original  owner  under  his  conditional  sale  to  the 
mortgagor,  which  has  the  paramount  right. 

First,  as  to  that  portion  of  the  property  which  had  been  put  in 
place  in  the  mill  and  factory  by  the  mortgagors  after  they  thus 
purchased  it  of  Eoot,  and  which  was  in  the  building  and  thus 
annexed  at  the  time  the  orator  took  his  mortgage :  As  to  this  prop- 
erty, the  orator,  as  it  appears,  having  advanced  his  money  and 
taken  his  mortgage  in  good  faith,  without  notice  of  any  lien  or 
incumbrance  upon  it,  and  from  its  condition  having  reason  to 
suppose  that  the  mortgagors'  title  to  this  property  in  question  was 
the  same  as  his  title  to  the  realty  to  which  it  was  annexed,  and  of 
which  it  was  apparently  parcel,  seems  to  have  a  strong  equity  in 
liis  favor.  While,  on  the  other  hand,  the  defendant  Eoot,  the 
unpaid  vendor,  who  endeavored  to  secure  himself  by  stipulation  in 
the  sale  that  he  should  hold  the  title  till  paid,  ought  not  to  be 
deprived  of  this  security  without  some  substantial  reason.  But  the 
defendant  Eoot  must  have  understood  when  he  sold  the  property 
to  Shants  &  Co.  that  they  intended  to  put  the  property  to  use  in 
advance  of  the  payment  of  the  price ;  and  from  the  kind  and  nature 
of  the  property  he  must  have  expected  that  in  its  use  it  necessarily 
must  be  annexed  to  the  realty  substantially  in  the  manner  in  which 
it  was,  and  thereby  become  apparently  parcel  of  the  realty.  What 
he  knew  or  had  reason  to  suppose  and  did  suppose  was  to  be  done 
with  the  property  he  must  be  taken  to  have  consented  to,  as  he  did 
not  object.  Eoot,  therefore,  having,  by  implication  at  least,  if  not 
expressly,  consented  that  the  property  might  be  incorporated  with 
the  realty  of  Shants  &  Co.  in  the  manner  it  was,  and  they  thereby 
become  clothed  with  the  apparent  title  as  incident  to  their  record 
title  to  the  real  estate,  whereby  the  mortgagee  was  misled  and 
induced  to  part  with  his  money  on  the  credit  of  the  property,  the 
equity  of  the  mortgagee  is  paramount  to  that  of  the  conditional 
vendor.  Justice  and  equity,  as  well  as  sound  policy,  require  this 
limit  to  the  rights  of  a  conditional  vendor  as  between  him  and  an 


-'<••  IV.]  Tiirr  r.   iiouton.  40:5 

iiinoront  purcliaser  or  inortf(n<5Ci'  of  real  cstati'  without  notice  wli«> 
iiilvances  his  inonov  on  the  faith  of  a  perfect  titU-. 

But  as  to  that  portion  of  the  property  mentioned  in  the  answer 
•  l'  the  (.lefriidant  Root  and  in  the  agreed  statement  of  facts  on 
lie,  which  had  not  Ijeen  j)hiced  in  the  mill  or  factory  at  the  time 
>'f  the  execution  of  the  mortgage  to  the  orator,  hut  was  in  the  yard 
;iiul  put  in  place  in  the  factory  or  mill  afterwards,  the  right  of  the 
tU'feiulanl  Root  is  paramount  to  the  right  of  the  orator.  That,  not 
having  heen  annexed  to  the  realty  at  the  date  of  the  mortgage, 
would  not  pass  as  incident  to  the  realty;  and  the  mortgage  di<l  not 
divest  Root  of  his  title.  It  having  heen  placed  in  the  building  by 
llu-  mortgagors  after  the  execution  of  the  mortgage,  the  mortgagee 
might  hold  it  as  against  them,  hut  not  as  against  Root,  the  condi- 
tional vendor.  As  to  this  portion  of  the  pro|)erty  the  mortgagee 
was  not  misled,  and  advanced  nothing  on  the  faith  of  it. 

The  decree  of  the  Court  of  Chancery  is  reversed,  and  cause 
remanded  for  a  decree  of  foreclosure  for  orator  against  all  the 
«Ut'endants  as  to  all  the  property,  except  that  defenihmt  Root  have 
a  right  to  that  portion  of  the  property,  or  the  value  thereof,  not  in 
})lace  in  the  factory  or  mill  at  the  time  of  the  execution  of  the 
mortgage  to  the  orator,  but  put  in  afterwards,  the  orator  having 
his  election  to  pay  to  Root  the  value  of  it,  or  have  it  excepted  in  the 
<lecree  so  far  as  Root  is  concerned,  with  liberty  to  Root  to  remove  it 
within  such  reasonable  time  as  the  Court  of  Chancery  shall  fix  for 
that  purpose.^ 


TIFFT  V,  ITORTOX. 

Conn-  OK  .\i'i'i;.\i,s  oi-   Ni;\v   Yohk.  IS?:^. 

(."):{  X.  v.  :ur.) 

Appeal  from  judgment  of  tin*  (leneral  Term  of  the  Superior 
Court  of  BulTalo,  Mllirming  a  judgment  in  favor  of  the  ])laintifrs. 
«  nten>d  upon  the  verdict  of  a  jury. 

This  action  was  l)rought  to  receiver  damages  for  the  alleged 
conversion  of  a  boiler  and  engin*'. 

The  j)laintifTs,  under  a  written  contract,  numufaetured  the 
'  ngine  and  boiler  in  (piestion,  with  other  machinery,  for  Mrs. 
.'ane  Coond)s  lirown,  to  be  put  up  and  used   in  a  new  elevator 

'  RuzzcU  V.   rii„in,in<7s,  r,l    Vt.   21.1    (ISSS):    ir,ir,„   v.    Kmrifi.  .1.1   \.    11. 
<  (i   <18r>»»)  :  H'lVAr.-j  v.  IliU,  ll.">  Miili.  X\:\   (IH!»7).  arcord.     .\ncl  see  A'rioir/- 
.11  V.  Jdhnsoti,  ,17   Mirli.  47    (1^<77),  ^nd   iMtising  Iron  Works  v.   Walker. 
"1   Miili.   109   (1892). 


404  COMMON    LAW    RELATIONS.  [CHAP.  I. 

which  Mrs.  Brown  was  building,  in  the  city  of  BuflCalo.  By  the 
terms  of  the  contract,  Mrs.  Brown  was  to  give  for  a  portion  of  the 
purchase-price  of  the  boiler,  engine  and  other  machinery  her  two 
promissory  notes,  to  be  secured  by  a  mortgage  on  the  boiler  and 
engine.  The  notes  and  mortgages  were  to  be  executed  and  delivered 
so  soon  as  the  engine  and  boiler  were  complete  in  the  plaintiffs* 
shop,  ready  to  be  put  up  at  the  elevator.  The  boiler  and  engine 
and  other  machinery  were  completed  according  to  the  contract ; . 
and  while  in  the  plaintiffs'  shop  the  mortgage  was  given  as  provided 
in  the  contract.  It  was  provided  in  the  mortgage  that  the  engine 
and  boiler  should  be  and  remain  personal  property  until  the  notes 
mentioned  in  it  were  fully  paid,  notwithstanding  the  manner  in 
which  they  should  be  placed  in  the  elevator.  The  mortgage  recited 
the  fact  that  the  engine  and  boiler  were  made  to  be  put  up  in  the 
elevator  of  Mrs.  Brown,  pursuant  to  the  agreement  above  men- 
tioned, and  authorized  the  plaintiffs,  in  case  of  a  breach  of  its 
condition,  to  enter  the  elevator  and  take  and  carry  the  boiler  and 
engine  away.  Mrs.  Brown  failed  to  pay  the  second  note  secured 
by  the  mortgage.  The  boiler  and  engine  were  not  put  in  the 
elevator  building,  but  on  a  foundation  made  for  them  outside  of 
the  building;  and  a  building  called  the  engine-house  was  built 
over  them  after  they  were  set  up.  After  the  mortgagor  failed  to 
pay  the  note,  plaintiffs  went  to  take  the  boiler  and  engine,  and, 
finding  the  defendants  in  possession,  demanded  them.  The  de- 
fendants claimed  to  own  them,  and  refused  to  let  the  plaintiffs 
have  them.  The  defendants  claimed  title  to  the  engine  and  boiler 
through  three  real  estate  mortgages,  executed  by  Mrs.  Brown  before 
the  boiler  and  engine  were  set  up  on  the  premises.  These  mort- 
gages had  been  foreclosed,  and  the  premises  sold  under  judgments 
obtained  in  the  foreclosure  actions,  and  the  premises  bid  off  by  and 
conveyed  to  the  defendants.  The  rights  of  the  parties,  by  stipula- 
tion before  sale,  were  not  to  be  affected  by  the  sales  on  the  judg- 
ments in  the  foreclosure  actions.  The  defendants  asked  the  court 
to  decide,  as  matter  of  law,  that  there  was  not  any  evidence  of 
a  conversion  by  the  defendants  of  the  boiler  and  engine.  This  tlu' 
court  declined  to  do.  The  defendants  requested  the  court  to  decide 
that  the  boiler  and  engine  were  a  part  of  the  realty,  as  between  the 
parties  to  this  action,  notwithstanding  the  written  agreement.  Tbe 
court  refused  so  to  decide.  The  jury  rendered  a  verdict  in  favor 
of  the  plaintiffs  for  the  sum  of  $5,141.88,  and  judgment  was 
entered  thereon. 

M.  A.  Whitnci/  and  R.  W.  Pccl-Jiam.  Jr..  for  the  appellants. 
The  engine  and  Ijoiler  became  a  part  of  the  realty,  and  were  subject 
to  the  liens  of  defendants'  mortgages  {Potter  v.  Cromwell,  40  N.  V. 
287;    Voorhees  v.   McGinnis,  48   id.   278;   Sparls  v.   State  BV.. 


"^*-  '^'1  TiriT  r.   iioRToN'.  405 

:  lUack.  [Iiul.]  4G0;  Cdpnt  v.  I'rckham,  Wo  Conn.  88;  AUonl 
'  .  M.  Co.  V.  (Jleason,  'M\  id.  8G).  The  agreement  in  the  chattel 
mortgage  was  of  no  avail,  unless  consented  to  hy  the  mortgagee  of 
the  real  estate  (5  Am.  L.  Reg.  [s.  s.]  329,  330;  LeJand  v.  Gassett, 
IMg.  (Vt.  Hep.  I  335;  s.  c,  17  Vt.  403;  Preston  v.  nn(j(js,  1«]  iV/. 
ViA ;  V'a/j  .Vr*-,s-  v.  PacarJ,  2  Peters,  137  ;  Walmslei/  v.  Milne,  G  Jur. 

1  K.  s.]  r^5;  s.  C,  7  C.  B.  [x.  s.  ]  115;  Grady's  Law  of  Fixtures, 
153:  4  Mete.  310;  Butler  v.  Parker,  7  id.-i2;  Lane  v.  King, 
JS  Wend.  584;  Shepard  v.  Philbrick,  2  Den.  174;  (7i7/^//  v.  Bakom, 
G  Barb.  370).  Under  a  mortgage  on  the  land  alone,  all  fixtures 
<  rected  ])rior  or  subsequent  to  the  mortgage  are  embraced  (7  C.  B. 
[K.  s.]  135,  and  cases  cited;  4  Deae.  &  C'h.  703;  4  E.  D.  S.  474; 

2  Barn.  &  C.  9G ;  2  Adol.  &  El.  157;  19  Barb.  317;  6  id.  370; 
15  Mass.  159;  7  Mete.  40;  8  Wend.  584  ;  '.'  Don.  174;  2  Sandf.  Ch. 
359). 

Juhn  Hanson  for  the  respondents.  PlaintiiVs  liad  a  right  to  fix 
the  character  of  the  property  in  the  engine  and  boiler  by  the  agree- 
ment in  the  chattel  mortgage  {Ford  v.  Cobb.  20  X.  Y.  344,  349; 
Palter  v.  Cornicell,  40  id.  287,  394,  295;  Voorhees  v.  McGinnis. 
IG  Barb.  242,  24G;  s.  c,  48  X.  Y.  278,  286). 

FoLOER,  J.    It  is  well  settled  that  chattels  may  be  annexed  to  the 

real  oi^tate  ami  still  retain  their  character  as  p(>rsonal  property.    See 

Voorhees  v.  McGinnis.  48  X.  Y.  278.  and  cases  there  cited.     Of 

the  various  circumstances  which  nuiy  determine  whether  in  any 

case  this  character  is  or  is  not  retained,  the  intention  with  which 

they  are  annexed  is  one;  and  if  the  intention  is  that  they  shall  not 

by  annexation  become  a  part   of  the   freehold,  as  a  general   rule 

they  will  not.     The  limitation  to  this  is  where  the  subject  or  mode 

r  annexation  is  such  as  that  the  attributes  of  personal  property 

mnot  be  predicated  of  the  thing  in  controversy   (Ford  v.  Cobb. 

."  X.  Y.  31 1),  as  where  the  property  coidd  not  be  removed  without 

Tactically  destroying  it,  or  where  it  or  part  of  it  is  essential  to  the 

ipport  of  that  to  which  it  is  attached  (id.). 

It  may  in  this  case  be  conceded  that  if  then^  were  no  fact  in  it 
lit  the  placing  upon  the  j)remises  of  the  engine  and  boilers  in  the 
lanner  in  which  they  were  attached  tlu-reto.  tlu'y  would  have 
'come  fixtures,  and  would  pass  as  a  jiart  of  the  realty.  lUit  the 
uTcement  of  the  then  owner  of  the  land  and  the  plaintifT  is 
\press,  that  they  should  l>c  ami  remain  jn'rsonal  proj)erty  until 
iie  notes  given  therefor  were  paid;  and  by  the  same  agreement 
ower  was  given  to  the  plaint ilTs  to  enter  upon  the  ])remises  in 
'  rtain  contingencies  and  to  take  and  carry  them  away.  While 
here  is  no  doubt  but  that  the  intention  of  the  owner  of  the  land 
was  that  the  engine  and  boilers  should  ultimately  become  a  part  of 
'le  rciilty  and  l)e  permanently  alVixed  to  it,  this  was  subordinate 


■106  COMMON    LAW    RELATIOXS.  [chap.   I. 

to  the  prior  intention  expressed  by  the  agreement.  That  fully 
shows  her  intention  and  the  intention  of  the  plaintilfs  that  the  act 
of  annexing  them  to  the  freehold  should  not  change  or  take  away 
the  character  of  them  as  chattels  until  the  price  of  them  had  been 
fully  paid.  And  as  parties  may  by  their  agreement,  expressing 
their  intention  so  to  do,  preserve  and  continue  the  character  of  tlie 
chattels  as  personal  property,  there  can  be  no  doubt  but  that  as 
between  themselves  the  agreement  in  this  case  was  fully  sufficient 
to  that  end. 

But  it  is  contended  that  where  in  the  solution  of  this  question 
the  intention  is  a  criterion,  it  must  be  the  intention  of  all  those  who 
are  interested  in  the  lands;  and  that  here  the  defendants,  prior 
mortgagees  of  the  real  estate,  were  interested,  and  have  not  ex- 
pressed nor  shown  such  intention.  It  is  not  to  be  denied  that,  as 
a  general  rule,  all  fixtures  put  upon  the  land  by  the  owner  thereof, 
whether  before  or  after  the  execution  of  a  mortgage  upon  it, 
become  subject  to  the  lien  thereof.  Yet  I  do  not  think  that  the 
prior  mortgagee  of  the  realty  can  interpose  before  foreclosure  and 
sale  to  prevent  the  carrying  out  of  such  an  agreement  as  that  in 
this  case.  Had  the  mortgagees  taken  their  mortgage  upon  the 
lands  after  the  boilers  and  engine  had  been  placed  thereon  under 
this  agreement,  they  would  have  had  no  right  to  prevent  the 
removal  of  them  by  the  plaintiffs  on  the  happening  of  the  contin- 
gencies contemplated  by  it.  The  rights  of  a  subsequent  mortgagee 
are  no  greater  than  those  of  a  subsequent  grantee;  and  he,  it  is 
held,  cannot  claim  the  chattels  thus  annexed,  and  must  seek  his 
remedy  for  their  removal  by  virtue  of  such  an  agreement  upon 
the  covenants  in  his  conveyance  of  the  lands  (Mott  v.  Palmer, 
1  N.  Y.  564;  and  see  Ford  v.  Cohh,  supra). 

A  prior  mortgagee  who  certainly  has  not  been  induced  to  enter 
into  his  relation  to  the  lands  by  the  presence  thereon  of  the  chattels 
in  dispute  subsequently  annexed  thereto  has  no  greater  right  than 
a  subsequent  mortgagee.  Neither  could  claim  as  subject  to  the 
lien  of  his  mortgage  personal  propert}'  brought  on  to  the  premises 
with  permission  of  the  owner  of  the  lands  and  not  at  all  affixed 
thereto.  Nor  can  either  claim  personal  property  as  so  subject  from 
the  mere  fact  of  the  affixing,  where  by  the  express  agreement  of 
the  owner  of  the  fee  and  the  owner  of  the  chattel  its  character  a? 
personal  property  was  not  to  be  changed,  but  was  to  continue,  and 
it  to  be  subject  to  a  right  of  removal  by  the  owner  of  the  chattel 
on  failure  of  performance  of  conditions.  The  language  of  the 
authorities  is  that  the  chattel  in  such  case  is  personal  property,  for 
which  an  action  of  trover  for  the  conversion  of  it  may  be  main- 
tained (Smith  V.  Benson,  1  Hill,  176;  Mott  v.  Palmer,  supra: 
Farrar  v.  Cliauffetete,  5  Den.  527;  Ford  v.  Col)h,  supra). 


SK*^'-  JV]  Tll-IT    1.    liDUTON.  407 

Anotlier  consideration  iiiakos  it  clear,  I  tliink,  that  in  this  case 
the  absence  of  a  concurrent  inti'ntion  on  the  ])art  of  tlie  prior 
mortgagees  is  of  no  weiglit.  As  above  stated,  as  a  general  rule,  all 
fixtures  put  up(»n  lands  by  the  owner  thereof  beconu'  a  part  thereof 
and  subject  to  the  lien  of  a  prior  mortgage;  but  sometimes  it  is 
doubtful  if  they  have  been  so  annexed  as  to  so  become.  And  then, 
it  is  said,  the  (piestion  may  be  decided  by  the  presumed  intent  of  the 
party  making  tlie  annexation  of  the  chattels  {Winsloir  v.  Mcr.  Ins. 
Co.,  4  Mete.  30G).  The  law  makes  a  presumption  in  the  case  of 
any  one  making  such  annexation,  and  it  is  different  as  the  interest 
of  the  person  in  the  land  is  difTerent,  that  is,  whether  it  is  tem- 
porary or  permanent.  The  law  presumes  that  because  the  interest 
of  a  tenant  in  the  land  is  temporary,  that  he  alTixes  for  himself 
with  a  view  to  his  own  enjoyment  during  his  term,  and  not  to 
enhance  the  value  of  the  estate;  hence,  it  permits  annexations  made 
by  him  to  be  detached  during  his  term,  if  done  without  injury  to 
the  freehold  and  in  agreement  with  known  usages.  The  law  pre- 
sumes that  because  the  interest  of  the  vendor  of  real  estate  who  is 
the  owner  of  it  has  been  permanent,  that  he  has  made  annexations 
for  himself,  to  be  sure,  but  with  a  view  to  a  lasting  enjoyment  of 
his  estate  and  for  its  continued  enhancement  in  value.  So  the 
mortgagor  of  land  is  the  owner  of  it,  and  has  a  permanent  interest 
therein,  and  the  law  presumes  that  improvements  which  he  makes 
thereon  by  the  annexation  of  chattels  he  makes  for  him.sclf  for 
prolonged  enjoyment  and  to  enhance  permanently  the  value  of  his 
estate  {Winslow  v.  Mcr.  Ins.  Co.,  supra).  These  are  presumptions 
of  the  intention  of  the  tenant  alone,  the  vendor  alone,  and  of  the 
mortgagor  alone;  nor  are  they  ordinarily  concerned  at  all  with 
the  relation  to  the  lands,  or  with  the  ])uri)ose  of  the  landlord  or  the 
vendee  or  the  mortgagee;  though  there  may  be  cases  in  which  the 
intention  of  both  parties  may  be  of  elTect,  as  where  a  mortgagee 
has  loaned  money  with  the  understanding  that  it  shall  be  applied 
to  enhance  the  value  of  the  estate  by  the  addition  of  chattels  in 
.such  manner.  And  they  are  but  presuni|)tions,  which  in  all  ca.ses 
mav  be  entirely  done  away  with  l)y  the  facts  (Lancusttr  v.  Eve, 
T)  ("'.  H.  \s.  s.l'717).  So  in  Elliott  v.  Bishop.  10  E.xch.  49G ;  s.  C. 
in  error,  11  Exch.  113,  it  is  recognized  that  the  express  agreement 
of  a  tenant  may  prevent  him  from  the  exercise  of  his  right  to 
detach  his  annexations,  which  is  the  same  as  to  say  that  his  agree- 
ment having  shown  that  it  was  not  his  intention  to  remove  them, 
the  presumption  of  contrary  purpose  which  would  otherwise  arise 
is  repelled.  So  in  Poller  v.  Cromwell.  40  X.  Y.  '.^ST,  and  cases 
<ited,  it  is  conceded  that  if  the  intention  of  the  vendor  of  lands  h«' 
lo  retain  in  chattels  annexed  thereto  their  character  as  personal 
])rnperty,  such  intention  will  pnnail.     So  in  T'/.-.r/i <•<-«:  v.  McGinni<!. 


408  COMMON    LAW    RELATIONS.  [CHAI'.  I. 

^upra,  it  is  conceded  that  if  the  intention  of  the  mortgagor  of  lands 
had  been  that  chattels  annexed  were  to  be  removable,  the  prior 
mortgagee  could  not  have  held  them  against  the  receiver  of  the 
goods,  &c.,  of  the  mortgagor.    See  also  Crane  v.  Brigliam,  11  N.  J. 
Eq.  (3  Stockton),  29,  35;  Teaff  v.  Hewitt,  1  Ohio  St.  (McCook), 
511-531.     The  general  rules  governing  the  rights  of  parties  in 
chattels  thus  annexed  to  the  real  estate  rest,  as  it  appears,  upon 
llio  presumptions  which  the  law  makes  of  what  their  purpose  is 
in  the  act  of  annexation.     This  presumption  grows  out  of  their 
relation  to  and  interest  in  the  land,  and  not  from  the  relation  or 
interest  in  it  of  others  which  may  be  opposite.     And  as  the  pre- 
sumption of  their  purpose  grows  alone  out  of  their  relation  and 
interest,  it  is  repelled  by  whatever  signifies  a  purpose  different; 
not  a  different  purpose  in  those  holding  a  relation  which  may 
become  hostile,  but  their  own  different  purpose.   Hence,  I  conclude 
that  the  agreement  of  the  owner  of  the  land  with  the  plaintiffs,  as 
it  did  fully  express  their  distinct  purpose  that  these  annexationi 
of  boiler  and  engines  should  not  make  them  a  part  of  the  real 
<>state,  was  sufficient  to  that  effect  without  any  concurring  intention 
of  the  defendants  as  prior  mortgagees. 

Though  the  defendants  became  the  purchasers  of  the  land  on 
the  foreclosure  of  the  mortgages,  and  were  the  owners  of  it  in  fee, 
and  probably  in  actual  possession  of  it,  and  of  the  boilers  and 
engines  annexed  to  it,  before  this  action  was  brought  or  demand 
made  of  them  for  these  chattels,  yet  they  are  to  be  considered  in 
this  case  only  as  prior  mortgagees  of  it.  Such  is  the  effect  of  the 
stipulation  made  by  them  that  the  ^sale  upon  the  decrees  should 
not  in  any  manner  change  the  legal  rights  of  the  plaintiffs  in  this 
action  ;  but  for  this  it  would  have  been  necessary  to  have  determined 
the  effect  upon  the  rights  of  the  parties  of  the  sale  on  foreclosure 
and  the  change  of  title  and  possession  of  the  lands,  and  the  applica- 
tion to  that  state  of  facts  of  the  principle  laid  down  in  Lane  v. 
King,  8  Wend.  584",  and  kindred  cases. 

It  appears  that  the  boilers  and  engine  cannot  be  removed  without 
some  injury  to  the  walls  built  up  about  them,  and  which  are  a  part 
of  the  real  estate ;  yet  this  fact  will  not  debar  the  plaintiffs.  The 
chattels  have  not  become  a  part  of  the  building;  the  removal  of 
them  will  not  take  away  or  destroy  that  which  is  essential  to  the 
support  of  the  main  building  or  other  part  of  the  real  estate  to 
which  they  were  attached ;  nor  will  it  destroy  or  of  necessity  injure 
the  chattels  themselves ;  nor  will  the  injury  to  the  walls  about  them 
1)0  irreat  in  extent  or  amount.  So  that  the  limitation  hereinbefore 
stated  does  not  apply. 

It  is  proper  to  add  that  the  English  case  cited  and  much  relied 
ii])on  by   iho  defendants   has   not   been   overlooked    {Walmsley  v. 


I 

I 


•''^:«'-   '^-l  TIIIT    /•.     IIOIITON.  ■!<):> 

Milne,  :  ('.  H.  |n.  >.  |  li:,).  1  i|(,  uui  ^rallar  from  il  lliat  tli.- 
ilceision  was  placed  »i|)()ii  the  jjround  (as  llu*  d.'ft'iulants  claim) 
Ihal  till'  mort^iiixcc  of  tln'  land  did  not  expect  or  understand  that 
the  chattels  aiiiiexi'd  were  reniovahle  or  to  he  removed.  'J'he  oj)in- 
ion  of  the  court  irccms  sumnud  up  in  the  concluding  sentence: 
**  We  think,  therefore,  that  when  ihe  morl;xa;,'or  (who  was  the  real 
owner  of  the  iidieritance)  alter  the  date  of  the  moit;;aj;e  annexed 
the  lixturi's  in  (picstion  for  a  ]»ermanent  purpose  and  for  the  hetter 
enjoyment  of  his  estate,  he  therein-  uuule  them  a  part  of  the  frec- 
liold  which  had  hem  vested  hy  the  mortjjafre  deed  in  the  mort- 
pipee."  It  is  to  he  home  in  mind,  too,  that  in  En<(land  and  in 
Massachusetts  the  rights  of  ;i  niorljxagee  of  land  in  the  mortgaged 
premises  arc  greater  than  in  this  State,  lie  is  regarded  as  the 
owner  and  the  mortgagor  in  the  light  of  a  ti-nanl.  So  that  things 
annexed  to  the  land  heconie  fixtures  upon  the  land  of  the  mort- 
gagee, as  it  were.  See  case  last  cited,  i)age  ]X]:  liiilh-r  v.  ['luir, 
7  Mete.  -10. 

The  judgment  should  he  allirnieil.  with  costs  to  the  resj)ondents. 

All  concur. 

Jiidf/mcnt  affirmed} 

^  Ouffus  V.  Iloirnril  Fiinificr  Co.,  S  App.  I).  (X.  V.)  .■>i»7  (  ISDli)  ;  Kmes 
V.  Entcs,  10  Kans.  :U-l  (1872);  Cochnin  v.  riint,  57  N.  II.  r>14  (1H77); 
l*irst  Xational  liauk  v.  Elmore,  52  Iowa,  541  (1879)  ;  Campbrlt  v.  Roddij, 
44  N.  J.  Eq.  244  (18HS)  ;  linnkky  v.  Forhncr,  117  liul.  17U  (ISSS)  ;  War- 
ren V.  LiddcU,  110  Ala.  232  (  1895)  -.  tri7/i.v  v.  Muugcr  Machinr  Co..  l.J  Tex. 
<  iv.  .\pp.  077  (1890),  accord.  And  coinparc  Mcl'itddcn  v.  Allrn,  134  N.  V. 
489   (1892),  and  Urannon  v.  Vuuyhun,  00  Ark.  87    (1898;. 


110  COMMON    LAW    RELATIONS.  [CHAP.  U 

CHAPTER    I.   {Continued). 
Section  V.     Waste  and  Repair. 

KING  V.  SMITH. 

High  Court  of  Chancery,  1843. 

(2  Hare,  239.) 

W.  Smith  conveyed  and  surrendered  certain  freehold  and  copy- 
hold estates  to  the  use  of  J.  Reid  and  his  heirs,  by  way  of  mortgage, 
to  secure  £2700  and  interest.  W.  Smith,  by  his  will,  gave  all  his 
real  and  personal  estate  to  the  defendant,  S.  Smith  (who  was  also 
his  heir-at-law,  customary  heir,  and  sole  executor),  "in  hopes  that 
he  might  be  able  to  pay  his  (the  testators)  just  debts,  and  find 
a  surplus  for  his  trouble."  J.  Reid  devised  his  legai  interest  in 
the  mortgaged  premises  to  the  plaintiffs,  and  appointed  them  his 
executors.  The  plaintiffs,  by  their  bill,  charged  that  the  mortgaged 
premises  were  a  "  scanty  security"  for  the  principal  and  interest 
due,  and  that  the  plaintiffs  were  entitled  and  claimed  to  be  specialty 
creditors  upon  the  general  estate  of  the  mortgagor  for  the  defi- 
ciency, and  that,  to  ascertain  the  same,  the  mortgaged  premises- 
ought  to  be  sold.  The  bill  prayed  an  account  of  the  mortgage 
debt,  a  sale  accordingly,  and  payment  out  of  the  proceeds;  and 
if  the  same  were  insufficient,  that  the  plaintiffs  might  be  declared 
to  be  specialty  creditors  upon  the  estate  for  the  deficiency;  that,  if 
necessary,  the  suit  might  be  taken  as  being  on  behalf  of  the  plain- 
tiffs, and  all  other  the  unsatisfied  creditors  of  W.  Smith,  and  the 
personal  and  real  estate  duly  administered  and  applied. 

After  appearance  and  before  answer  the  plaintiffs  filed  their 
supplemental  l)ill.  stating  that,  since  the  original  bill  was  filed,  the 
defendant  had  felled,  and  was  proceeding  to  fell  and  carry  away 
large  numbers  of  timber  and  timber-like  trees  which  were  growing 
on  the  mortgaged  i)remises,  that  many  of  such  trees  were  lying 
upon  the  lands,  and  had  been  advertised  for  sale,  and  praying  an 
account  of  the  trees  felled,  and  of  the  monie?  produced  by  the  sale, 
and  an  injunction  to  restrain  the  felling  and  sale  of  trees  from  the 
mortgaged  premises. 

Tlie  plaintiffs  moved  for  the  injunction,  according  to  the  prayer. 

ViCE-CiiANCELLOR  [Wigram].  It  is  now  an  established  rule 
that  if  the  security  of  the  mortgagee  is  insufficient,  and  the  court 
is  satisfied  of  that  fact,  the  mortgagor  will  not  be  allowed  to  do 


NKC.    v.]  KINO     C.     S.MI  111.  ill 

that  wlii<li  utiiiM  (liivi'tlv  im|)air  tin-  security — rut  timltiT  u|ii>ii 
the  iiiortga^i'd  prt'iiiiscs.  It  has  km  ar^'ucd  tliat  if  the  hill  Im- 
for  a  foreclosure,  wlicii  the  mortgagee  seeks  to  take  the  whoh; 
estate,  the  eourt  will  not  prevent  him  [the  iiiort^ja^^or  |,  p(  luliu;; 
that  suit,  from  cutting  timi)er  or  rreeivinj;  rents,  or  doing  any  otluT 
act  iniident  to  the  ownership:  i)Ut  that,  if  the  jdaintifT  suetl  as 
a  general  eri'(lit(»r.  the  eourt  would  give  him  the  relief  hy  injunc- 
tion. 'J'hat,  however,  is  not  tite  distinction.  The  rule  would  be 
rather  the  other  way.  The  plaintilT.  in  a  foretlusure  suit,  asks 
nothing  more  than  the  estate,  whilst  the  plainliir,  in  creditors'  suit, 
-oeks  the  application,  not  only  of  the  mortgagee!  estate,  but,  if 
necessary,  of  the  general  estate  also,  in  ])ayment  of  his  debt.  It  i.s 
very  diliieult  to  suppose  that  a  mere  creditor  can  have  any  such 
right  as  the  argument  assumes.  On  what  principle  is  the  executor 
and  trustee  of  real  estate  to  be  restrained  at  the  suit  of  a  general 
creditor  from  acting  according  to  his  judgment  in  tin-  management 
of  the  property? 

I  think  the  allegation  in  the  bill,  iliat  the  mortgaged  pri'mi>es 
are  a  scanty  security  for  the  debt,  is  a  sulVicient  foundation  f"r 
admitting  evidence  of  the  value  of  the  estate. 

ViCE-Cii.\xt'KLLOK.  The  ea.-es  decide  that  a  mortgagee  out  of 
possession  is  not  of  course  entitled  to  an  injunction  to  restrain  the 
mortgagor  from  cutting  timber  on  the  mortgaged  ])roperty.  If  the 
security  is  sullicient,  the  court  will  not  grant  an  injunetion  merely 
because  the  mortgagor  cuts,  or  threatens  to  cut.  timber.  There 
must  be  a  sj)ecial  case  made  out  befori'  this  eourt  will  inter|)o.'ie. 
The  dillieulty  I  feel  is  in  discovering  what  is  meant  by  a  "  sullicient 
security."  Su]ij)ose  the  mortgage  debt,  with  all  the  expenses,  to  bi? 
£1000,  and  the  jiroperty  to  l)e  worth  i'lO(K),  that  is.  in  one  sense, 
a  suflieient  security;  but  no  mortgagee  who  is  well  advised  would 
lend  his  money  unless  the  mortgaged  j)roperty  was  worth  one-third 
more  than  the  amount  lent  at  the  tinu»  of  the  mortgage.  If  the 
property  consisted  of  houses,  wjjicij  are  subject  to  many  casualties 
to  which  land  is  not  liable,  the  mortgagee  would  proltably  re<]uir«! 
more.  It  is  rather  a  ([uestion  of  prudence  than  of  actual  value. 
I  think  the  question  which  must  be  tried  is  whetlu-r  the  property  tin* 
mortgagee  takes  as  a  security  is  .-ullicieiit  in  this  sensi- — that  the 
security  is  worth  so  much  more  than  the  money  advanc<'<l  that 
the  act  of  cutting  timlter  is  not  to  be  considered  as  substantially 
imj>airing  the  value,  which  was  the  b.isi«;  of  the  contract  betwi-en 
the  parties  at  tin'  time  if  was  entered  into.  I  have  read  ihe  atlidavit, 
and  1  cannot  lind  that  either  tlv>  rental  or  income  of  the  propcriv 
appears;  but  it  seems  that  the  substantial  part  of  it  lon-^ists  of 
houses,  whicli  might  make  it  a  more  serious  ([uestion  whether  the 


4\2  COMMON"    LAW    RELATIOXS.  [CIIAP.  I. 

court  should  iwrmit  the  mortgagor  to  cut  the  timber.  The  supple- 
mental bill,  which  states  the  circumstances  with  respect  to  the 
timber  and  prays  the  injunction,  contains  no  case  with  reference 
to  the  insutheiency  of  value,  nor  does  the  plaintiff,  by  his  affidavit, 
make  any  such  case.  The  bill  and  affidavit  appear  to  proceed  on 
the  supposition  that  the  mortgagor  has  no  right  to  cut  the  timber 
under  any  circumstances.  In  the  valuation  which  is  attempted 
to  be  shewn,  I  am  not  told  the  quantity  of  the  land,  or  the  rental; 
nor  can  I  discover  of  what  class  the  houses  are,  or  whether  they  are 
tenanted  or  not,  or  what  is  the  nature  of  the  property  generally. 

It  is  stated,  on  the  defendant's  affidavits,  that  he  did  not  cut 
any  of  the  trees  with  the  intention  of  injuring  the  estate,  but  on 
the  contrary  he  did  it  in  the  due  and  proper  course  of  husbandry 
and  management.  What  is  meant  by  felling  twenty-one  large  elm 
trees  in  due  course  of  husbandry,  I  cannot  comprehend.  It  is 
obvious  that  the  defendant  is  using  language  of  which  he  does  not 
know  the  effect.  There  being,  however,  no  abstract  right  on  the 
part  of  a  mortgagee  to  say  that  the  mortgagor  shall  not  cut  timber, 
I  am  satisfied  that  there  must  be  clearer  evidence  of  the  value  before 
me,  or  I  cannot  grant  the  injunction. 

Let  the  motion  stand  over,  with  liberty  to  apply.  If  the  defend- 
ant proceeds  to  cut  more  timber,  the  plaintiff  can  renew  his 
application,  and  bring  before  me  a  case  upon  which  I  can  adjudi- 
cate, and  then  the  costs  of  this  motion  will  l)e  disposed  of.  I  should 
be  very  reluctant  to  decide  it  without  knowing  what  is  the  actual 
value  of  the  security  which  has  been  accepted  by  the  mortgagee,  or 
whether  he  is  really  secured  or  not.^ 


Petersox  y.  Clark,  15  Johns.  205  (1818).  Per  Curiam.  There 
can  be  no  doubt  but  that  the  deed  from  Van  Camp  to  Clark,  and 
defeasance  given  back,  amounted  only  to  a  mortgage,  and  the 
simple  question  then  is,  whether  a  mortgagee  can  maintain  an 
action  of  waste  against  the  mortgagor,  before  the  forfeiture  of  the 
mortgage ;  for  the  waste  alleged  to  have  been  committed  in  this 
case  was  before  the  expiration  of  the  time  limited  for  the  payment 
of  the  money  secured  by  the  mortgage.  Indeed,  the  present  suit 
was  commenced  before  that  time.     Waste  is  an  injury  done  to  tbc 

^  This  represents  the  general  rule  in  tliis  eountry:  Bradj/  v.  Waldron, 
2  Johns.  Ch.  148  (181G);  Fairhank  v.  Cndworih/ S3  Wis."  358  (1873): 
Eiinnons  v.  Hinderer,  24  N.  J.  Eq.  39  (1873)  ;  Triplcit  v.  Parmlee,  16  Neb. 
((4!)  (1884),  (semhle)  ;  Moriarty  v.  Ashtcorth,  43  Minn.  1  (1890).  That 
the  right  to  an  injunction  to  restrain  waste  by  the  mortgagor  is  absolute, 
sen  \clson  v.  riiiajur,  30  111.  473    (1803). 


**'•''•   ^- 1  CA.MI'HKI.I.    /•.     MAiOMlt.  W'.i 

inheritaiui',  iiiul  the  action  of  waste  is  ;:iv(n  to  liim  who  lia>  tlio 
inheritance  in  expectancy,  in  n-maindcr,  or  reversion;  Imt  it  i< 
exitressiy  hiid  down  l)y  HIackstone  (.{  HI.  Corn,  'ii')),  that  he  who 
hath  the  ri'inainder  for  lifi-  only  i.s  not  entitled  to  sue  for  the  wast<', 
since  his  interest  may  never,  perhaix.  eonie  into  pos.«;ession,  and 
then  he  lias  sulTereil  no  injury.  S.i.  likewise,  with  resjKH't  to  the 
niortga;,'ee,  csi)ecially  when  the  ni(>rl;,M;,'e  Ls  not  forfeited,  his  intere-t 
in  the  land  is  contin;Lrent,  and  may  he  defeateil  hy  |)ayment  of  the 
inoney  secnred  hy  the  mortpi<xe;  and  it  must  follow,  as  matter  of 
course,  that  he  ha.s  not  such  interest  in  the  timher  as  to  sustain  an 
action  of  trover.   The  judgment  of  the  court  helow  must  be  reversed. 


Cami'HEi.l  v.  Macomb,  4  Johns.  Ch.  oill  (l.S'^O).  Tin-:  Ciian- 
CELLOu  [Ki:nt|.  I  cannot  make  it  a  condition  of  the  order  stayiui^ 
the  sale,  that  tiie  defendant  should  repair  the  dam.  'I'his  would  be 
a  very  extraordinary  and  dangerous  interference  with  the  exercise 
of  the  rights  of  a  mortgagor,  and  is,  in  practice,  unknown.  Suppose 
the  most  valuable  part  of  the  mortgaged  ])remises  should  consist 
of  buildings,  and  they  should  accidentally  be  destroyecHty  fire;  can 
the  mortgagor  be  com|)elled  immediately  to  rebuild?  Is  it  not 
rather  incumbent  on  the  mortgagee,  or  the  surety,  to  ])rovide  for 
such  a  case  in  the  contract,  or  by  insurance?  It  would  bring  dis- 
tress and  ruin  upon  a  mortgagor,  to  charge  him  with  burdens  and 
duties  not  within  tlu'  contemplation  of  his  eontraet,  and,  therefon-, 
not  within  his  provident  foresight.  How  far  the  court  could  or 
ought  to  interfere  in  a  ca.se  of  negligent  or  permissive  waste, 
rapidly  impairing  the  security,  is  a  ([ucstion  which  need  not  now 
be  discussed;  for  the  relief,  if  any,  would  not  be  by  directing  the 
mortgaged  premises  to  be  sold  for  a  debt  not  due,  or,  under  a  decn  e 
of  sale,  to  give  an  order  to  repair  or  a  reference  to  assess  damage-. 
The  necessity  of  any  interference  of  any  kind,  in  ca.ses  of  m<»ri- 
gages,  is  exceedingly  diminished  by  the  consid»'ration  that  the 
mortgagi'c  can,  if  he  pli-ases,  relieve  himself  by  obtaining  possession 
of  the  land,  and  make,  at  his  own  expense,  the  re(|uisite  repairs,  for 
which  he  would  be  allowed,  in  account,  when  the  mortgagor  came 
to  redeem.  It  is  also  stated  in  this  ca.se  that  the  present  owner  of 
the  e«iuify  of  redemption  is  in  the  act  of  repairing  the  dam;  and 
it  is  so  evidently  his  interest  to  do  it,  and  his  jiayment  of  the 
interest  due  on  the  mortgage,  together  with  the  co<ts.  is  sucli 
decisive  evidence  that  the  i)roperty  is  considen-d  to  be  worth  nioro 
than  the  debt  charged  thereon,  that  I  should  infer  there  was  littlo 
or  no  foundation  for  the  alarm  discovered  in  the  petition. 


414  COMMON    LAW    RELATIOXS.  [CHAP.  I. 

STOWELL  V.  PIKE. 

Supreme  Judicial  Court  of  Maine,  1823. 

(2  Greenl  387.) 

In  an  action  of  trespass  quare  clausiim  f regit,  the  case  was  thus: 
The  plaintiff,  by  his  deed  dated  September  15th,  1819,  bargained 
and  sold  the  close  described  in  the  writ  to  one  Bickford,  in  fee, 
taking  from  Bickford,  at  the  same  time,  a  mortgage  of  the  same 
land,  to  secure  the  payment  of  the  purchase  money,  for  which 
Bickford  also  gave  his  notes  of  hand  to  the  plaintiff,  amounting  to 
three  hundred  and  thirty  dollars,  payable  at  different  periods  in 
the  course  of  two  years  and  a  half,  with  interest.  In  the  course 
of  the  spring  following,  Bickford  paid  his  first  instalment;  and,  in 
December,  1820,  he  sold  all  the  timber  then  standing  on  the 
premises,  to  the  value  of  two  hundred  and  thirty  dollars,  to  the 
defendant.  Pike,  and  others,  who,  with  the  other  defendants  in 
their  employment,  without  license  from  the  plaintiff,  cut  it  down 
and  converted  it  to  their  own  use,  for  which  cutting  this  action  was 
brought.  Bickford  continued  in  possession  of  the  premises  from 
the  date  of  his  deed  till  after  the  cutting  of  the  timber,  when  the 
plaintiff  entered  upon  him  for  condition  broken,  the  residue  of  the 
purchase  money  being  still  due. 

Upon  these  facts  the  parties  submitted  the  cause  to  the  decision 
of  the  court,  the  defendants  waiving  any  objection  to  the  form  of 
action. 

L.  Whitman  for  the  defendants.  This  case  is  distinguishable 
from  Sinith  v.  Goodwin,  decided  lately  in  Cumberland  {ante,  p.  173) 
in  the  circumstance  of  Bickford's  being  in  possession  of  the  premises 
at  the  time  of  the  supposed  trespass,  and  in  his  having  paid  all  the 
purchase  money  then  due.  The  decisions  in  Massachusetts  are 
against  any  action  in  favor  of  the  mortgagee  for  an  injury  to  the 
mortgaged  premises  while  in  the  possession  of  the  mortgagor  and  so 
situated  as  to  render  it  doubtful  whether  the  mortgagee  will  claim 
to  hold  the  land,  or  rely  on  his  personal  security  {Hatch  v.  Dicight 
d-  al,  17  Mass.  289).  ' 

In  this  country,  the  mortgagor,  under  circumstances  like  the 
present,  must,  from  the  usage  of  the  country,  even  where  no  express 
as/reemcut  is  proved,  bo  considered  as  having  license  from  the 
mortgagee  to  do  the  acts  for  which  these  defendants  are  sued.  Here 
the  deed  and  mortgage  were  of  even  date,  the  land  was  what  is 
termed  a  wild  lot,  and  the  acts  done  by  the  defendants  were  such 
only  as  are  necessary  to  reduce  any  similar  lot  to  a  state  of  cultiva- 
tion and  productiveness.    It  must  have  been  known  l)y  the  plaintiff 


S*:^    ^1  STOWKLL    V.    riKK.  415 

that  siK'h  was  tlu-  course  to  Ix'  acloj)t(.'il,  else  no  motive  can  1)^' 
as>if.MU'd  for  the  purchase.  Such  has  been  the  well-known  an<l 
undeviatin^'  usa«i:e  from  the  first  setth'ment  of  this  country,  rcspect- 
inj^  hinds  thus  j)urchase(l,  and  it  ou;,dit  not  to  he  disturlx'd  uj)on 
liji;ht  grounds.  It  is  a  reasonal)K'  practice,  favorable  to  agriculttire, 
and  deserving,  on  the  score  of  pul)lic  imlicy,  of  all  the  encourage- 
ment which  courts  of  ju-^tice  can  give. 

drccnlcaf  and  Lincoln  for  the  j)laintill".  Tlic  action  is  substan- 
tially l)y  the  mortgagee  against  the  mortgagor,  for  stri{)ping  the 
land  of  its  timber.  The  trees  were  fixtures,  and  therefore  not 
removable  by  tlie  mortgagor:  and  this,  whether  erected  by  iiim  or 
not  {Elires  v.  Mair,  3  East.  38;  ^^niiUi  v.  (loodwin.  nnle,  p.  173). 
To  the  objection  drawn  from  the  general  practice  in  these  cases 
and  frompublic  policy,  it  is  answered,  1,  this  was  not  a  clearing  up 
of  the  lot.  for  the  ))urpose  of  agriculture,  but  a  sale  of  all  the 
timber  then  standing  on  it,  and  so  is  not  the  case  supposed. 
*,?.  Whatever  may  be  the  rule  of  equity  or  good  policy,  the  mortgagor 
is  not  brought  within  its  principle,  because  he  never  applied  to  the 
«lischarge  of  his  debt  due  for  the  land  any  part  of  the  money  ob- 
tained by  the  sale  of  the  timber.  Further,  the  indulgence  here 
claimed  amounts  to  a  license,  which  is  c\j)ressly  negatived  in  the 
case  stated.  The  mischiefs  anticipated  by  the  defendants  may 
always  be  avoided  in  practice  by  pleading  a  license,  and  relying 
for  proof  on  the  general  usage,  whicii  the  jury  will  determine. 
Mellex,  C.  J.,  delivered  the  opinion  of  the  court,  as  follows: 
If  A.  mortgage  lands  to  B.  in  fee,  the  legal  estate  is  considered 
to  be  in  B.  as  between  him  and  .\.  and  tho.se  claiming  under  A.; 
but  as  to  all  the  world  but  B.,  A.  is  considered  as  seised  of  the  legal 
<'state,  and  so  may  convey  to  C,  subject,  however,  to  the  mortgage 
{/ihinci/  V.  lieane,  ante,  p.  13"^).  For  this  reason,  B.  nuiy  main- 
tain trespass  against  A.  and  those  claiming  under  him,  because  A.'s 
jmsscssion  is  in  submission  to  B.'s  title,  and  is,  in  fact,  the  posses- 
sion of  B.  In  NcmiU  v.  Wrif/ht.  3  Ma.ss.  138,  Par.sons,  ('.  J., 
«lelivering  the  opinion  of  the  court,  says,  ''  It  is  very  clear  that, 
when  a  man  seised  of  lands  in  fee  shall  mortgage  them,  if  then- 
be  no  agreement  that  the  mortgagor  shall  retain  the  j)ossession.  the 
mortgagee  may  enter  immetliately,  put  the  mortgagor  out  of  pos.ses- 
sion,  and  receive  the  profits:  and  if  the  mortgagor  reftises  to  quit 
the  possession,  tin*  mortgagee  may  consider  him  as  a  tn'spas.ser,  and 
may  maintain  an  action  of  trespass  against  him.  or  he  may.  in 
a  writ  of  entry,  recover  against  him  as  a  disseisor."  There  is 
nothing,  thru,  in  the  relation  betwi'cn  mortgagor  and  mortgagtH*. 
inconsistent  with  the  luiture  of  an  action  of  trespass  by  the  latter 
against  the  former:  and  surely  a  mortgagor,  or  ont>  claiming  under 
him.  is  not  less  liable  for  an  injury  to  the  mortgagee  by  cutting 


416  COMMON    LAW    KELATIOXS.  [CHAP.  I. 

down  and  carrying  away  timber  and  wood  from  the  premises,  than 
he  would  be  by  merely  withholding  the  possession  and  receiving 
the  rents  and  profits  to  his  own  use  (Union  Bank  v.  Emerson, 
15  Mass.  159;  Bro.  Tr.  55,  363;  5  Rep.  13;  Cro.  Eliz.  784).  Wc 
need  not,  however,  rely  on  these  cases,  or  decide  on  the  form  of 
action,  as  the  parties  have  waived  all  objections  to  form,  if  any 
exist.  But  on  these  principles  we  decided  the  case  of  Smith  v. 
Goodwin,  cited  for  the  plaintiff;  and,  on  the  same  principles,  we 
think  the  action  maintainable,  unless  the  alleged  usage  and  general 
understanding  with  respect  to  felling  trees  and  clearing  wild  lands, 
though  mortgaged  to  secure  payment  of  the  purchase  money,  should 
be  considered  as  preventing  the  application  of  those  principles  to 
a  case  like  the  present.  It  was  urged  by  the  defendant's  counsel 
that  such  usage  and  general  tacit  understanding  are  equal  to  a 
license  from  the  mortgagee  to  the  mortgagor  or  his  assignee,  to  do 
the  acts  which  are  charged  in  this  action  as  a  trespass.  The  facts 
in  the  case  do  not  present  this  question.  We  have  no  means  of 
knowing  whether  any  such  usage  and  general  understanding  exist. 
The  argument  of  the  counsel,  therefore,  cannot  avail,  as  it  does  not 
apply.  If  such  usage  and  understanding  existed  at  the  time  of  the 
transactions  of  which  we  have  been  speaking,  and  were  considered 
as  amounting  to  a  license,  and  pleadable  as  such  against  the  deed 
in  question,  they  should  have  been  disclosed  in  the  form  of  a  special 
plea,  and  the  question  arising  thereon  left  to  the  decision  of  the 
jury.  As  the  case  stands,  the  plaintiff  must  have  judgment  for 
the  value  of  the  timber  and  costs,  according  to  the  agreement  of 
the  parties.^ 


COOPER  v.  DAVIS. 

Supreme  Court  of  Errors  of  Connecticut,  1843. 

(15  Con7i.  556.) 

This  was  an  action  of  trover  to  recover  the  value  of  a  pair  of 
Burr  mill-stones,  taken  by  the  defendant. 

The  cause  was  tried  at  New-Haven,  January  term,  1843,  before 
Waite,  J. 

The  plaintiff  claimed  title  to  the  property  in  question,  by  virtue 
of  a  sale  made  to  him  by  Walter  S.  Thompson  and  Charles  Cooper. 

^  Pettengill  v.  Evans,  5  N.  H.  54  (1829)  ;  Dorr  v.  Diiddcrar,  88  111.  107 
(1878),  accord.  So  in  Vermont,  after  condition  broken:  Langdon  v.  Paul, 
22  Vt.  205   (1850)  ;  Eagar  v.  Braincrd,  44  Vt.  294   (1872). 


SEC.  v.]  coori:i{  r.  D.vvis.  417 

Tlio  defendant,  wlio  ailniititd  tlic  tiikingf  claimed  a  right  to  do  so, 
under  the  following  eireuinslances.  In  October.  1HH!>,  he  was  the 
owner  of  an  oltl  grist-mill,  and.  having  purchased  a  tract  of  land 
for  the  site  of  a  new  grist-mill,  he  entered  into  a  written  contract 
with  Thompson  Cooper  and  David  O.  Way,  to  build  and  complete 
the  new  mill.  After  they  had  erected  the  building  for  the  new 
mill,  and  before  it  was  completed  according  to  the  contract,  viz.  on 
the  iilst  of  February,  181U,  the  defendant  sold  and  conveyed  to 
them  the  whole  property  owned  by  him,  belonging  to  the  old  mill 
and  the  new  one,  including  the  mill-stones  in  question.  To  secun.' 
the  balance  of  the  purchase-money  unpaid  at  the  time  of  the  sale, 
they  afterwards,  on  the  same  day,  gave  two  promissory  notes,  and 
executed  and  delivered  to  the  defendant  a  mortgage  deed  of  the 
same  property.  At  this  time  said  mill-stones  had  been  taken  from 
the  old  mill  and  placed  by  the  side  of  the  new  one,  to  be  used  for 
its  conij)lction.  They  soon  afterwards  finished  it,  and  |)ut  it  in 
operation  for  grinding  corn  and  other  grain,  using  said  mill-stones 
for  this  purpose.  The  lower  stone  was  set  in  a  frame,  fastened  ti> 
the  floor  of  the  mill,  and  was  fastened  therein  by  means  of  wedges 
driven  between  the  stone  and  frame;  and  in  all  other  respects  the 
stones  were  i)laced  in  the  mill  in  the  ni. inner  in  which  mill-stones 
are  usually  placed  in  grist-mills. 

Cooper  and  Way  having  failed  to  pay  one  of  their  notes  after 
it  became  due,  the  defendant  brought  his  bill  for  a  foreclosure, 
and,  at  the  term  of  the  Superior  Court  in  January,  1842,  obtainetl 
a  decree  against  them,  limiting  the  time  of  redemption  to  the  first 
Monday  of  July,  1842.  At  the  same  term  the  defendant  recovered, 
judgment  against  them  in  an  action  of  cjtK-tment  for  the  mort- 
gaged premises.  lie  afterwards  took  out  execution  on  this  judg- 
ment, and  placed  it  in  the  hands  of  an  ollicer  to  be  executed.  The 
officer  made  demand  of  Thorn j)son  Cooper  for  the  possession  of 
the  premises,  who  informed  him  that  he  lived  upon  them,  and 
requested  a  delay  of  one  week  that  he  might  remove  his  family 
therefrom;  to  which  the  ollicer  consented.  In  the  mean  time 
Thom|)son  Cooper  repaired  to  the  mill  antl  removed  therefnun  the 
mill-stones,  and  sold  them  to  the  plaintilT,  who  carried  them  to 
.1  certain  shed  and  placed  them  there  for  safe-keeping.  The 
defendant  afterwards  found  them  in  the  shed,  took  them  away  and 
cnnvertecl  tlicm  to  his  own  use;  which  is  the  taking  complained  uf 
in  the  declaration.  Cooper  and  Way,  the  mortgagors,  continued 
in  pos.scssion  of  the  mill  from  the  time  of  the  sale  made  to  them 
until  after  the  removal  of  the  mill-stones. 

Upon  these  facts  the  j)laintilT  claimecl  that  he  was  entitled  t'» 
a  verdict  in  his  favimr;  that  the  mill-stones  were  not  conveyed  t>» 
the  defendant  by  virtue  of  the  mortgage  deed  and,  consequently. 


418  COMMON    LAW    RELATIONS.  [CHAP.  I. 

that  he  never  had  any  interest  in  them ;  that  the  mortgagors,  having 
placed  them  in  the  mill  for  the  purpose  of  carrying  on  their  business, 
might  lawfully  remove  them  at  any  time  while  they  continued  in 
possession;  that  having  so  removed  them  they  might  legally  sell 
and  deliver  them  to  the  plaintiff,  and  the  plaintiff  prayed  the  court 
so  to  instruct  the  jury. 

The  court  did  not  so  instruct  them,  but  informed  them  that 
although  the  mill-stones  were  not  conveyed  to  the  plaintiff  by  virtue 
of  the  mortgage  deed,  yet,  having  been  placed  in  the  mill  in  the 
manner  stated,  they  became  annexed  to  the  freehold,  and  the 
mortgagors  had  no  right  to  remove  them  therefrom  and  convey  them 
to  the  plaintiff,  especially  after  a  decree  of  foreclosure,  and  jvidg- 
ment  in  an  action  of  ejectment  against  them. 

The  jury  returned  a  verdict  in  favour  of  the  defendant,  and  the 
plaintiff  moved  for  a  new  trial  for  a  misdirection. 

Kimherhj,  in  support  of  the  motion,  contended,  1.  That  the 
defendant  never  acquired  any  title  to  the  property  in  question. 
In  the  first  place,  the  mortgage  deed  does  not  purport  to  convey  the 
machinery  of  the  mill.  Secondly,  it  appears  by  the  motion  that 
these  stones  were  not  in  the  mill  at  the  time  of  the  mortgage,  but 
were  placed  there  by  the  mortgagors  afterwards.  Thirdly,  these 
stones,  after  they  were  placed  in  the  mill,  continued  to  be  personal 
estate,  and,  of  course,  were  removable  at  the  pleasure  of  the  owner 
(Fenton  v.  Roberts,  2  East,  88;  Ehves  v.  Maw,  3  East,  38;  Van 
Ness  V.  Pacard,  2  Peters,  137;  Cresson  v.  Stout,  17  Johns.  R.  116; 
Gale  V.  Ward,  14  Mass.  R.  352).  Fourthly,  at  any  rate,  the  purpose 
for  which  the  stones  were  placed  in  the  mill,  and  whether  real  or 
personal  estate,  were  questions  of  fact  for  the  jury  and,  as  such, 
should  have  been  submitted  to  them  (Gibbons  on  Fixt.  6). 

2.  That  if  these  raill-stones  were  so  annexed  to  the  building 
as  that  they  became  part  of  the  realty,  and  thus  a  security  for 
the  debt,  still,  having  been  severed  from  the  freehold  whilst  the 
mortgagors  were  in  possession,  they  were  unincumbered  in  the 
hands  of  their  vendee.  In  the  first  place,  the  mortgagor  continues 
the  owner  of  the  property  mortgaged  until  foreclosure  (1  Pow. 
Mort.  156,  n.  a;  4  Kent's  Com.  155;  2  Sw.  Dig.  165,  167;  Wakcman 
V.  Banks,  2  Conn.  R.  446,  600 ;  Leonard  v.  Bosivorth,  4  Conn.  R. 
423;  Clark  v.  Beach,  6  Conn.  R.  159,  163;  Tobij  v.  Read,  9  Conn. 
R.  222;  Peterson  v.  Clark,  15  Johns.  R.  205;  Barkhanisted  v. 
Farmingto7i,  2  Conn.  R.  605).  Secondly,  the  mortgage  is  a  power 
to  take  possession  and  hold  the  premises  as  security;  and  if  the 
mortgagor,  whilst  in  possession,  would  impair  the  security  contrary 
to  good  faith,  the  remedy  is  by  injunction,  not  because  the  mort- 
gagee is  owner,  but  because  the  mortgagor  is  using  the  estate 
contrary  to  his  agreement  and  to  his  good  faith  (2  Sw.  Dig.  168, 


'-^«'•  v.|  ('()(H'i:i;    c.    K.vvis.  419 

K".';  I  Kciifs  (uiii.  I.').");  Tuhtj  v.  licihl,  '.)  Conn.  H.  2"i5).  Tlu* 
iinirt;.M;,'(c  ciinnot  sue  the  niortj^ni^'or  for  waste  {I'flrrson  v.  Clark. 
!.">  Johns.  \{.  '.'(>.'»).  'I'liirdly,  the  nu)rt<rM;,'(»r  hcinj,'  the  owner,  and 
in  possession,  has  a  ri^ht  lo  use  the  ])roiH'rty  as  his  own,  until 
restrainetl. 

;{.  That  the  li.udits  of  the  j)arties  are  not  ehan^'cd  hy  the  decree 
aJid  judnnient.  In  the  lirst  jthiee,  if  the  rehition  were  ehan^'ed, 
I  hen  t!ie  luort^^•l;,for  wouhl  he  lialtle  for  the  mesne  profits,  which 
luld  not  he.  lie  would  he  entitled,  also,  to  cnihlements.  And 
lie  would  no  lon^aT  he  liahle  to  pay  interest  on  the  deht.  Secondly, 
the  action  of  ejectinenl  was  premature.  Only  one  note  had  fallen 
due;  and  hy  the  terms  of  tiie  condition,  the  mortgaijee  was  to  take 
jiossession,  on  failure  of  the  mortgagor  to  jiay  i)oth  notes.  The 
lime  limited  hy  tiie  decree  for  redemption  had  not  expired. 

Biihluiu,  contra,  remarked,  1.  That  it  was  apparent  from  the 
facts  stated  in  the  motion,  that  it  was  the  intention  of  the  j)arties 
that  the  mill-stones,  which  were  to  he  used  in  the  completion  of 
the  mill,  were  to  constitute  a  ])art  of  the  defendant's  security. 

'i.  That,  independently  of  the  contract  which  accompanied  the 
mortgage  deed,  and  formed  ])art  of  the  security,  the  mill-stones 
when  j)laeed  in  the  mill  became  fi.xtures  and  part  of  the  freehold, 
and,  as  such,  were  not  removable  by  the  mortgagors,  even  before 
the  judgment  in  ejectment  (fiib.  Fi.xt.  li>,  o,") ;  Farrar  S-  al.  v. 
Slachpolc,  ()  CJreenl.  1.51  ;  Goddard  v.  BnJstrr  i(-  al.,  (J  (Jreenl.  I'il ; 
Serg.  &  Watts,  11 G). 

;{.  That,  by  the  recovery  in  the  action  of  ejectment,  all  right  of 
the  mortgagors  was  at  an  end.     In  going  upon  the  premises  and 
moving  the  mill-stones,  they  were  tresj)assers  {llodijson  <f-  al.  v. 
..iscvijue,  5  15.  \-  .\ld.  88;  7 "  E.  C.  L.  35;  'i  Bac.  Ahr.  138).    The 
indulgence  of  the  oflicer  who  held  the  execution  conferred  no  such 
•ight  (Cib.  Fi.xt.   !3;  1  II.  Bla.  L\"38 ;  1  Pow.  Mort.  311).     It  was 
't  necessary  that  the  writ  of  execution  should  he  executed,  to  put 
.an  end  to  the  tenancy.     The  rights  of  the  parties  were  to  be  deter- 
mined by  the  judgment.     In  tresj)ass  for  the  mesne  prolits,  it  is 
ily  necessary  to  produce  the  record  of  the  judgment  in  ejei-tment ; 
.noof  of  execution  executed  is  not  necessary   (Hul.   X.  P.  8T). 
W.MTi:,  .1.     The  defendant   claimed   title  to  the  mill-stones   in 
lestion,   by   virtue  of  a   mortgage  made  to   him   of  certain   real 
late,  ui)on  whicli  was  situated  a  grist-mill.       lie  hatl  ol)tained 
/ain-i  iln>  mortgagors  a  decree  for  a  foreclosure,  and  a  judgment 
T   the  possession,   in   an   action  of  ejectment.       Hut   before   th«' 
piration  of  the  time  limited   for  the  foreclosure,  and  before  he 
id  taken  actual  possession,  the  mortgagors  severed  the  stones  from 
'•  mill  and  .sold  them  to  the  plaintitT.     The  defendant,  having 
lerwards  found  them,  took  possession  of  them  as  his  own  property. 


420  COMMON    LAW    RELATIONS.  [CIIAI>.   f. 

The  question  arising  upon  these  facts  was  whether  the  phiintiif 
had  thus  acquired,  as  against  the  defendant,  a  valid  title.  Upon 
the  trial  in  the  court  below  it  was  supposed  that,  after  a  decree 
for  a  foreclosure  had  been  passed,  and  a  judgment  rendered  in 
an  action  of  ejectment  for  the  possession,  the  mortgagors  might 
be  considered  as  trespassers  in  removing  the  fixed  machinery  and 
disposing  of  it  in  the  manner  stated  in  the  motion. 

The  law  recognized  in  the  case  of  Hodgson  v.  Gascolgne  was 
thought  to  be  applicable  to  the  present  (5  B.  &  Aid.  81 ;  7  E.  C.  L. 
35).  It  was  there  holden  that  after  a  landlord  had  recovered 
judgment  against  his  tenant  in  an  action  of  ejectment  for  the 
possession  of  the  demised  property,  the  tenant  ceased  to  have  any 
interest  in  the  growing  crops,  and  the  sheriff  had  no  right  to  levy 
an  execution  upon  them. 

But,  upon  consideration,  we  are  all  satisfied  that  the  principl.: 
laid  down  in  that  case  does  not  apply  to  the  present.  There,  tli,^ 
question  was  as  to  the  relative  rights  of  a  landlord  and  tenant ; 
here,  as  to  the  rights  of  a  mortgagor  and  mortgagee. 

By  repeated  decisions  it  is  now  fully  established  that  a  mort- 
gagor, before  his  right  of  redemption  is  foreclosed,  continues  the 
owner  of  the  real  estate  mortgaged;  that  he  is  not  accountable  for 
the  rents  and  profits,  nor  liable,  in  an  action  at  law,  for  waste 
committed  while  in  possession.  The  mortgagee  has  merely  a  lieu 
upon  the  property  for  the  security  of  his  debt,  by  virtue  of  which 
he  may  obtain  possession,  and  appropriate  the  pledge  in  pay  men  *^ 
of  his  debt. 

The  mortgagor  has,  indeed,  no  right  by  the  commission  of 
waste  to  render  the  security  inadequate.  But  the  appropriate' 
remedy  for  such  conduct  is  by  way  of  injunction.  If  the  security 
is  impaired  by  cutting  and  carrying  away  the  wood  and  timber, 
the  mortgagee  has  no  power  to  seize  them  after  they  have  been 
severed  and  carried  away;  but  his  duty,  in  such  case,  is  to  restrain 
the  mortgagor  from  such  acts  by  an  injunction. 

These  general  principles  are  not  denied.  But  it  is  claimed  that 
the  rights  of  the  defendant  have  been  varied  by  the  judgment  iu 
his  favour  for  the  possession.  But  we  do  not  see  that  that  circum- 
stance can  make  any  material  difference.  He  had  not  taken  actual 
possession ;  nor  had  his  title  to  the  property  become  absolute  by  tlit> 
decree.  lie  stood,  simply,  in  the  character  of  mortgagee  out  of 
possession.  His  further  proceedings  in  relation  to  the  mortgage' 
might  at  any  time  have  been  arrested  by  paying  him  his  debt. 
His  interest  in  the  property  continued  to  be  but  a  lien.  The  mort- 
gagors continued  in  possession,  and  as  such  were  the  owners.  TIk- 
mill-stones,  after  they  had  been  severed  from  the  mill,  removed  and 
sold,  could  not  be  reclaimed  by  the  defendant  by  virtue  of  Ihn 


f=r.C.   v.]  VAX     I'Kl.T    i.    M'lilCAU".  421 

iiuiit^Myt'.  Ami  nllhoii<,Mi  tlu'  (lt'si<,Mi  of  the  mortgagors  probably 
uas  to  imi)air  tlu'  tlcfcudant's  security,  and  j)r('V<'nt  him  from 
I  ..Ikvting  the  full  amount  of  his  dobt,  yet  we  eannot  say  that  he 
i>  entitled  to  relief  in  the  manner  in  whieh  he  has  sought  it.  His 
duty  was  to  have  protected  his  rights  hy  an  application  for  an 
injunction. 

Tjion    this   ground,    tiu'refore,   witlmut    adverting   to    the   other 
uestions,  which  we  do  not  consider  it   ni'cessary  to  examine,  we 
liiink  a  new  trial  must  be  granted. 

In  this  opinion  the  other  Judges  concurred. 

Xcic  trial  lo  he  granted} 


VAX  PKLT  V.  McGRAW. 

Court  of  Aitkals  of  Xi;\v  Yohk,  1850. 

(4  X.  Y.  liu.) 

Van  Pelt  sued  Southworth  and  .McGrawin  the  Court  of  Common 
I'loas  of  Tompkins  County,  and  declared  in  case  for  wrongfully 

iid  fraudulently  removing  rails,  timber,  &c.  froui  certain  lands  on 

hich  the  ])laintilT  held  a  n\ortgage,  thereby  injuring  his  security. 
Ac.  It  was  proved  on  the  trial  that  in  May,  1840.  Almeron  Baily 
.  nd  William  E.  Baily,  being  the  owners  of  lU)  acres  of  land  in 
I>ryden,  Tompkins  Countv.  executed  a  bond  and  mortgage  covering 
tlie  same  to  Harvey  A.  Rice,  to  secure  the  payment  of  $.')0(),  one 
half  payable  in  May,  1811,  and  one  half  in  May,  18lv\  In  August, 
1842,  Rice  sold  and  a.ssigned  the  bond  and  mortgage  to  the  plaintitT, 
who  instituted  a  foreclosure  suit  thereon,  and  obtained  the  usual 
-iecree  for  the  sale  of  the  premi.^es  in  .Vugust,  184  1.     The  amount 

lien  due  on  the  mortgage,  including  the  costs  of  the  foreclosure 
Mjit,  was  nearly  nine  hundred  doUars.     The  mortgagors  were  in- 

>lvent,  and  the  premises  were  an  inadcMpiate  security  for  this  sum. 
On  the  sale  under  the  decree,  which  took  place  in  October,  isn, 
the  ])remises  j)nMlucc(l  oidy  the  sun\  of  $.')T."».  Shortly  before  tlie 
hale  and  while  the  advertisement  was  running,  the  defendant  Mc- 
(iraw,  who  had  become  the  owner  of  the  eipiity  of  redem{)tion  by 
conveyance  from  the  mortgagors,  avowing  that   he  would  "strip 

'  Kircher  v.  Srhalk.  3i)  N.  .1.  T..  'M'y  (1S77)  :  Vamlnslicr  v.  Knapp.  JO 
Kans.  (547  (1878);  Triplrit  v.  I'armhr.  10  Nob.  049  (1884):  Vrrtirr  v. 
Urtz.  40  \.  .7.  Kq.  2.")0  (188J>).  arcnrtl.  Compnro  liurkout  v.  Sicift,  27  Cal. 
•J33    (ISO.")),  uinl  Hill  V.  (liriu,  f.l   Cal.  47    (1S75). 


422  COMMON    LAW    RELATIONS.  [CIIAP.  I. 

the  land,"  proceeded  to  draw  off  rails,  and  to  cut  down  and  draw 
off  valuable  timber,  &c.  The  premises  were  thereby  considerably 
lessened  in  value.  These  acts  were  done  by  McGraw,  and  by 
Southworth  aiding  and  assisting  him,  with  full  knowledge  of  the 
plaintiff's  mortgage,  and  of  the  insolvency  of  the  mortgagors. 

The  defendants'  counsel  requested  the  court  to  charge  the  jury 
that  McGraw,  having  the  fee  of  the  land  and  being  in  possession, 
had  a  right  to  take  off  the  fences  and  timber,  and  that  these  acts, 
being  lawful,  could  not  be  deemed  to  have  been  done  wrongfully  or 
fraudulently.  The  court  charged  that  the  acts  were  lawful  if  they 
did  not  prejudice  the  plaintiff's  rights  or  impair  his  security,  but 
if  the  defendants  had  impaired  that  security  with  a  knowledge 
of  the  lien,  then  their  acts  were  wrongful  and  fraudulent.  The 
defendants'  counsel  also  requested  the  court  to  charge  that,  inas- 
much as  the  plaintiff  had  alledged  in  his  declaration  that  the 
defendants  did  the  acts  fraudulently  and  with  a  design  to  injure 
the  plaintiff,  he  was  bound  to  prove  those  allegations  by  other 
evidence  than  the  mere  removal  of  the  rails  and  timber  for  their 
own  emolument.  The  court  refused  so  to  charge.  To  the  charge 
as  delivered  and  to  the  refusal  to  charge  as  requested,  the  defend- 
ants excepted.  The  jury  found  a  verdict  of  $150  in  favor  of  the 
plaintiff.  The  judgment  entered  thereon  was  affirmed  in  the 
Supreme  Court  on  error  brought.  The  defendants  appealed  to  this 
court. 

Pratt.  J.  There  is  no  doubt  but  that  an  action  on  the  case  will 
lie  for  an  injury  of  the  character  complained  of  in  this  case.  It 
forms  no  objection  to  this  action  that  the  circumstances  of  the  case 
are  novel,  and  that  no  case  precisely  similar  in  all  respects  has 
previously  arisen.  The  action  is  based  upon  very  general  princi- 
ples, and  is  designed  to  afford  relief  in  all  cases  where  one  man  is 
injured  by  the  wrongful  act  of  another,  where  no  other  remedy 
is  provided.  This  injury  may  result  from  some  breach  of  positive 
law,  or  some  violation  of  a  right  or  duty  growing  out  of  the  relations 
existing  between  the  parties  (1  Cow.  Treat.  3). 

The  defendant  McGraw,  in  this  case,  came  into  the  possession 
of  the  land  subject  to  the  mortgage.  The  rights  of  the  holder  of 
the  mortgage  were  therefore  paramount  to  his  rights,  and  any 
attempt  on  his  part  to  impair  the  mortgage  as  a  security  was  a 
violation  of  the  plaintiff's  rights.  But  the  case  is  not  new  in  it« 
circumstances.  The  case  of  Gates  v.  Joice,  11  John.  136,  was 
precisely  like  the  case  at  bar  in  principle.  That  action  was  brought 
by  the  assignee  of  a  judgment  against  a  person  for  taking  down 
and  removing  a  building  from  the  land  upon  which  the  judgment 
was  a  lien.  The  plaintiff's  security  was  thereby  impaired.  The 
court  in  that  case  sustained  the  action.     The  decision  in  that  case 


SEC.   v.]  VAN     I'KI.T    C.    .M"<;I!.V\V.  l.'ft 

was  rffi-rrt'd  to  and  approval  in  Lanr  v.  Ilitchcut  k\  11  Jolni.  '^\'.'>. 
and  in  iiardiicr  v.  Ucnrll,  3  Denio,  'I'.W.  Nor  is  tlicrc  any  tliiiii.' 
in  the  case  of  Peterson  v.  Clark,  15  Jolin.  205,  which  conflicts  with 
the  principle  of  these  eases.  That  was  an  action  by  a  niortfja^rei' 
in  the  nsual  form  of  an  action  for  waste.  The  dechiration  allfdj,'<d 
seisin  in  the  |)laintiir.  upon  which  the  <lef('n(hint  took  issue.  Then- 
was  no  allegation  that  the  mortgagor  was  insolvent,  or  the  judgment 
as  a  security  imjiaired.  The  only  issue  to  Ik?  passed  upon  was  that 
in  relation  to  tlie  seisin.  It  is  (piite  clear  that  upon  such  an  is-Uf 
the  niortgagci'  must  fail.  Now  this  at-tion  is  not  l)as<'d  upon  tin- 
assumption  that  the  jjlaintifT's  land  has  been  injured,  hut  that  hi'* 
mortgage  as  a  security  has  been  impaired.  I  lis  damages,  therefore, 
would  be  limited  to  the  amount  of  injury  to  the  mortgage,  however 
great  the  injury  to  the  land  miglit  be.  It  could,  then-fore,  be  of 
no  consetiuence  whether  the  injury  occurred  b^'fore  or  after  forfeit- 
ure of  the  mortgage.     The  action  is  clearly  maintpin-ible. 

It  only  remains,  therefore,  to  be  considered  whether  there  was 
any  error  in  the  charge  of  the  court.  In  order  to  come  to  a  correct 
conclusion  upon  this  point,  it  becomes  necessary  to  examine  the 
exceptions  to  the  charge  in  connection  with  the  undisputed  testi- 
mony in  the  cause,  and  the  propositions  upon  wliii  h  tlie  tuurt  wn-.- 
refpiired  to  charge.  It  had  been  proved  that  the  defendants  kiieu 
of  the  mortgage,  that  the  mortgagors  were  in.solvent,  and  that  tlie 
]»roperty  had  Ijeen  advertised  for  sale  by  virtue  of  the  mortga-e. 
They  were  forbid  to  remove  the  fences  and  timber,  for  the  reason 
that  the  security  would  thereby  be  impaired.  It  was  also  proved 
that  the  value  of  the  mortgage  had  been  impain-d  by  su(-h  removal. 
Vnder  this  state  of  faets  the  defendants'  c-oun.'^el  a.sked  the  court 
to  charge  the  jury  that  ilcCJraw,  having  the  fee  of  the  land  and 
being  in  possession,  had  a  right  to  take  off  the  fences  and  timber; 
that  the  acts  being  lawful  could  not  be  deemed  to  have  been  done 
wrongfidly  or  fraudulently.  The  t-ourt  charged  that  the  acts  wen' 
lawful  if  they  ilid  not  j)rejudice  the  plaintilf's  rights  or  impair  hi- 
•curity,  but  that  if  they  had  impain'd  the  security,  knowing  the 
|ihiintifT's  lien,  they  were  liable.  As  an  answer  to  the  proposition- 
"f  the  defendants'  counsel,  the  charge  was  (-orreet.  Acts  may  be 
harndess  in  themselves,  so  long  as  they  injtire  no  one.  but  the 
<onse<iuenj-es  of  acts  often  give  character  to  the  acts  themselves. 
It  is  upon  this  distinction  that  the  maxim  is  i)a.sed.  sic  iilere  tttn 
lit  Illinium  nun  Id'ilns.  As  I  have  before  observed,  the  lien  of  the 
plaint ilT  upon  the  land  was  parannnint  to  any  interest  which  the 
defendants  possessed  therein,  and  any  wilful  inj\iry  of  that  lien 
l>y  them  was  a  violation  of  the  plainlilT's  rights,  for  which  an  action 
would  lie. 

The  defendants'  counsel  also  asked  the  court  to  cJuirge  that,  the 


424  COMMON    LAW    RELATIONS.  [CHAP.  I. 

plaintiff  having  alledged  in  his  dechiration  that  the  defendants 
did  the  acts  fraudulently  and  with  a  design  to  injure  the  plaintiff, 
he  was  bound  to  prove  the  allegations  by  evidence  other  than  the 
mere  act  of  removing  the  timber  for  the  emolument  of  the  defend- 
ants. The  court  refused  so  to  charge,  to  which  there  was  an 
exception.  This  proposition  is  somewhat  obscure,  but  I  understand 
it  to  mean  that  the  plaintiff  should  prove  that  the  primary  motive 
of  the  defendants  was  to  cheat  the  plaintiff.  If  the  defendants 
knew  that  by  taking  off  the  timber  the  value  of  the  plaintiff's 
mortgage  as  a  security  would  be  impaired,  they  would  be  legally 
chargeable  with  a  design  to  effect  that  object,  although  their  leading 
motive  may  have  been  their  own  gain.  A  man  must  be  deemed  to 
design  the  necessary  consequences  of  his  acts.  If,  therefore,  he  does 
a  wrongful  act,  knowing  that  his  neighbor  will  be  thereby  injured, 
he  is  liable.  It  is  upon  this  principle  that  persons  are  often  charge- 
able with  the  intent  to  defraud  creditors,  or  to  commit  any  other 
fraud.  The  immediate  motive  is  oftentimes  self-interest,  but  if 
the  necessary  consequence  is  a  fraud  upon  his  neighbor,  the  actor 
is  legally  chargeable  with  a  design  to  effect  that  result.  Upon  the 
whole,  therefore,  although  the  charge  is  not  quite  so  explicit  as 
it  should  be,  yet  taken  in  connection  with  the  propositions  presented 
to  the  court,  I  think  it  was  substantially  correct.  The  judgment 
of  the  Supreme  Court  should  be  affirmed. 

Judgment  affirmed.^ 


WILSON  V.  MALTBY. 
Court  of  Appeals  of  New  York,  1874. 
(59  N.  Y.  126.) 

Appeal  from  order  of  the  General  Term  of  the  Supreme  Court 
in  the  third  judicial  department,  affirming  an  order  of  Special 
Term  denying  a  motion  for  a  new  trial. 

This  action  was  brought  for  the  foreclosure  of  a  mortgage  made 
by  the  defendant,  George  Hubbard,  and  wife.  Plaintiff  sought  to 
recover  of  defendants,  C.  S.  Maltby  and  Thorn  J.  Houston,  in  case 
the  mortgaged  premises  should  not  realize,  upon  sale,  sufficient  to 
])ay  the  mortgage  debt,  the  value  of  certain  wood  cut  upon  the 

^Waterman  v.  Matteson,  4  R.  I.  539  (1857);  Jackson  ads.  Turrell, 
.-{!)  N.  J.  L.  329  (1877),  accord.  Adams  v.  Corriston,  7  Minn.  456  (1862), 
contra.    Compare  Allison  v.  McCune,  15  Oh.  Rep.  726   (1846). 


sK(  .   v.]  WII.SOK    C.    MVLTBY.  4v'.» 

iiiortgagi'd  j)roniises,  tlie  coini)laint  alleging  fraud  and  collusion 
lictwocn  them  and  the  mortgagor. 

Ifuhhard  jmrthasfd  the  j)n'niiscs  in  (juostion,  heing  mostly  wood- 
land, of  jdaintitT's  intcslalc,  in  lS(i7,  sul)j\'ct  to  a  mortgage  thereon 
held  by  one  Knapp,  giving  the  mortgage  in  suit  for  part  of  the 
purehase-money.  In  1871  Hubhard  entered  into  a  contract  with 
Maltby  and  Houston,  by  which  he  sold  to  them  the  wood  growing 
n  llie  mortgaged  premises,  the  same  to  be  cut  by  the  purchaser, 
measured  and  paid  for  March  1,  1871.  PlaintilT,  learning  that 
I  he  wood  was  being  cut,  calleil  upon  Hubbard  and  threatened  to 
-lay  the  cutting  by  injunction;  but,  upon  Hubbard  agreeing  to  pay 
over  the  money  received  for  the  wood  on  the  Knapp  mortgage,  he 
abandoned  the  intent.  On  the  ',i7th  February,  ISTl,  after  tlie  wood 
was  all  cut,  ])laintifr,  being  apprehensive  that  Hubbard  would  not 
<lo  as  he  agreed,  notified  the  purchasers  of  the  wood  of  his  lien,  of 
the  agreement  with  Hul^bard,  and  communicated  to  them  his  fears, 
recpiesting  them  t<i  delay  j)aying  over  the  purchase-money;  this 
(hey  declined  to  do,  but  paid  the  same  to  Hubbard,  as  agreed,  on 
the  first  of  ilarch.  T7p  to  the  time  of  such  notice  they  had  no 
knowledge  that  there  was  any  mortgage  upon  the  premises,  and 
the  allegations  of  fraud  were  not  proved.  Hubbard  did  not  pay  it 
over,  as  agreed,  but  absconded  therewith.  The  mortgaged  premises 
were  insullicient  to  pay  the  mortgages. 

Andrews,  J.  The  contract  for  the  purchase  of  the  wood  was 
made  by  the  defendants,  ^faltby  and  Houston,  with  Hubbard,  the 
owner  of  the  land  from  which  it  was  taken.  Hubbard  was  in 
possession  of  the  premises,  and,  by  the  contract,  the  defendant:* 
were  to  cut  the  wood  and  to  pay  Hubbard  a  certain  price  per  cortl 
on  the  1st  of  March,  1871.  The  defendants  did  not  know  until 
"U  or  about  the  '^Ith  of  February,  1871,  of  the  plaintitT's  mortgagi*. 
"T  that  there  was  any  incumlirance  on  the  land.  The  wood  had 
hen  been  cut,  and  nothing  remained  to  be  done  by  the  defendants 
under  the  contract,  except  the  payment  of  the  purchase-price, 
'i'liero  can  be  no  doubt  that  the  title  to  the  wood  vested  in  the 
iifcnilants  upon  its  severance  from  thi'  land.  They  were  tlie 
"wners  of  the  wood  by  purchase  from  the  owner  of  the  land,  and 
were  debtors  to  Hubbard  U>v  the  agreed  price.  The  fact  that  the 
land  was  mortgaged  when  the  contract  was  made,  or  when  the  wood 
was  cut,  did  not  alTect  the  defendants'  title  to  the  severed  jjroperty. 
«nd  although  the  cutting  of  the  wood  injpaired  the  security  of  the 
mortgage,  the  defend.ints  were  not  responsible  to  th»'  mortgagees 
'or  the  resulting  injury,  unless  they  cut  the  wood  knowing  of  the 
lien  and  with  intent  to  injure  the  pbiintifT  in  respect  to  his  security 
{Viin  VrU  V.  }f<(!niii\  \  Coin^t  11<>).  There  is  an  additional 
reason  in  this  case  whv  the  plaint ilT  i-  precluded  from  treating  the 


426  COMMON    LAW    RELATIOXg.  [ciIAr.  I. 

act  of  the  defendants,  in  cutting  the  wood,  as  tortious,  or  as  a 
violation  of  his  rights  or  equities.  After  he  was  informed  that 
the  defendants  were  cutting  the  wood,  he  took  no  proceeding  to 
prevent  a  continuance  of  tlie  waste,  but  allowed  the  work  to  proceed 
upon  the  promise  of  Hubbard  that  he  would  apply  the  money  he 
should  receive  from  the  defendants  upon  the  Knapp  mortgage. 
The  promise  was  made  in  December,  and  it  was  not  until  the 
following  February  that  he  notified  the  defendants  of  his  claim 
on  the  premises,  and  at  that  time  they  had  completed  the  work 
under  the  contract  with  Hubbard.  This  transaction  operated  as 
a  license  to  Hubbard  to  sell  the  wood  to  the  defendants,  and 
estopped  the  plaintiff  from  questioning  their  title.  The  question 
then  comes  to  this :  Could  the  defendants  lawfully  pay  their  debt 
to  Hubbard,  against  the  protest  of  the  plaintiff,  after  being  iu- 
formed  that  Hubbard  threatened  to  violate  his  agreement  to  apply 
the  money  on  the  prior  mortgage?  There  can  be  but  one  answer 
to  this  question :  The  defendants'  contract  was  with  Hubbard  alone, 
and  tlieir  debt  was  owing  to  him.  The  promise  of  Hubbard  to 
apply  the  amount  he  should  receive  from  the  defendants  on  the 
Knapp  mortgage  did  not  make  the  plaintiff  the  assignee  of  the 
debt.  It  gave  to  the  plaintiff  at  most  a  right  as  against  Hubbard 
to  intercept  the  payment  upon  proceedings  taken,  based  upon 
evidence  that  he  threatened  to  dispose  of  the  money  in  violation 
of  his  agreement. 

We  express  no  opinion  whether  such  an  action  could  be  main- 
tained, but  we  think  it  is  clear  that,  until  prevented  by  the  order 
of  the  court,  the  defendants  could  lawfully  pay  the  debt  to  Hub- 
bard, and  that,  if  they  had  refused,  he  could  have  maintained  an 
action  to  recover  it.  The  defendants  were  neither  parties  nor 
privies  to  the  agreement  between  Hubbard  and  the  plaintiff,  as  to 
the  application  of  the  fund,  and  they  owed  no  legal  duty  to  the 
plaintiff  to  defer  the  payment  of  their  debt  at  his  request.  That 
agreement  recognized  Hubbard's  right  to  receive  the  payment,  and 
no  legal  proceedings  having  been  taken  to  prevent  it,  the  payment 
to  him  was  a  valid  discharge  of  their  obligation.  In  view  of  the 
finding  of  the  jury,  it  cannot  be  claimed  that  they  colluded  with 
Hubbard  in  the  transaction,  or  misled  the  plaintiff,  or  induced  hiia 
to  institute  legal  proceedings  against  Hubbard  upon  the  promise 
to  retain  the  money  until  an  injunction  should  be  procured. 

The  judgment  should  be  affirmed. 

All  concur. 

Judgment  affirmed.^ 

^  Augier  v.  Agnew,  98  Pa.  St.  587  (1881),  accord. 


«KC.  v.]  SKAKLi:    r.    SAWYKH.  4>*7 

SKAin.K  V.   SAWVKir 

Supreme  Jiurial  Coi  in   oi    .Massachi  skits,  ISTf). 

{]■!:  M'ls.^.  till.) 

Morton,  J.  Tliis  is  an  actinn  ul"  tdpt  lV»r  the  convfrsioii  »»f  a 
ijiiantity  of  wood  and  tinil)c'r. 

It  appeared  at  tlie  trial  that  one  Warren,  Itein^  the  owner  of 
a  lot  of  wood-land,  niortgat^ed  it  to  the  plaintiff's  testatf)r;  and 
that,  after  the  eondition  of  the  niort[,M<;e  was  hroken,  hut  hefonr 
the  mortgagee  had  taken  j)osscssion,  Warren  eut  the  wood  ami 
timber  in  question  and  sold  it  to  the  defendant.  The  presiding 
justice  of  the  Superior  Court  ruled  that,  "  if  the  defendant  bought 
of  the  mortgagor  wood  and  timber  eut  from  the  mortgaged  prem- 
ises, and  exereised  such  acts  of  ownership  over  the  same  as  would 
amount  to  a  conversion,  then  he  would  l)e  liable  to  the  mortgagofr 
for  the  value  of  the  same,  without  any  previous  demand,  and 
although  he  bought  the  same  in  good  faith  and  without  any  notice 
"r  knowledge  of  any  claim  uj)on  the  same."  To  this  ruling  thf 
d<'fendant  excepted. 

Upon  the  (luestion  whether,  if  a  mortgagor  commits  waste  by 
removing  buildings,  wood,  timber,  fixtures  or  other  parts  of  the 
realty,  the  mortgagee  out  of  possession  can  follow  the  property 
after  it  has  been  severed,  and  recover  it  or  its  value,  there  have 
l>een  conflicting  decisions  in  different  jurisdictions.  In  Xew  York 
ind  Connecticut,  it  has  been  held  that  a  mortgagee  out  of  possession 
rannot  maintain  an  action  at  law  for  waste  committed  by  the 
mortgagor;  and  that  he  has  no  jjroperty  in  wood  or  timber  cut  and 
removed,  so  as  to  enable  him  to  maintain  trover  for  its  convcrsittn 
(I'llcrsun  V.  Clark,  1.3  Johns.  '^05 ;  Cooper  v.  Ddvis,  15  Conn.  5.")(i). 
On  the  other  hand,  it  has  been  held  in  Maine,  Xew  llamj)shirf. 
Vermont  and  Rhode  Island,  that  tind)er,  if  wrongfully  eut  and 
removed  by  the  mortgagor,  remains  the  proj)erty  of  the  m<irtgag<i' 
'•ut  of  possession,  and  he  may  recover  its  value  of  the  mortgagor  or 
a  purchaser  from  him  (CJorc  v.  Jcnncss,  1!)  Maine,  ').? :  Fnifhimi- 
Itam  v.  MrKn.sick.  24  Maine,  10.1;  Smilli  v.  Moore.  II  X  II  •.".  ; 
Lnniidon  v.  Paul.  22  Vt.  20.");  Waferman  v.  }f<ineson.  1  K.  1.  rtlWU . 

We  are  not  aware  that  this  precise  (juestion  has  been  adjudieateil 
in  this  State,  but  the  previous  decision-^  of  this  court  in  regard 
to  the  rights  of  mortgagees  and  the  nature  of  their  interest  in  the 
mortgaged  estate,  are  such  as  to  lead  to  the  conclusion  that  a 
mortgagee  out  of  possession  is  entitb-d  to  timl)er.  fixtures  and  otlu^r 
parts  of  the  realtv  wrongfully  severed.  an<l  may  recover  them,  or 
their  value,  if  a  conversion  is  proved.     In  Fai/  v.  lirnrrr.  .1  Tirk. 


4:28  COMMON    LAW    RELATIONS.  [CHAP.  I. 

203,  it  was  held  that  a  mortgagee  in  possession,  but  before  fore- 
closure, could  maintain  an  action  on  the  case  in  the  nature  of 
waste  against  a  tenant  for  life,  for  cutting  down  trees  on  the 
mortgaged  land  before  he  took  possession,  and  the  court  in  the 
opinion  comment  on  the  case  of  Peterson  v.  Clarl-,  15  Johns.  205, 
as  not  being  of  authority  here,  "  since  the  law  of  mortgage  in  New 
York  is  so  different  from  our  own."  In  Page  v.  Bohinson,  10  Cush. 
99,  it  was  held  that  a  mortgagee,  after  condition  broken,  though 
not  in  actual  possession,  could  maintain  trespass  against  the  mort- 
gagor, or  one  acting  under  his  authority,  for  cutting  and  carrying 
aAvay  timber-trees  from  the  mortgaged  premises,  without  license 
express  or  implied  from  the  mortgagee.  In  Cole  v.  Steiuart,  11 
Cush.  181,  it  was  held  that  an  action  at  law  would  lie  by  a  mort- 
gagee not  in  possession  against  one  who,  under  authority  from  the 
mortgagor,  removed  a  building  from  the  mortgaged  land.  In 
Butler  V.  Page,  7  Met.  40,  a  second  mortgagee  sold  to  the  defendant 
a  building  standing  on  the  mortgaged  land,  who  took  it  down  and 
removed  the  materials.  It  was  held  that  the  administrator  of  the 
mortgagor  could  not  maintain  trover  for  the  materials,  as  the  fee 
of  the  mortgaged  premises  was  in  the  mortgagees,  and  the  removal 
of  the  building  vested  no  property  in  the  materials  in  the  mort- 
gagor's representative. 

In  Wilmarth  v.  Bancroft.  10  Allen,  348,  a  house  standing  on 
mortgaged  land  was  partially  destroyed  by  fire.  The  mortgagor 
sold  to  the  defendant  such  materials  as  were  saved,  and  brought 
this  action  to  recover  the  price  agreed  to  be  paid.  It  was  held  that 
the  fact  that  the  mortgagee  had  claimed  the  agreed  price,  and 
forbidden  the  defendant  to  pay  it  to  the  mortgagor,  was  a  good 
defence.  The  opinion  is  put  upon  the  ground  that  the  partial 
burning  of  the  house,  and  the  consequent  severance  of  the  unburnt 
materials,  "  did  not  terminate  or  affect  the  mortgagee's  interest 
in  the  fixtures."  So  it  has  been  held  in  several  cases  that  a  mort- 
gagee out  of  possession  may  maintain  an  action  at  law  against  the 
mortgagor  or  a  stranger  for  removing  fixtures  and  thus  impairing 
the  security  {Gooding  v.  Shea,  103  Mass.  3G0 ;  Byrom  v.  Chapin, 
113  Mass.  308;  King  v.  Bangs,  120  Mass.  514). 

The  fair  result  of  these  authorities  is  tliat,  under  our  law,  a 
mortgagee  is  so  far  the  owner  in  foe  of  the  mortgaged  estate  thai, 
if  any  part  of  it  is  wrongfully  severed  and  converted  into  personalty 
hy  the  mortgagor,  his  intei-cst  is  not  divested,  but  he  remains  the 
owner  of  the  personalty,  and  may  follow  it  and  recover  it  or  its 
value  of  any  one  who  has  converted  it  to  his  own  use  {Stanley  v. 
fkiylord,  1  Cush.  53G ;  Riley  v.  Boston  Water  Power  Co.,  11  Cusb. 
11).  But  the  severance  nnist  be  wrongful,  and,  where  it  is  mad(! 
by  the  mortgagor  or  one  acting  under  his  authority,  whether  it  is 


'*'^*-  ^'l  sKAKi.i;  r.  sA\vvi;ic.  i2\) 

wrongful  or  not  will  drju-nd  upon  tlir  tiucstion  wht'tlifr  a  lic-fU--'- 
to  do  tiie  act  lias  been  expressly  given,  or  is  fairly  to  be  implied 
from  the  relations  of  the  parties.  The  true  rule  is  as  stated  in 
Smith  V.  Moore,  11  N.  II.  55,  and  aj)proved  in  I'aije  v.  liohinson, 
10  Cush.  'JI>,  that  acts  of  liie  niorlf,M<,'()r  in  cutting  wood  and 
timber,  or  otherwise  severing  parts  of  the  realty,  are  not  wrongful 
when  from  the  circumstances  of  the  case  the  assent  of  the  mortgagtc 
may  be  reasonably  presumed.  The  relation  between  a  mortgagor 
and  mortgagee  is  a  very  peculiar  one.  The  mortgagee  takes  an 
estate  in  fee,  but  the  sole  purpose  of  the  mortgage  is  to  secure  his 
debt.  Usually  in  this  State  the  mortgage  contains  a  provision  that 
the  mortgagor  may  retain  possession  until  condition  broken.  The 
object  of  this  is  that  the  mortgagor  may  have  the  use  and  enjoyment 
of  his  pro])erty,  and  it  imjjlies  a  license  to  use  it  in  the  same 
manner  as  such  property  is  ordinarily  used  and  as  will  not  un- 
reasonably impair  the  adequacy  of  the  security.  If  a  mortgage  be 
of  a  dwelling-house,  the  mortgagor  may  do  many  acts,  such  as  acts 
of  repair  or  alteration,  which  may  involve  the  removal  of  parts 
of  the  realty,  which  would  not  be  wrongful  because  within  the 
license  implied  from  the  relations  of  the  parties.  If  a  farmer 
mortgages  the  whole  or  a  part  of  his  farm,  with  a  clause  permitting 
him  to  retain  possession,  as  was  probably  the  case  at  bar,  it  \i 
within  the  contemplation  of  the  parties  that  he  is  to  carry  on  his 
farm  in  the  usual  manner,  and  a  license  to  do  so  is  implied.  In 
such  case,  it  is  clear  that  he  is  entitled  to  take  the  annual  crops,  and 
wood  for  fuel  {Woodward  v.  Pickett,  8  Gray,  GIT).  And  we  do 
not  think  that  the  implied  license  is  necessarily  limited  to  the 
annual  crops,  but  that  it  extends  to  any  acts  of  carrying  on  the 
farm  which  are  usual  and  j)roper  in  the  course  of  good  husbandry. 
If,  in  carrying  on  similar  farms,  it  is  usual  and  is  good  husbandry 
to  cut  and  carry  to  market  wood  and  timber  to  a  limited  extent, 
a  license  to  do  this  might  be  implied  from  the  relation  of  the 
parties. 

The  bill  of  exceptions  furnishes  us  with  so  meagre  and  imiterfect 
a  history  of  the  ca.se,  that  we  are  unable  to  say  how  far  thest« 
considerations  are  applicable  in  the  case  at  bar.  Hut  the  ruling  of 
the  presiding  justice  .seems  to  have  been  general,  that  the  defendant 
would  be  liable  if  the  wood  and  timber  were  cut  from  the  mortgaged 
premi.'^es,  and  to  have  excluded  the  <piestion  whether,  under  the 
circumstances  of  the  case,  the  as.sent  of  the  mortgagee  thereto  could 
fairly  be  presumed  by  the  jury.  We  are  of  opinion  that  this 
<|westion  should  be  submitted  to  the  jury.  and.  therefore,  that  a  n^nv 
'  ial  must  be  ordered. 

Exceptions  siista in •• !. 


CHAPTER  11. 

EQUITY    RELATIONS. 

Section  I.     Oxce  a  Mortgage,  Always  a  Mortgage. 

HOWARD  V.  HARRIS. 

High  Court  of  Chancery,  1681. 

(1  Ver?i.  33.) 

Howard  mortgages  land,  and  the  proviso  for  redemption  was 
thus :  provided  that  I  myself,  or  the  heirs  males  of  my  body  may 
redeem.^  The  question  was,  whether  his  assignee  should  redeem 
it  ?  and  it  was  decreed  he  should ;  for  if  once  a  mortgage,  always 
a  mortgage. 

In  this  case  part  of  the  mortgaged  estate  happened  to  be  in 
Mrs.  Howard's  jointure,  and  it  was  admitted  that  she  thereby  was 
entitled  to  a  redemption  of  the  whole  mortgage;  and  so  it  was  ad- 
'  judged  in  the  ease  of  Browne  and  Edwards.^ 


NEWCOMB  V.  BONHAM. 
High  Court  of  Chancery,  1681,  1683,  1684. 
(1  Vern.  7,  214,  232.) 
A  man  being  seised  of  lands  in  fee,  makes  an  absolute  conveyance 

*  The  words  of  the  proviso  are  "  that  if  he  or  the  heirs  of  his  body  paid 
the  £505,  the  mortgage  money,  and  interest  at  two  years'  end,  tlie  conveyance 
to  be  void."  Then  a  further  sum  of  money  was  borrowed  by  Howard ;  and 
the  above-mentioned  proviso  was  released  by  deed,  and  another  proviso 
contained  in  such  last-mentioned  deed  "  tliat  if  he  or  the  heirs  of  his  body 
liegotten  should,  at  a  given  day  therein  mentioned,  pay  £1000,  then,"  &c. 
And  in  this  case  there  was  a  covenant  on  the  part  of  the  mortgagor  that 
no  person  should  have  the  power  or  benefit  of  redemption,  but  only  himself 
and  the  heirs  of  his  body.  On  the  effect  of  such  a  covenant,  vide  Newcomb 
V.  Bonham,  ante,  p.  7,  note.  In  the  principal  case  a  plea  as  to  the  redemption 
was  put  in,  but  overruled. — Rep. 

=  Reg.  Lib.  1G81,  A.  fol.  2G0. 


J^f* '•  l-l  Ni:\V(().MI»    C.     IIONIIVM.  131 

tliiTidf  t<»  the  (Iffindiiiil  1>i)mIiiiiii  :  luit  In"  anotluT  dcnl  <if  the  same 
(late  the  lands  an*  made  redeemal)le  upon  payment  of  £1000  and 
interest  at  any  tinu-  durin<j  the  life  of  the  jjrantor;  and  in  rase  the 
lands  should  not  he  redeemed  in  his  lifetime,  then  he  covenants  that 
thf  same  should  never  he  redeemed.  The  grantor  di<'s  l)efore  the 
lands  are  redeemed,  and  his  heir  at  law  exhihits  a  hill  to  have 
a  redemption. 

It  was  a  proof  in  the  cause  that  the  mortfjagor  had  a  kindnc.*;.'? 
for  the  mortgagee,  as  heing  his  near  relation,  and  did  intend  him 
the  lands  after  his  death,  and  that  the  clause  of  redemption  wa.s 
l»ut  in  only  upon  the  account  that  the  mortgagor  wa.s  then  a  hach- 
elor,  and  so  might  marry  and  have  issue;  but  that  his  full  intent 
was  that  in  case  he  died  without  issue  the  mortgagee  should  have 
the  lands  ahsolutely  without  redempti(»n;  and  also  that  the  said 
one  thousand  pounds  was  really  the  full  value  of  the  estate  at  the 
time  of  the  conveyance,  but  it  afterwards  happened  to  be  a  good 
bargain,  it  being  a  reversion  after  two  lives,  and  the  two  lives 
liapj)ening  to  die  within  a  short  time:  and  it  was  urgeil  that  the 
mortgagee  run  hazard  enough,  for  that  as  it  happened  to  be  a  good 
bargain,  it  might  have  been  a  bad  one,  and  yet  he  had  no  covenant' 
7ior  other  remedy  to  compel  the  repayment  of  his  money,  for  the 
mortgagor  had  time  to  redeem  during  life;  and  suj)pose  the  mort- 
gagor should  have  lived  thirty  or  forty  years  after  the  mortgage 
made,  and  then  had  come  to  redeem,  as  he  might  liave  ilone,  there 
had  been  all  the  interest  upon  interest  thereby  lost,  which  comes  to 
more  than  the  princij)al. 

The  Loud  t'liANCKLLou  [Xottixciiam]  was  of  opinion  that 
although  the  mortgagor  had  time  to  redeem  during  life,  yet  the 
inortgagee  might  have  comj)ellcd  him  to  redeem,  or  have  foreclosed 
iiim :  and  said  that  it  was  a  general  rule,  once  a  mortgage  and  alwavs 
a  mortgage;  and  in  regard  the  estate  was  expressly  redeemal)le  in 
the  mortgagor's  lifetime,  it  must  continue  so  afterwards,  and  there- 
fore decreed  an  account  and  a  redemption.' 

This  ca.se  came  now  before  the  court  upon  a  demurrer  to  a  bill  of 
review  to  reviTse  a  decree  made  in  this  eau.^e  by  the  Lord  Chaneel- 
lor  Nottingham;  and  the  error  assigned  was  that  the  defendant 
Newcomb  ought  not  to  be  admitted  to  a  redemption  against  his 
exj)re.ss  agreement  in  the  mortgage  deed  to  reileem  within  a  certain 
time,  or  otherwise  that  the  estate  should  be  irredeenuible. 

It  was  argued  for  the  deiuurrer, 

'And  also  pir  ]Atri\  ('lium dlor,  (liat  tlio  drod-*  of  lease  and  rolraso  Itoinfj 
I'lit  n  socurify.  tlip  same  eojild  rn)t  l>e  oxtinniiistied  liy  any  covenant  or 
affieenient  at  the  time  of  making  the  mort>ra>re.  Rejj.  TJl).  ItJSO.  ]\.  .'i3S  ; 
rn/«   Hutniirrick  v.  Barton,  1  C'l>.  Cu.  2\1.—Ilrp. 


433  EQUITY    RELATIONS.  [CHAP.  it. 

1st.  That  an  estate  could  not  be  a  mortgage  at  one  time  and  after- 
wards become  an  absolute  purchase  by  one  and  the  same  deed. 

2dly.  That  the  mortgagee  in  this  case  had  a  proper  remedy,  and 
might  have  made  his  estate  absolute  in  a  legal  course,  viz.,  by 
exhibiting  a  bill  to  foreclose  the  mortgagor  of  the  equity  of  redemp- 
tion: and  they  cited  the  case  of  Yieldmington  and  Gardiner,  where 
mortgagor  was  to  redeem  during  life  only,  and  yet  his  heir  admitted 
to  the  redemption ;  and  Sir  Robert  Jason's  case,  where  an  estate  was 
to  go  to  his  wife  and  her  heirs,  unless  a  sufficient  Jointure  were 
settled  within  such  a  time  limited  in  the  deed;  and  the  case  of 
Howard  and  Harris. 

But  as  to  that  case  it  was  answered  though  there  was  a  qualified 
redemption,  yet  there  was  an  express  covenant  for  repayment  of  the 
mortgage  money,  and  so  it  was  in  the  power  of  the  mortgagee  to 
make  it  a  mortgage  at  any  time. 

But  the  Lord  Keeper  [Sir  Francis  North]  inclined  to  reverse 
the  decree,  for  that  modus  &  conventio  vincunt  legem;  and  all  con- 
ditional purchases  or  bargains  must  not  be  turned  into  mortgages : 
and  said  that  where  there  is  a  condition  or  covenant  that  is  good 
and  binding  in  law,  equity  Avill  not  take  it  away. 

It  was  objected  against  the  bill  of  review  that  they  had  assigned 
errors  collected  from  the  proofs  in  the  cause  that  did  not  appear  in 
the  body  of  the  decree. 

But  the  Lord  Keeper  observed  that  was  occasioned  by  the  ill  way 
they  had  got  of  late  in  drawing  up  decrees  in  general  without  par- 
ticularly stating  the  matters  of  fact ;  and  said  the  plaintiff  in  a  bill 
of  review  should  not  be  concluded  by  it,  unless  the  matter  of  fact 
were  particularly  stated  in  the  decree. 

At  last  it  was  agreed  by  the  counsel  to  wave  the  signing  and 
enrolling  the  decree  by  consent,  and  to  hear  the  cause  again  de 
integro. 

This  cause  coming  on  to  be  heard  de  integro  before  the  Lord 
Keeper^  he  adhered  to  his  former  opinion  that  there  ought  to  be  no 
redemption  in  this  case;  and  principally  because  it  was  proved  in 
the  cause  that  the  intent  and  design  of  the  mortgagor  was  to  make 
a  settlement  by  this  mortgage,  and  that  he  intended  a  kindness  and 
benefit  to  the  mortgagee  in  case  he  should  not  think  fit  to  redeem 
this  estate  in  his  lifetime ;  and  that  there  being  an  express  covenant 
that  the  mortgagor  might  redeem  at  any  time  during  his  life,  he 
thought  he  could  not  in  equity  have  been  debarred  of  that  privilege ; 
for  by  a  bill  to  foreclose  a  man  you  shall  only  bar  him  of  his  equi- 
table title  when  the  estate  in  law  is  become  forfeited;  but  where  he 
has  a  continuing  title  at  law,  as  in  this  case  an  express  proviso  that 


**•*'■  '-J  iJATlY    V.    SNOOK.  AXV 

he  nii^'lil  rrdtciii  at  any  tinn,-  during  lift.',  lie  tliouglil  e<iuity  eould 
not  debar  liiiu  of  that  j)rivilege;  and  therefore,  being  the  mortgagee 
in  the  j)resent  case,  coidd  not  have  eonipeUed  the  mortgagor  to  re- 
deem, and  he  might  have  lived  so  long  as  to  have  made  it  an  ill 
bargain;  and  now,  when  by  a  contingency  it  happens  to  be  a  good 
bargain,  there  is  no  reason  to  raise  an  equity  from  thence  to  takt; 
the  estate  from  the  mortgagee,  especially  in  this  case  there  being 
a  kindness  and  benefit  intended  him  by  the  mortgagor:  and  thenfon- 
reversed  the  Lord  Nottingham's  decree,  and  dismissed  the  original 
bill  for  a  redemption.* 


BATTY  V.  SXOOK. 

Supreme  Court  of  Michigan-,  1858. 

(5  Mich.  r.U.) 

Appeal  from  Macomb  Circuit  in  Chancery.^ 

Manning,  J.:  The  bill  in  this  case  is  very  inartificially  drawn; 
6o  much  so  that,  on  first  reading  it  over,  one  is  at  a  loss  to  know 
whether  it  is  for  the  redemption  of  mortgaged  premises,  for  the 
specific  performance  of  a  contract,  or  to  set  aside  certain  trans- 
actions for  fraud.  We  mention  this,  as  the  merits  of  a  case  may 
sometimes  be  overlooked  or  lost  sight  of  by  reason  of  the  rubbish 
under  which  it  is  concealed.  We  think,  however,  there  are  sutficienl 
facts  stated,  when  separated  from  the  irrelevant  or  immaterial 
matter,  to  enable  us  to  treat  it  as  a  bill  to  have  a  certain  deed  ainl 
contract  relative  to  real  estate  declared  a  mortgage,  and  for  redemp- 
tion of  the  mortgaged  premises.     As  such  we  shall  consider  it. 

Complainant  purchased  of  the  defendant,  Warner,  in  1853  a  lot  in 
the  village  of  Mt.  Clemens,  on  which  there  was  a  saw  mill.  On 
the  5tli  of  Ajjril,  \Sol,  the  i)remises  were  deeded  i)y  Warnt-r  to 
complainant,  who  at  the  same  time,  to  secure  a  part  of  the  j)urchase- 
nioney,  mortgaged  the  lot  to  Warni-r  for  $v'331.v'(>.  j)ayable  with 
interest — $.')()()  on  the  18th  Xovemi)er,  18.51;  $')()()  in  one  year 
thereafter;  tlu-  like  sum  in  two  years;  and  the  balance,  being 
$831. '>.'(;,  in  three  years.     Tin*  eoinplainant  soon  thereafter,  and  in 

'  U(n.  I.il>.  ICiS.J.  .\.  fdl.  4SJ.  Ami  \]\\-  ili-nii^-^ion  \va-*  aftcrwinii-.  1  M.iy. 
1<)8!),  aninncd  in  Pari.:  .Touin.  Hou-r  of  Lnr(l>i.  14  vol.  IK/.  Jioiihnm  \. 
Srirromb.  2  \pn(.  .Id.')  and  l!»;i. —  /»'«•/>. 

'  Tlio  facts  are  >uni(ient!y  staled   in  the  opinion. 


434  EQUITY    RELATIONS.  [CHAP.  II. 

less  than  a  year,  became  embarrassed  in  his  business,  and  was  unable 
to  pay  Warner  and  his  other  creditors  what  he  was  owing  them. 
He  was  indebted  to  Warner  in  a  large  sum  over  and  above  the 
mortgage  debt,  and  Warner,  being  aware  of  his  pecuniary  difficulties, 
was  solicitous  to  get  his  debt  secured — that  is,  that  portion  of  it 
not  included  in  the  mortgage ;  and  went  twice  from  Saginaw,  where 
he  was  residing,  to  Mt.  Clemens,  to  see  if  he  could  not  make  some 
arrangement  with  complainant  for  that  purpose.  On  his  last  visit 
a  settlement  took  place  between  the  parties,  from  which  it  appears 
complainant  turned  out  property  in  part  payment  of  what  he  was 
owing  him,  leaving  a  balance  still  due  Warner  of  $2000.  Warner, 
to  effect  the  settlement,  was  induced  to  take  the  property  at  more 
than  its  value.  In  pursuance  of  this  settlement,  the  mortgage  from 
complainant  to  Warner  was  canceled,  and  the  mortgaged  premises 
were  deeded  back  to  Warner  by  complainant.  This  deed  bears  date 
on  the  6th  February,  1855. 

There  is  also  a  contract  between  the  parties  for  the  repurchase 
of  the  premises  by  complainant.  This  contract  bears  date  Febru- 
ary 7th — the  day  after  the  deed.  Were  the  two  instruments  parts 
of  one  and  the  same  transaction,  or  were  they  separate  and  distinct 
transactions?  The  difference  in  their  dates  favors  the  latter  view, 
but  it  is  by  no  means  conclusive.  The  bill  alleges  both  had  their 
origin  in  the  settlement,  and  that  they  are  parts  of  the  same  trans- 
action, and  were  intended  as  security  for  the  payment  of  the  $2000. 
The  answer,  instead  of  denying  this  in  clear  and  explicit  teims,  as 
it  should  have  done  if  it  was  not  the  truth,  we  think  admits  it. 
Eef erring  to  Warner's  second  visit,  the  answer  says  he  (Warner) 
was  about  to  return  home  when  complainant  stated  to  him  he  had 
a  horse  and  buggy  and  a  certain  promissory  note  he  would  let  him 
have  if  "  he  would  release  all  complainant  was  owing  him  aside 
from  the  mortgage  and  a  part  of  the  latter,  and  extend  the  payment 
due  on  the  mortgage  to  the  1st  of  December,  1855."  The  answer 
then  proceeds :  "  That  this  defendant,  thinking  he  could  do  no 
better,  then  and  there  agreed  to  take  said  note  and  horse  and  buggy 
and  a  deed  of  said  saw-mill  lot  and  mill,  and  entered  into  contract 
A"  (the  contract  of  7th  February,  1855,  already  spoken  of),  "with 
the  design  and  express  understanding  on  the  part  of  said  complain- 
ant and  this  defendant,  if  he  (the  said  complainant)  failed  in  any 
particular  in  complying  with  said  contract  A,  that  he  (the  said 
<:-omplainant)  should  have  no  right  at  law  or  in  equity  to  the  said 
lands  and  saw  mill;  and  said  contract  A  was  particularly  and 
expressly  conditioned  to  be  the  same  as  an  original  contract  for 
the  conveyance  of  land,  in  which  time  should  be  material,  and  every 
requisite  on  the  part  of  said  complainant  to  be  done  and  performed 
should  be  by  him  literally  complied  with." 


SM'.  I]  HATTY    V.    RN'OOK.  435 

IKtc  is  iin  adinission  of  coiiiplainant's  easo  bv  tlu'  answer.  It 
atlinits  the  di't-d  and  contract  arc  parts  of  one  transaction,  and  that 
lilt'  olijcct  of  tlu'Mi  was  to  secure  the  balance  of  coinplainant's  d<-l)t 
1i>  Warner,  ll  also  shows  that  if  i(Jini)lainant  failed  to  \n\y  promptly 
when  the  debt  became  due,  he  was  to  forfeit  all  right  at  law  and  in 
<tjuity  to  the  premises  he  had  conveyed  to  Warner,  and  that  to  effect 
ihis  ol)ject  it  was  agreed  the  contract  should  be  considered  and 
ireated  as  an  original  contract  for  the  ])urchase  of  the  premi.ses,  in 
which  time  should  be  material.  When  the  arrangement  was  entered 
into  there  was  but  one  payment  due  on  complainant's  mortgage  of 
ihe  ."ith  Ajiril.  1854,  and  one  other  that  would  become  due  before 
the  1st  December,  1855,  when  comi)lainant  was  rciiuired  to  pay  $500 
on  the  contract  of  Tth  February,  which  also  provided  for  the  pay- 
ment of  the  remaining  $1500  in  one  year  thereafter — nearly  a  year 
before  the  last  installment  would  have  fallen  due  on  the  mortgage 
given  in  1S54.  The  contract  contained  a  covenant  for  the  payment 
of  the  $'2000.  and  by  it  complainant  was  to  retain  pos.session  of  the 
jiremises  and  was  not  to  remove  any  buildings  or  machinery. 

Other  facts  might  be  mentioned  to  show  the  mortgage  of  '54  was 
eanceled,  and  the  deed  and  contract  of  the  Oth  and  Tth  February, 
'55,  were  made  to  secure  the  $"3000  complainant  was  owing  Warner; 
but  it  is  unnecessary  to  notice  them  or  to  go  into  the  proofs  to 
establish  what  is  admitted  by  the  answer. 

The  only  remaining  question  is,  whether  the  ca.se  is  one  proj»cr 
for  the  interposition  of  a  court  of  equity. 

Once  a  mortgage,  always  a  mortgage,  may  be  regarded  as  a  maxim 
of  the  court.  Equity  is  jealous  of  all  contracts  between  mortgagor 
and  mortgagee  by  which  the  equity  of  redemption  is  to  be  shortened 
or  cut  otT.  The  mortgagor  may  release  the  e([uity  of  redemption 
to  the  mortgagee  for  a  good  and  valual)le  consideration  when  done 
voluntarily,  and  there  is  no  fraud  and  no  undui'  intluence  brouglit 
to  bear  upon  him  for  that  purpose  by  the  creditor.  But  it  cannot 
Ih;  done  by  a  cotemporaneous  or  subsccpicnt'  executory  contract  by 
which  the  ecjuity  of  redemption  is  to  be  forfeited  if  the  mortgage 
debt  is  not  paid  on  the  day  stated  in  such  contract  without  an 
abandonment  by  the  court  of  those  equitable  i)rinci|)les  it  has  ever 
acted  on  in  relieving  against  penalties  and  forfeitures.  What  we 
now  call  a  mortgage  was  at  common  law  a  conditional  convevance 
<  f  the  land,  by  which  the  title  of  the  vendee  was  to  terminate  or 
l)ecome  absolute  on  the  j)erforn>ance  or  non-perfornumce  of  the 
condition  of  the  grant  by  the  vendor  at  the  day.  When  such  con- 
veyance was  made  to  secure  a  debt,  or  for  the  |)erforinance  of  .some 
other  act  by  tlu'  vendor,  ('(juity  took  cognizance  of  the  transaction 

'Compare  Wynkonp  v.  Coiriny.  21    111.  .'iTO   (18.')0). 


436  EQUITY    KELATIONS.  ■     [CHAP.  U. 

and  declared  the  conveyance  a  security  merely  for  the  payment  of 
the  debt  or  doing  of  the  act,  and  on  the  performance  thereof  by  the 
vendor,  after  the  day  had  elapsed  and  the  estate  had  become  absolute, 
would  decree  a  reconveyance  of  the  premises.  To  allow  the  equity  of 
redemption  to  be  cut  off  by  a  forfeiture  of  it  in  a  separate  contract 
would  be  a  revival  of  the  common  law  doctrine,  using  for  that 
purpose  two  instruments  instead  of  one  to  effect  the  object. 

Snooks,  the  other  defendant,  to  whom  Warner  conveyed  on  the 
22d  December,  1855,  purchased  with  full  knowledge  of  complain- 
ant's equities.  He  took  possession  soon  after,  and  has  been  in 
possession  ever  since. 

The  decree  of  the  court  below,  dismissing  the  complainant's  bill 
with  costs,  must  be  reversed  and  a  decree  be  entered  declaring  the 
deed  and  contract  one  transaction  and  to  be  a  mortgage,  and  that 
complainant  is  entitled  to  redeem;  and  the  transcript  must  be 
remitted  to  the  court  below  for  further  proceedings. 

The  other  justices  concurred. 


MOONEY  V.  BYKNE. 

Court  of  Appeals  of  New  York,  1900. 
(163  N.  Y.  86.) 

Appeal  from  a  judgment  of  the  Appellate  Division  of  the  Su- 
preme Court  in  the  second  judicial  department,  entered  March  20, 
1897,  affirming  a  judgment  in  favor  of  defendants,  entered  upon 
a  dismissal  of  the  complaint  by  the  court  on  trial  at  Special  Term. 

The  nature  of  the  action  and  the  facts,  so  far  as  material,  are 
stated  in  the  opinion. 

Vann,  J.  The  case  made  by  the  complaint  v/as  that  of  a  mort- 
gagor with  a  right  to  redeem  from  a  mortgagee  or  his  devisees  iu 
possession.  The  defendants  denied  that  there  was  any  mortgage, 
alleged  an  absolute  conveyance  from  the  plaintiff  to  one  Owen 
Byrne,  and  a  subsequent  conveyance  from  the  latter  to  a  bona  pd^, 
purchaser.  They  also  pleaded  the  Statute  of  Limitations  and 
specified  the  period  of  six  and  ten  years  as  the  limit  exceeded  by  the 
plaintiff  in  bringing  her  action. 

The  facts  agreed  upon  by  the  parties  and  admitted  by  tlie  plead- 
ings are  in  substance  as  follows:  On  the  14th  of  August,  1878,  the 


*•"  •  '1  MooNKv   I .   uvkm;.  437 

j)laintiff  owncil  and  \\a-  in  jiosscssion  <»f  a  pani-l  of  land  in  llie 
<ity  of  New  York  worth  $l(»,u<)(>  and  ii|twards,  and  at  the  same 
time  she  was  indehted  to  Oweu  Byrne  in  the  sum  of  about  $:{0()0. 
secured  by  three  mortgages  on  said  premises,  whieh  were  under 
])rocess  of  foreclosure.  In  order  to  secure  the  payment  of  this 
indebtedness  she  conveyed  the  hind  to  said  Hyrne  at  his  request  by 
a  di'cd  dated  on  the  day  hist  naincil  and  duly  recorded.  "  The  said 
deed  was  given  as  security"  and  for  no  other  purpose.  It  contained 
full  covenants,  subject  to  said  mortgages,  which,  as  it  was  declared, 
••shall  not  merge  in  the  fee,  but  shall  remain  valid  and  subsisting 
liens.""  Said  l»yrnc  at  the  same  time  gave  back  a  dcfeasanee  of 
even  date  whereljy  he  agreed  to  reconvey  to  the  plaintiff  upon  the 
j)ayment  to  him  within  one  year  of  .said  indebtedness  certain 
advances  which  he  agreed  to  make  for  her  benefit  and  the  costs  of 
the  foreclosure  proeeedings.  It  was  stipulated  that  she  should  be 
relieved  from  personal  liability  on  the  bonds  and  that  no  judgment 
for  deficiency  should  "  be  claimed  or  entered  against  her  in  any 
action  that  may  be  taken  upon  said  bonds  or  mortgages  so  long  as 
she  and  all  persons  claiming  under  her  shall  not  disi)ute  or  contest 
the  title  of  the"  .said  Byrne  "or  his  assigns  to  said  mortgaged 
premises  or  the  amounts  due  him  on  said  mortgages.  .  .  ."  Said 
instrument  also  provided  "  that  as  to  the  agreement  In'  the  "  said 
Byrne  '*'  to  reconvey  said  premi.ses,  time  is  of  the  essence  thereof, 
and,  further,  that  this  instrument  shall  not  be  recorded  by  or  on 
hehalf  of  the  "'  plaintifT,  "and  that  for  a  violation  of  this  provision 
this  agreement,  so  far  as  the  same  provides  for  such  reconveyance, 
shall  thereupon  become  utterly  null  and  void."  The  defeasance 
was  never  recorded. 

Saitl  Byrne  at  once  took  possession  of  the  premises  and  remaimd 
in  possession  thereof  until  the  13th  of  June,  1881,  when  he  conveyed 
to  one  Walker  by  a  deed  duly  recorded,  but  "said  conveyance  was 
Juade  without  the  consent  of  the  plaint ilf,  who  had  no  knowledge 
of  it  until  this  action  was  begun  "  on  the  7th  of  March,  180."3.  Said 
Byrne  died  on  the  11th  of  January,  1880.  leaving  a  will  by  which 
he  gave  all  his  property,  real  and  personal,  to  the  defendants.  His 
»xec\itor  accounted  and  has  been  discharged,  and  the  property  of 
the  testator  has  lu-en  delivered  to  the  defendants.  The  plaintilT 
claimed  that  the  rents  and  profits  of  the  |)remises  n'ct'ived  by  ByriU' 
amounted  to  more  than  the  ])rincipal  and  interest  of  the  debt 
secured.  She  alleged  in  her  complaint  that  if  Byrm*  luul  conveyed 
the  jtremises  to  any  one,  such  conveyance  was  made  without  her 
knowledge  or  consent.  She  demanded  an  accounting  as  to  the 
amount  due  from  her.  and  that  she  might  "  be  at  lilMTty  to  n-deem 
i-aid  mortgaged  premi.ses  upon  payment  of  what«'ver  may  upon  such 
accounting  i)e  found  diu',  which  this  plaintilT  hereby  offers  to  pay," 


438  EQUITY    RELATIONS.  [CIIAP.  JU 

and  that  the  defendants  be  compelled  to  convey  said  ^jremises  to 
her.  She  also  demanded  alternative  and  general  relief.  Said 
Walker,  who  still  owns  the  premises,  was  not  made  a  party  to  the 
action.  The  trial  judge  dismissed  the  complaint  upon  the  ground 
that  "  the  Statute  of  Limitations  is  a  conclusive  defense/'  and  the 
Appellate  Division  affinned,  on  an  opinion  rendered  in  overruling 
a  demurrer  to  the  answer,  when  the  case  was  in  the  first  department 
(15  App.  Div.  624;  1  tJ.  316). 

The  facts  agreed  upon  show  that  there  was  a  mortgage;  for  a 
deed,  although  absolute  on  its  face,  when  given  as  security  only,  is 
a  mortgage  by  operation  of  law  {Horn  v.  Keteltas,  46  N.  Y.  605 ; 
Meehan  v.  Forrester,  52  N.  Y.  277 ;  Odell  v.  Montross,  68  X.  Y.  491) ; 
Barry  v.  Hamhurg-Brenien  Fire  Ins.  Co.,  110  X.  Y.  1,  5;  Kraemer 
V.  Adelsherger,  122  N.  Y.  467;  Macauley  v.  Smith,  132  K  Y.  524; 
15  Am.  &  Eng.  Encyc.  791 ;  1  R.  S.  756,  sec.  3;  Laws  1896,  ch.  547,. 
sec.  269).  While  there  was  no  covenant  to  pay  the  debt,  none  was 
needed,  for  the  property  was  worth  much  more  than  the  amount 
of  the  indebtedness,  and  the  mortgagee  could  safely  confine  his 
remedy  to  the  land  (1  R.  S.  739).  The  absence  of  such  a  covenant,, 
the  conditional  release  of  any  claim  for  deficiency,  and  the  agree- 
ment not  to  record  the  defeasance,  are  of  no  importance  in  view 
of  the  express  admission  that  the  deed  was  given  as  security.  The 
deed  and  defeasance  were  executed  at  the  same  time,  and  as  the 
latter  in  express  terms  refers  to  the  former,  they  must  be  construed 
the  same  as  if  both  were  embodied  in  a  single  instrument.  When 
read  together  in  the  light  of  the  admission  that  the  object  was  to 
secure  a  debt,  it  is  clear  that  the  transaction  was  not  a  conditional 
sale,  and  that  the  covenant  making  time  the  essence  of  the  contract 
to  reconvey  has  no  more  effect  than  if  it  occurred  in  the  defeasance 
clause  of  an  ordinary  mortgage.  An  instrument  executed  simply  as 
security  cannot  be  turned  into  a  conditional  sale  by  the  form  of 
a  covenant  to  reconvey,  and  even  if  there  was  a  doubt  as  to  the 
meaning,  the  contract  would  Ije  regarded  as  a  mortgage,  so  as  to 
avoid  a  forfeiture,  which  the  law  abhors  {Matthews  v.  Sheehan,. 
69  N.  Y.  585).  As  was  said  by  the  Supreme  Court  of  the  United 
States:  "It  is  an  established  doctrine  that  a  court  of  equity  will 
treat  a  deed,  absolute  in  form,  as  a  mortgage,  when  it  is  executei-l 
as  security  for  a  loan  of  money.  That  court  looks  beyond  the  terms 
of  the  instrument  to  the  real  transaction,  and  when  it  is  shown  tO' 
be  one  of  security,  and  not  of  sale,  it  will  give  effect  to  the  actual 
contract  of  the  parties.  ...  It  is  also  an  established  doctrine  that 
an  equity  of  redemption  is  inseparably  connected  with  a  mortgage ; 
that  is  to  say,  so  long  as  the  instrument  is  one  of  security,  the 
borrower  has,  in  a  court  of  equity,  a  right  to  redeem  the  property 


'^"'    I-l  MOONKY    V.    HYHNK.  -l.'}'.) 

ii|t()ii  paynient  of  the  loan.  Tliis  rij^ht  cannot  hv  waived  or  aban- 
iloiK'd  by  any  stipulation  of  the  parties  made  at  the  time,  even  if 
t-nibodii'd  in  the  ni<)r(<,M<,'e.  This  is  a  doetrine  from  whieb  a  court 
of  etpiity  never  deviates"  {l\ii(jh  v.  Davis,  \)(\  V.  S.  W.Vi,  ',VM\). 

The  right  to  redeem  is  an  essential  part  of  a  mortgage,  read  in 
by  the  law  if  not  inserted  by  the  parties.  Although  many  attempts 
have  been  made,  no  form  of  covenant  has  yet  been  devi.sed  that  will 
cut  olT  the  right  of  a  mortgagor  to  redeem,  even  after  the  law  day 
has  long  passed  by  {Clark  v.  Henry,  2  Cow.  3*^1,  :VM  ;  Jones  on 
Mortgages,  §  1039).  Even  an  express  stipulation  not  to  redeem 
does  not  prevent  redemption,  because  the  right  is  created  by  law. 
P'or  the  same  reason  an  express  power  to  sell  at  private  sale  after 
default  is  of  no  effect.  'Mf,"  said  Chancellor  Kent,  "a  freehold 
estate  be  held  by  way  of  mortgage  for  a  debt,  then  it  may  be  laid 
down  as  an  invariable  rule  that  the  creditor  must  first  obtain  a 
decree  for  a  sale  under  a  bill  of  foreclosure.  There  never  was  an 
instance  in  which  the  creditor,  holding  land  in  pledge,  was  allowed 
to  sell  at  his  own  will  and  j)leasure.  It  would  open  the  door  to  the 
most  shameful  imposition  and  abuse"  (Hart  v.  Ten  Eyck,  2  Johns. 
Ch.  G2,  100).  The  utmost  effect  claimed  for  the  provision  that  tin? 
defeasance  was  not  to  be  recorded  is  that  it  was  a  consent  to  a  private 
sale  after  default.  As  was  well  said  by  a  recent  writer:  ''If  the 
instrument  is  in  its  essence  a  mortgage,  the  parties  cannot  by  any 
stipulation,  however  express  and  positive,  render  it  anything  l)ut 
a  mortgage,  or  dei)rive  it  of  the  essential  attributes  belonging  to 
a  mortgage  in  ecjuity.  The  debtor  or  mortgagor  cannot,  in  the 
inception  of  the  instrument,  as  a  part  of  or  collateral  to  its  execu- 
tion, in  any  manner  dej)rive  himself  of  his  equitable  right  to  come 
in  after  a  default  in  paying  the  money  at  the  stipulated  time,  and 
to  pay  the  debt  and  interest,  and  thereby  to  redeem  the  land  from 
the  lien  and  incumbrance  of  the  mortgage;  tiie  equitable  right  of 
redemption,  after  a  default,  is  preserved,  remains  in  full  force,  and 
will  be  protected  and  enforced  by  a  court  of  equity,  no  matter  what 
stipulations  the  parties  may  have  made  in  the  original  transaction 
purporting  to  cut  off  this  right"  (3  Pomeroy's  Va\.  Jur.,  Jj  ll!).)). 
So  Mr.  Thomas  says  that  "■  it  was  a  bold  but  necessary  decision  of 
equity  that  a  debtor  could  not,  even  by  the  most  solemn  engagements 
entered  into  at  the  time  of  the  loan,  preclude  himself  from  his  right 
to  redeem"   (Thomas  on  Mortgages,  sj  0). 

To  |)revent  undue  advantage  through  inadetpiacy  of  consideration, 
either  with  or  without  an  opj)ortunity  to  rej)urchase,  the  courts  are 
steadfast  in  holding  that  a  conveyance,  whatever  its  form,  if  in  fact 
given  to  secure  a  drbt,  is  neither  an  absolute  nor  a  conditional  sale, 
but  a  mortgage,  and  that  the  grantor  and  grantee  have  merely  the 


1 


440  EQUITY    RELATIONS.  [CHAP.  11. 

• 

rights  and  are  subject  only  to  the  obligations  of  mortgagor  and 
mortgagee  {Lawrence  v.  Farmers'  L.  &  T.  Co.,  13  X.  Y.  200).  In 
the  case  before  us  there  was  no  purchase  of  the  land  by  Owen 
Byrne,  for  the  existing  relation  of  debtor  and  creditor  between 
himself  and  the  plaintiff  was  not  ended,  but  was  continued  by  a 
contract  intended  to  secure  the  old  debt,  together  with  some  further 
advances.  He  had  a  lien  on,  but  no  estate  in,  the  land  (Thorn  v. 
Sutherland,  123  N.  Y.  236;Huhhen  v.  Moulson,  53  N.  Y.  225,  228). 
She  had  the  right  to  redeem  and  he  the  right  to  hold  the  land  until 
she  redeemed,  or  her  right  of  redemption  was  cut  off  by  the  judg- 
ment of  a  court  of  competent  jurisdiction.  The  continued  existence 
of  the  debt  is  the  birthmark  of  a  mortgage,  and  that  is  involved  in 
the  concession  that  the  land  was  conveyed  as  security.  The  passing 
of  the  law  day  did  not  extinguish  her  right,  for  "  once  a  mortgage, 
always  a  mortgage "  is  a  maxim  so  sound  and  ancient  as  to  be 
a  rule  of  property.  As  the  deed  was  a  mortgage  when  given,  it  did 
not  cease  to  be  a  mortgage  after  the  period  of  redemption  had 
expired.  In  Macauleij  v.  Smith,  supra,  it  was  held  that  the  sur- 
render of  possession  by  the  grantor  to  the  grantee  after  the  debt 
became  due  did  not  prevent  the  levy  of  an  attachment,  issued  in 
behalf  of  creditors  of  the  former,  upon  lands  conveyed  to  the  latter 
as  security. 

The  plaintiff,  therefore,  is  a  mortgagor,  whose  right  to  redeem 
from  the  mortgagee  in  possession  has  not  been  cut  off  nor  cut  down 
by  any  act  or  omission  on  her  part.  As  the  defendants  stand  in 
the  shoes  of  Owen  Byrne,  with  no  rights  except  by  way  of  gift  iinder 
his  will,  the  case  is  the  same  in  principle  as  if  he  were  living  and 
flic  sole  defendant.  After  the  plaintiff  had  established  her  right 
i:o  redeem  as  to  him  what  answer  could  he  make  thereto?  Would 
it  be  an  answer  for  him  to  say,  "  I  have  conveyed  the  lands  away, 
and,  tlierefore,  you  cannot  redeem  ?  "  While  this  would  be  a  con- 
clusive answer  in  behalf  of  Walker,  the  present  owner  of  the  land, 
if  he  had  been  made  a  party  and  the  right  to  redeem  had  been 
asserted  against  him,  can  Owen  Byrne  or  his  devisees  say  that,  by 
his  wrongful  act  in  conveying  the  land,  he  deprived  the  plaintiff 
of  the  right  to  redeem  in  any  form  and  confined  her  to  an  action 
for  the  moneys  received  on  the  sale,  to  which  the  Statute  of  Limita- 
tions would  be  a  bar?  Can  a  mortgagee  by  his  own  act,  without 
a  judicial  sale  or  the  consent  of  the  mortgagor,  destroy  the  right 
to  redeem,  which  is  so  carefully  guarded  by  the  courts?  The  mort- 
gagee could  not,  by  selling  the  mortgaged  premises,  change  the 
rights  of  the  plaintiff  as  against  himself.  As  to  him,  she  still  has 
the  right  to  redeem,  for  by  his  act,  without  her  knowledge  or  con- 
sent, he  could  not  annul  his  covenant  to  reconvey.  That  covenant 
is  still  in  force,  and  the  plaintiff  may  compel  its  performance,  so 


^^rx-.i.]  MOOXEV   i.  ii\usi:.  ni 

far  .13  the  ri^^hls  of  (liinl  parties,  a<(|uiro(l  iimlor  \ho  Rocording 
Alt.  will  prrmit.  As  Owtii  Hx  rnc  convryctl  to  a  bona  fulr  purchasor. 
ilic  plainlill"  cannot  follow  the  huul  as  siicli,  Imt  slu'  is  not  prevented 
liy  that  wrongful  act  from  any  form  of  redemption  now  practicable. 
\o  act  of  his  could  utterly  destroy  her  cause  of  action  to  redeem, 
lie  might  affect  its  value,  but  he  could  n<»t  take  its  life.  As  a  .sub- 
-titute  for  a  decree  requiring  him  to  n>purchase  the  land  and 
•  (invey  it  to  her,  which  might  be  impossible  and  would  be  apt  to 
involve  hardshij>.  she  may  treat  the  value  of  the  land,  measured 
in  money  presumed  to  be  in  his  hands  when  her  right  to  redeem 
was  established,  as  land,  and  enforce  the  right  of  redemption  accord- 
ingly. Unless  we  virtiuilly  sanction  his  wrongdoing  by  j)ermitting 
him  to  defeat  her  right  of  redemption  ab.solutely  by  his  own  act, 
upon  showing  a  right  to  redeem  she  must  be  permitted  to  make  the 
best  redemption  j)ossible  as  against  him.  Because  he  has  put  it 
out  of  his  j)ower  to  render  to  her  all  she  is  entitled  to,  he  cannot 
refuse  to  make  the  nearest  approach  to  it  that  is  left.  A  court  of 
<  'juity,  in  order  to  bring  about  an  equitable  result,  disregards  forms 
;ind  treats  money  as  land  and  land  as  money  when  reiiuired  lo 
jirevent  injustice.  A  mortgagee  in  possession  uiuler  a  recorded 
deed,  absolute  on  its  face,  with  an  unrecorded  defeasance,  cannot 
?-ell  tlie  land  and  claim  that  the  purchase  price  is  money  as  against 
one  who  has  an  equitable  right  to  insist  that  in  legal  efTect  it  is 
land.  As  the  plaint ilf  established  a  right  to  redeem.  Owen  ByriU' 
and  his  devisees  eannot  complain  if,  in  working  out  the  relief 
required  by  the  violation  of  his  covenant,  the  court  does  the  best  it 
can  to  right  the  wrong  by  treating  the  money  as  land.  In  order 
to  i)revent  him  from  making  a  jirofit  out  of  his  wrong,  the  law 
raises  the  presumjjtion  that  he  now  has  the  full  value  of  the  land 
as  a  separate  fund  in  his  hands,  and  treating  it  as  land  allows  the 
plaintiff  to  redeem,  the  same  as  if  it  were  in  fact  land.  As  against 
the  wrongdoer  and  his  estate  it  will  exert  all  its  ])ower  to  make 
the  plaintiff  whole.  j)aying  due  regard  to  equities  arising  through 
improvements  uj)on  the  land,  so  as  not  to  give  her  more  than  she 
is  equitably  entitled  to. 

Thus,  in  Mcehan  v.  Forrester,  supra,  the  court,  through  Iv.vr.vLi.o, 
J.,  said:  "The  sale  was  shown  to  have  l)een  made  without  the 
consent  of  Meehan  and  in  violation  of  his  rights,  and  it  tloes  not 
appear  that  the  plaintiif  ever  had  notice  of  it.  He  was  not  bound 
by  such  a  sale.  He  was  entitled  to  his  land  on  payment  of  the 
amount  due  to  Rt-rtine  or  his  representatives.  If  Bertine,  by  reason 
of  his  own  wrongful  act,  had  deprived  himself  of  thr  ability  to 
restore  the  land  to  which  the  f)laintiff  is  cquitai)ly  entitled.  ht>  or 
liis  representatives  were  l)ound  to  account  to  the  plaintiff,  at  his 
election,  either  for  the  proceeds  of  sale  of  the  land  or  its  value  at 


442  EQUITY    EELATIO^^S.  [CHAP.  11. 

the  time  when  the  plaintiff's  right  to  such  reparation  was  established 
{Hart  V.  Ten  Eyck,  2  Johns.  Ch.  117;  Peahodij  v.  Tarhell,  2  Cush. 
227,  233;  May  v.  Le  Claire,  11  Wall.  236,  237)." 

In  that  case,  as  in  this,  the  only  cause  of  action  alleged  or  proved 
Avas  the  right  to  redeem;  but  as  the  premises  had  been  wrongfully 
conveyed,  the  plaintiff,  upon  establishing  such  right,  was  awarded 
compensation  on  the  basis  of  value  at  the  time  of  the  trial.  Com- 
pensation was  allowed  as  an  equitable  substitute  for  actual  redemp- 
tion. In  other  words,  the  land  which  should  have  been  conveyed 
was  appraised  by  the  court,  and  the  defendant  compelled  to  restore 
the  amount  of  the  appraisal,  as  the  only  method  of  redemption 
possible.  The  form  of  relief  granted  was  a  money  judgment,  but 
that  was  possible  only  because  a  right  to  redeem  had  been  estab- 
lished, for  without  that  right  the  relief  would  be  limited  to  the 
proceeds  of  the  sale  {Baily  v.  Hornthal,  154  N".  Y.  648,  661).  So 
in  the  case  at  bar,  the  plaintiff  established  the  same  right,  but  the 
defendant  showed  that  he  had  placed  it  beyond  his  power  to  recon- 
vey.  Thereupon  in  rebuttal  and  not  as  a  part  of  her  cause  of 
action,  the  plaintiff  had  the  right  to  prove  the  present  value  of  the 
land,  so  as  to  follow  the  money  presumed  to  be  in  the  defendant's 
hands,  and  redeem  that  which  he  had  wrongfully  substituted  for 
the  land,  the  same  as  if  it  were  in  fact  land.  Guided  by  the  cardinal 
principle  that  the  wrongdoer  shall  make  nothing  from  his  wrong, 
equity  so  moulds  and  applies  its  plastic  remedies  as  to  force  from 
him  the  most  complete  restitution  which  his  wrongful  act  will 
permit  {May  v.  Le  Claire,  78  U.  S.  217;  Van  Dusen  v.  Worrell, 
4  Abb.  Ct.  App.  Doe.  473;  Miller  v.  McGuctin,  15  Abb.  [N.  C] 
204;  Hart  v.  Ten  EycJc,  2  Johns.  Ch.  62,  108;  Enos  v.  Sutherland^ 
11  Mich.  538,  542;  Budd  v.  Van  Or.den,  33  N.  J.  Eq.  143;  s.  c,  id. 
564).  When  he  cannot  restore  the  land  it  will  compel  him  to 
restore  that  which  stands  in  his  hands  for  the  land,  and  will  not 
permit  him  to  assert  that  it  is  not  land  when  the  assertion  would 
be  profitable  to  himself  but  unjust  to  the  one  whom  he  wronged. 
He  cannot  escape  by  offering  to  pay  what  he  received  on  selling  the 
lands,  but  must  pay  the  value  at  the  time  of  the  trial.  He  cannot 
cut  off  the  right  of  redemption  and  convert  it  into  a  personal 
liability,  for  he  is  still  a  mortgagee,  and  subject  as  such  to  the 
mortgagor's  rights.  The  fact  that  the  injured  mortgagor  need  not 
take  the  proceeds  of  the  sale,  but  may  insist  on  the  proved  value 
of  the  land,  as  well  as  the  pleadings  and  proofs,  show  that  this  is 
a  pure  action  to  redeem,  and  must  be  so  regarded  for  all  purposes, 
including  the  defense  of  the  Statute  of  Limitations.  While  the 
mortgagor  is  helpless  as  against  his  grantee,  she  is  not  helpless  as 
against  him. 

The  defendants  insist  that  as  the  plaintiff  can  only  recover  a 


i^y<-  l)  MUONKV     C.    IlMfNi:.  'll.'j 

niuncv  jiul;^Mii('iil,  tlu'  iau>c'  of  iK-tioii  is  in  llu'  iiatiin-  nf  an  accouiii- 
ing  for  moncv  had  and  rccoivt'd,  and  henco  that  the  six-year,  or  ai 
most  tlio  li-n-yrar  Statuto  of  Ijiniitations  is  a  har.  Tliis  is  not 
an  action,  however,  to  reeovt-r  nioncv,  hut  to  redeem  hind  from 
a  mortfxa^'e.  and  hut  for  the  miscoiuliii't  of  the  defendant  wouhi 
have  resulted  simj)ly  in  a  judgment  of  redemption,  with  an  account- 
ing for  the  rents  and  profits  of  thi*  hmd,  after  payment  of  tlie  deht 
hy  the  phiintifT,  according  to  her  demand  and  offer  hefore  thi? 
commencement  of  the  action.  Tlie  j)criod  of  limitation  provided 
by  the  Code,  within  which  an  action  to  redeem  from  a  mortgage 
may  be  maintained,  is  twenty  years  after  breach  of  the  condition 
or  the  non-fulfillment  of  the  covenant  therein  contained  (Code  Civ. 
Pro..  s<  ;{71>)-  ^o  far  as  the  defendants  are  concerned,  the  plaintilT 
liad  a  right  to  redeem.  She  brought  her  action  to  redeem  and 
established  it  by  evidence,  and  was  entitled  to  Judgment  accordingly  ; 
but  as  that  judgment  would  be  inefTectual  because  the  mortgagee 
had  sold  the  land,  equity  will  simply  vary  its  relief  from  a  judgment 
of  redemption  in  land  to  a  judgment  of  redemption  in  moni'y  repre- 
senting the  land.  If  the  plaintiff  had  not  elected  to  redeem,  but 
to  sue  for  money  had  and  received  to  her  use,  the  case  of  Mills  v. 
Mills,  115  X.  Y.  80,  relied  upon  by  the  defendants,  might  be  an 
authority.  In  that  case,  however,  as  was  stated  by  this  court,  '*all 
the  relief  asked  for  in  the  complaint  is  an  accounting  and  a  judg- 
ment for  a  sum  of  money,  and  no  other  relief  was  needed  or  possible 
upon  the  facts  established.  This  was  in  no  .sense  an  action  to 
redeem,  as  there  was  no  mortgage  and  nothing  to  redeem."  The 
relief  demanded,  as  aj)pears  from  the  ai)i)eal  book  on  file  in  this 
i-ourt.  was  simply  a  judgment  ''for  all  moneys  received  by"  the 
defendant.  No  claim  was  nuule  that  the  two  transactions,  which 
were  four  years  apart,  constituted  a  mortgage,  or  that  there  was 
ever  a  right  to  redeem.  The  theory  of  the  action  was  that  the 
defendant  lawfully  sold  the  land  and  should  account  for  the  pro- 
ceeds, after  deducting  his  own  claim.  Thus,  the  court  said :  "  Abso- 
lute title  to  the  lands  was  vested  in  the  defendant,  evidently  with 
the  intention  that  he  might  sell  them  and  reind)ursc  himself,  an«I 
j)ay  over  any  sur|)lus  to  his  brother."  The  fundanu'ntal  fact  thai 
the  defendant  sold  without  right  was  wanting  in  that  case,  and 
hence  the  principle,  which  is  the  basis  of  our  judgment,  coubl  not 
be  applied.  It  is  the  wrongfid  conveyance  by  the  mortgagi'c  in 
possession,  under  a  lU'cd  jd>solute  (tn  its  faci',  that  enai)les  a  court 
of  equity  to  h(»ld  on  to  the  ca.se  aftiT  ordinary  redemption  has  been 
shown  to  be  impossii>le,  and  to  allow  such  a  reilemption  again>t 
the  wrongd(»er  as  will  jirevent  him  from  gaining  by  his  wrong,  an<l 
will  givi'  the  plaint itT  her  due  as  nearly  as  may  be. 


444 


EQUITY    RELATIONS. 


[CIIAP.   II, 


The  judgment  appealed  from  should  he  reversed  and  a  new  trial 
granted,  with  eosts  to  ahide  event. 

Parker,  Ch.  J.,  Bartlett,  Martin  and  Werner,  J  J.,  concur ; 
Gray,  J.,  not  voting;  Cullen,  J.,  not  sitting. 

Judgment  reversed,  etc.^ 


'  "  That  the  deed  under  which  defendant  held  the  land,  although  absolute 
in  form,  was  a  mortgage,  admits  of  no  doubt.  .  .  .  The  original  character 
of  the  transaction  was  in  no  manner  changed  by  the  renewal  of  the  note 
for  the  balance  and  by  accepting  a  new  agreement  as  to  making  a  deed  on 
payment  of  the  sum  to  become  due,  notwithstanding  it  contained  a  clause 
declaring  time  of  payment  material  and  of  the  essence  of  the  contract,  and 
in  case  of  failure  the  '  intervention  of  equity  is  forever  barred.'  The  relation 
of  mortgagor  and  mortgagee  still  continued."— Per  Scott,  J.,  in  Tennenj  v. 
'Nicholson,  87  111.  464  ( 1877 ) .  Accord,  are  Clark  v.  Eenry,  2  Cowen  (N.  Y.) , 
324  (1823)  ;  Htover  v.  Bounds,  1  Oh.  St.  107  (1853)  ;  Bearss  v.  Ford,  108 
111.  16  (1883);  Parmer  v.  Parmer,  74  Ala.  285  (1883);  TurpxQ  V.  Lowe, 
114  Ind.  37  (1887),  and  the  authorities  generally. 


^'^<^-   "•]  TFULL    V.    SKINNER.  Ilj 

(•II.\Pl'i;i;    II.      {Cnnlinur.l). 
Section  If.     Hi;li:asi:  of  tiii;  llc^t  itv  or  [{kdemttion. 

TKILL  V.   SKINNKR. 

SurHEML  Jldkiai.  (oruT  OK  .Massachu.sett.s,  1835. 

(i;  rir/c.  •.>i;{.) 

SiiAW,  C.  J.,  delivered  the  opinion  of  the  court.  The  plaintilf 
has  brought  liis  bill  in  equity  to  redeem  certain  mortgaged  premises 
therein  described,  being  parcels  of  real  estate  situated  in  Cambridge. 
He  claims  title  as  the  purchaser  of  an  ecpiity  of  redemption  at  an 
officer's  sale,  made  pursuant  to  the  statutes  ])roviding  for  tin; 
seizure  and  sale  of  equities  of  redemption  for  satisfying  executions. 
The  sale  to  the  plaintiff  was  made  on  May  4,  1833,  for  $3500  on 
an  execution  and  judgment  recovered  by  Ezra  Trull  against  Kuval 
Makcjieace,  in  a  suit  in  whith  the  premises  had  been  attached  on 
mesne  process  the  11th  of  April,  183^'.  The  question  therefore  is, 
whether  ^lakepeace  had  such. an  ec^uity  of  redemption,  liable  to  bo 
taken  by  creditors,  either  in  May,  1833,  when  it  was  taken  in  execu- 
tion, or  in  .\pril,  1S3'2,  when  it  was  attached. 

There  is  no  doubt  that  the  transaction  of  Sei)tenilR'r.  l8v*T.  con- 
stituted a  mortgage.  Makepeace  conveyed  to  Skinner  &  llurd  an 
estate  in  fee,  consisting  of  sundry  parcels  of  land;  and  at  the  same 
time  an  indenture,  bearing  the  same  date,  was  entered  into  by  th»; 
parties,  reciting  the  i-onveyanc-e,  reciting  that  a  debt  was  due  from 
Makepeace  to  Skinner  &  llurd,  and  containing  an  agreement  that 
Skinner  &  llurd  should  purchase  in  the  ecjuity  of  redemption,  then 
about  to  be  sold  on  execution,  should  pay  off  a  mortgage  due  t.» 
Dr.  Shattuck,  should  advance  further  sums  of  money,  and,  upon 
repayment  of  the  sums  due  to  them,  should  release  and  reassign  to 
Makepeace.  It  was  further  agreed  that  Makepeace  might  make 
sales  of  the  lands  from  time  to  time,  that  Skinner  &  llurd  would 
execute  releases  jjursuant  to  such  sales,  that  they  should  receive  the 
money,  the  jiroeeeds  of  such  sales,  and  apply  it  to  the  paynu>nt  of 
the  debt,  and  should  account  for  the  surplus;  and  the  whole  was 
to  be  accomiilished  in  three  years. 

Some  small  sales  were  made  pursuant  to  this  agreement,  and  in 
April.  1831,  a  large  part  of  the  debt  remaining  unpaid,  a  now 
arrangement   was   nnuli'.  also  by   indenture.      Th.-   in-trumeul  o£ 


446  EQUITY    RELATIONS.  [CHAP.  II. 

defeasance,  before  held  by  Makepeace,  was  surrendered  and  delivered 
np  to  be  cancelled,  and  new  stipulations  were  entered  into,  by  which 
Skinner  &  Hurd  leased  the  land  to  Makepeace  for  two  years,  at 
a  rent  about  equal  to  the  interest  on  the  debt;  and  they  further 
stipulated  that,  upon  the  payment  of  a  certain  sum  by  Makepeace 
in  two  years,  they  would  convey  the  estate  to  him. 

The  first  question  is  whether  this  last  agreement,  surrendering 
and  cancelling  the  instrument  of  defeasance,  was  an  extinguishment 
of  the  equity  of  redemption,  as  between  the  parties,  and  against  the 
creditors  of  the  mortgager.  The  court  are  of  opinion  that  where  an 
absolute  deed  is  given,  accompanied  by  a  simultaneous  instrument 
operating  by  way  of  defeasance,  and  afterwards  the  parties,  by  fair 
mutual  stipulations,  agree  that  the  defeasance  shall  be  surrendered 
and  cancelled,  with  an  intent  to  vest  the  estate  unconditionally  in 
the  grantee  by  force  of  the  first  deed,  by  such  surrender  and  cancel- 
lation the  estate  becomes  absolute  in  the  mortgagee.  The  original 
conveyance  stands  unaffected  in  form  and  legal  effect;  it  conveys 
an  estate  in  fee;  the  only  party  who  could  even  claim  a  right  to 
deny  it  that  operation,  by  engrafting  a  condition  upon  it,  has  volun- 
tarily surrendered  the  only  legal  evidence  by  which  that  claim  could 
be  supported,  and  is  thereby  estopped  from  setting  it  up.  Sucli 
cancellation  does  not  operate  by  way  of  transfer,  nor,  strictly  speak- 
ing, by  way  of  release  working  upon  the  estate,  but  rather  as  an 
estoppel  arising  from  the  voluntary  surrender  of  the  legal  evidence, 
by  which  alone  the  claim  could  be  supported:  like  the  cancellation 
of  an  unregistered  deed  and  a  conveyance  by  the  first  grantor  to 
a  third  person  without  notice.  The  cancellation  reconveys  no  inter- 
est to  the  grantor,  and  yet  taken  together  such  cancellation  and 
conveyance  to  a  third  person  make  a  good  title  to  the  latter  by 
operation  of  law.  It  gives  a  seisin  de  facto,  a  conveyance  by  deed 
duly  registered  being  to  many  purposes  equivalent  to  livery  of 
seisin  (Highee  v.  Eice,  5  Mass.  R.  352).  It  is  good  against  the 
grantor  and  his  heirs  by  force  of  the  second  deed,  and  it  is  good 
against  the  first  grantee  and  all  claiming  under  him,  by  force  of 
the  registry  acts  {C ommonwealth  v.  Dudley,  10  Mass.  R.  403).  But 
the  point  now  decided,  of  the  effect  of  cancelling  an  instrument  of 
defeasance,  seems  to  be  settled  by  authorities  {Harrison  v.  Phillips 
Academy,  13  Mass.  R.  456;  Eice  v.  Eice,  4  Pick.  349).  But  this 
rule  is  to  be  taken  with  this  qualification,  that  the  transaction  is 
conducted  with  perfect  fairness  and  good  faith,  both  as  between  the 
parties  and  as  against  the  creditors  of  the  mortgager,  and  that  tlic 
riglits  of  third  persons  had  not  intervened  before  the  completion 
of  the  transfer  by  the  cancellation.  But  if  these  qualifications  do 
exist,  if  no  unfair  advantage  is  taken  of  the  mortgager,  if  by  mutual 
agreement  all  beneficial  and  available  interest  of  the  mortgager  ia 


^^«•    "•]  TIUI.I.    r.    SKIN'NKK.  W, 

laki'ii  away,  in  a  form  which  iiuist  forever  prevent  luni  from  enfore- 
injr  ii  ri^^ht  to  reileem  hy  any  le^al  or  equitable  proceedinff,  there 
seems  to  he  no  interest  wliieh  the  creditor  of  such  party  can  take 
for  the  satisfaction  of  his  chiims. 

'2.  The  court  are  also  of  opinion  that  the  agreement  hy  Skinner 
\-  llurd  to  convey  upon  certain  terms  in  two  years,  contained  in  the 
indenture  of  Ajiril,  1831,  diil  not  oj)erate  as  a  defeasance,  so  as  to 
constitute  with  tlie  ori<,nnal  conveyance  a  new  mortgage,  l)ocause 
it  was  not  executed  at  tlie  same  time  with  the  conveyance  of  which 
it  is  claimed  to  be  a  defeasance,  nor  as  part  of  one  and  the  sann^ 
transaction,  nor  was  so  understood  or  intended  by  the  parties 
{Kcllcran  v.  Brown,  4  Mass.  R.  443  ;  Harrison  v.  Phillips  Academy. 
VI  Mass.  K.  45(;). 

Perhaps  where  parties  by  mutual  agreement,  intending  to  enlarge 
and  extend  the  time  of  redemption,  should  take  up  an  existing 
instrument  of  defeasance  and  at  the  same  time  execute  another, 
connected  witii  the  former  by  proper  recitals  and  provisions,  showing 
an  intention  to  continue  the  former  right  of  redemption  on  foot,  in 
a  modified  form,  by  force  of  this  substituted  instrument  of  defeas- 
ance, such  new  instrument  might  be  so  construed  as  to  relate  back 
to  the  first  deed  and  preserve  the  mortgage,  when  such  construction 
would  but  support  and  carry  into  elTect  the  intent  of  the  parties; 
of  this,  however,  it  is  unnecessary  to  express  an  opinion.  The 
instrument  now  relied  on  as  a  defeasance  was  not  only  not  made  at 
the  same  time  the  original  deed  was  executed,  nor  at  the  time  it  took 
effect,  nor  was  it  either  actually  or  constructively  part  of  the  same 
transaction,  nor  was  it  a  case  where  the  parties  recognised  it  as 
a  mortgage,  or  intended  to  construe  or  carry  it  into  effect  as  such. 
'I'he  court  are,  therefore,  of  opinion  that  by  the  surrender  of  the 
defeasance  the  right  in  ecjuity  was  extinguished,  the  original  mort- 
gagee remained  seised  by  force  of  the  first  deed,  and  the  new 
contract  did  not  constitute  a  new  mortgage,  nor  keep  the  existing 
equity  of  redemption  in  force. 

3.  This  leads  to  the  renuiining,  and  perhaps  to  the  partii's  the 
most  important  ([uestion,  whether  this  surrender  of  the  defea.sance 
and  extinguishment  of  the  equity  was  good  against  the  creditors  of 
Makepeace.  This  depends  mainly  on  the  questions  of  fact,  to  which 
nnuh  evidence  was  taken,  whether  this  arrangement  was  made  witii 
an  intent  to  delay,  defeat  or  defraud  the  creditors  of  Makej)eace ; 
whether  there  was  a  secret  trust  on  the  jiart  of  the  respondents  to 
hold  the  same,  in  whole  or  in  paii.  for  the  benefit  of  the  mortgager; 
and  whether  there  was  such  a  disparity  between  the  value  of  the 
♦•state  and  the  amount  for  wiiieh  it  was  taken  as  to  lead  to  a  reason- 
able inferiMice  of  any  such  fraiidnleiif  intent. 

(After  an  examination  ami  summing  ujt  of  the  evidence:) 


448  EQUITY    RELATIONS.  [CHAP.  II. 

Upon  the  whole  evidence  the  court  are  of  opinion  that  the  trans- 
action was  not  fraudulent,  that  the  equity  of  redemption  was  relin- 
quished  before  the  attachment,  and  that  the  complainant  did  not 
acquire  a  right  to  redeem  under  the  officer's  deed. 

Bill  dismissed. 


GREEN  V.  BUTLER. 

Supreme  Court  of  California,  1864. 

(26  Cal.  595.) 

Appeal  from  the  District  Court,  Twelfth  Judicial  District,  city 
and  county  of  San  Francisco. 

This  action  was  brought  to  compel  an  accounting  and  a  reconvey- 
ance of  the  property.  Plaintiff  claimed  that  the  deed  and  defeasauce 
constituted  a  mortgage,  and  that  Leavitt,  unknown  to  plaintiff,  had 
paid  Butler  a  large  portion  of  the  sum  mentioned  in  the  defeasance 
before  the  execution  of  the  same,  and  that  the  amount  thus  paid 
by  Leavitt,  and  the  proceeds  of  the  property  received  by  Butler  as 
mortgagee  in  possession,  had  satisfied  the  mortgage,  and  that  Leavitt 
and  Butler  had  combined  together  to  defraud  plaintiff. 

The  other  facts  are  stated  in  the  opinion  of  the  court. 

By  the  court.  Sawyer,  J.  A  large  portion  of  the  briefs  on  both 
sides  is  devoted  to  a  discussion  of  the  evidence.  But  no  appeal  has 
been  taken  from  the  order  denying  a  new  trial,  and  the  parties  must 
be  presumed  to  have  been  satisfied  with  the  facts  as  found.  Whether 
they  were  or  not,  the  appeal  is  from  the  judgment  alone,  and,  on  such 
appeal,  we  cannot  review  the  evidence.  The  practice  is  the  same  in 
all  cases,  whether  at  law  or  in  equity  (Allen  v.  Fennon,  27  Cal.  68). 
Whatever  doubt  there  might  formerly  have  been  on  this  point  as  to 
cases  in  equity,  there  can  be  none  since  the  passage  of  the  Act  of  1861, 
the  first  section  of  which  provides  "  that  no  distinction  as  to  the 
mode  of  taking  or  perfecting  appeals,  or  as  to  the  effect  of  them,  shall 
be  made  between  cases  at  law  and  cases  in  equity,  but  the  provisions 
of  the  Practice  Act  shall  apply  in  like  manner  to  all  cases  of  appeal'' 
(Laws  1861,  p.  589).  Nor  did  the  parties,  when  the  appeal  was 
taken,  seem  to  contemplate  that  we  should  re-examine  the  evidence. 
It  is  stipulated  that  certain  papers  on  file  shall  constitute  the  state- 
ment on  appeal  (there  docs  not  appear  to  have  been  any  statement 
on  motion  for  new  trial),  and  the  grounds  of  appeal  specified  in 
tlie  statement  are,  substantially,  that  the  referee  erred  in  his  con- 
clusions of  law,  and,  as  a  consequence,  that  the  judgment  is  erro- 


S"^^'-    "J  GREEN    r.    lU  TLKK.  410 

neous.  No  error  as  to  tlic  fads  foiiiul  is  alleged  in  the  staiemcnt 
as  a  ground  of  apjjeal. 

Tiie  referee  finds,  among  other  faets,  that  prior  to  the  1 1th  of 
August,  18.>l,  the  plaintilf  was  in  possession  of  the  lands  described 
in  the  complaint ;  that  on  tiiat  day,  for  a  valuable  consideration,  he 
conveyed  the  said  lands  and  improvements  thereon  by  a  deed 
absolute  on  its  faee  to  the  defendant  Butler;  that  although  tiie  deed 
was  absolute  on  its  face,  it  was  intended  as  a  mortgage  to  secure  to 
said  defendants  certain  moneys,  due  and  to  grow  due,  for  erecting 
buildings  and  improvements  thereon  for  a  firm  composed  of  plaintiff 
and  defendant  Leavitt ;  that  on  the  2Uth  of  October,  18:>i,  the  said 
firm  of  (.Jreen  &  Leavitt  iuid  an  accounting  with  defendant  Butler, 
and  tiiat  upon  said  accounting  it  was  found  and  agreed  by  all  parties 
that  said  firm  was  indebted  to  said  Butler  for  constructing  said 
improvements  in  the  sum  of  eight  thousand  five  hundred  dollars; 
that  on  said  '-iOlh  day  of  October  said  Butler  executed  and  delivered 
to  said  Green  &  Leavitt  a  written  defeasance,  whereby  he  bouml 
himself,  upon  the  payment  by  them  to  him  on  or  before  March  1, 
1855,  the  said  sum  of  eight  thousand  five  hundred  dollars,  to  convey 
by  quit-claim  to  said  (Jreen  &  Leavitt  the  said  [)remises,  and  cove- 
nanted in  said  defeasance  that  if,  after  said  1st  day  of  March,  he 
should  sell  said  premises,  ho  would  pay  over  to  said  parties  any 
surplus  that  might  arise  over  his  debt  and  costs  ;  that  said  defendant 
Butler  on  the  1st  of  February,  1855,  with  the  consent  of  said 
plaintiff  and  said  defendant  Leavitt,  entered  into  possession  of  said 
premises  and  continued  in  possession  till  the  "iTlh  day  of  February, 
1855. 

"That  on  the  said  "•^Tth  day  of  February,  .v.i).  1855,  at  said  city 
and  county,  the  said  plaintiff  and  the  said  defendant,  Josepli  K. 
Butler,  had  an  accounting  and  settlement  of  and  concerning  the 
said  plaintilFs  interest  in  and  to  the  land  described  in  said  com- 
plaint, and  the  improvements  then  thereon,  and  of  the  furniture 
then  in  said  *  OtH-aii  House;'  on  which  accounting  and  settlement 
the  said  defendant,  Josi'ph  F.  Butler,  paid  to  the  said  plaintifT  the 
sum  of  two  thousand  dollars,  in  four  j)romissory  notes,  for  said 
plaintitT's  interest  in  and  to  said  land  and  the  improvements 
thereon,  and  the  furniture  tlien  in  said  house,  which  said  notes  w«'re 
subseijuently  paid;  and  the  said  plaintiff  then  and  there,  in  consid- 
eration of  said  sum  of  two  thousand  dollars,  surrendered  the  said 
written  defeasance  to  the  said  defendant,  .Tosej)h  F.  Butler,  for 
eancellation.  and  the  same  was  thereby  cancelled  as  against  the  said 
plaintifT." 

The  only  (piestion  arising  on  the  record  is  as  to  the  effect  upon 
the  rights  of  the  parties  as  to  the  relief  .sought  in  this  action,  of 
the  surrender  of  the  defeasance  to  be  cancelled,  under  the  agreement 


450  EQUITY    RELATIO^"S.  [cilAP.  II. 

found  by  the  referee.    The  principles  stated  in  the  numerous  eases 
cited  by  appellant's  counsel  are  generally  admitted  to  be  correct. 
But  there  can  be  no  doubt  that  a  mortgagee  can  make  a  bo7ia  fide 
purchase  of  the  equity  of  redemption — if,  indeed,  we  may  use  tliese 
terms  in  the  present  condition  of  the  law  as  to  mortgages  in  this 
State — and  thereby  acquire  an  absolute  title.    The  principle  is  well 
stated  in  Remsen  v.  Hay,  2  Edw.  Ch.  535,  in  the  following  terms: 
"  There  is  nothing  in  the  policy  of  the  law  to  prevent  a  mortgagee 
from  acquiring  an  absolute  ownership  by  purchase  from  the  mort- 
gagor at  any  time  subsequent  to  the  taking  of  the  mortgage,  and 
by  a  fresh  contract  to  be  made  between  them.     Courts  view  with 
jealousy  and  suspicion  any  dealings  between  the  mortgagor  and 
mortgagee  to  extinguish  the  equity  of  redemption ;  but  if  it  be  fair 
and  honest  on  the  part  of  the  mortgagee,  the  purchase  will  not  be 
disturbed.    The  law  only  prohibits  a  mortgagee  from  availing  him- 
self of  a  stipulation  contained  in  the  mortgage  deed,  or  of  some 
covenant  or  agreement  forming  part  of  the  same  transaction  with 
the  loan  and  the  taking  of  the  security,  by  which  he  shall  attempt 
upon  the  happening  of  some  future  event  or  contingency  to  render 
the  estate  irredeemable  and  obtain  an  absolute  ownership.    In  such 
cases  the  maxim  applies  of  '  Once  a  mortgage,  always  a  mortgage' 
{Henry  v.  Davis,  7  John.  Ch.  40;  Clark  v.  Henry,  2  Cow.  333). 
But  it  cannot  interfere  with  the  right  to  foreclose  when  the  mortgage 
has  become  forfeited,  nor  with  any  fresh  contract  which  the  mort- 
gagor may  choose  to  make  with  the  mortgagee  for  a  sale  or  relin- 
quishment of  the  equity  of  redemption  and  vesting  the  latter  with 
an  irredeemable  estate."     There  are  numerous  authorities  to  the 
same  effect  (1  Wash.  Eeal  Prop.,  p.  496,  §§  23,  24;  Dougherty  v. 
McCoJgan,  6  Gill.  &  J.  275;  Russell  v.  Southard,  12  How.  154; 
Adams  v.  McKenzie,  18  Ala.  698). 

Independent  of  authority,  no  argument  is  necessary  to  show  that, 
upon  principle,  a  mortgagor  has  the  same  capacity  to  contract  with 
reference  to  his  interest  in  the  mortgaged  property  that  he  has  in 
respect  to  any  other  property.  Nor  has  section  two  hundred  and 
sixty  of  the  Practice  Act,  or  any  of  the  former  decisions  in  this 
State  relating  to  mortgages,  placed  any  restriction  upon  the  author- 
ity of  the  mortgagor  to  make  other  and  further  contracts  affecting 
his  title  to  the  land  subsequent  to  the  execution  of  the  mortgage. 
The  language  of  Mr.  Justice  Field  in  McMillan  v.  Richards,  9  Cal 
365,  cited  by  counsel,  that  "  the  owner  of  a  mortgage  in  this  State 
can  in  no  case  become  the  owner  of  the  mortgaged  premises,  except 
by  purchase  upon  sale  under  judicial  decree,  consummated  by  con- 
veyance," must  be  limited  to  the  question  then  under  discussion.  He 
was  simply  endeavoring  to  show  that  no  title  passed  by  the  mortgage 
alone,  either  before  or  after  default,  or  could  be  acquired  under  it 


^*-*-  "1  GRKFN-    V.    IMTLKH.  lol 

l»v  strict  fori'i'losun-  or  in  any  other  maimrr  than  hy  ii  sale  under 
a  decree  of  a  court,  and  that  in  >\u-\\  case  the  tith"  did  not  vest  till 

wnsuinniatcd  hy  a  conveyance  after  the  i)eri(»d  for  redemption  had 

spired,     lie  had  no  reference  to  a  contract  alfectin^'  the  title,  made 

V  the  mortgagor  himself  subsequent  to  the  making  of  the  mortgage. 
Keference  was  oidy  made  to  the  ])ossil)ility  of  ac(piiring  title  through 
I  he  mortgage,  independent  of  any  further  action  on  the  part  of  the 
mortgagor. 

In  this  case,  according  to  the  linding  of  the  referee,  there  \va.- 
a  settlement  between  tlie  ])laintifr  and  defendant  Butler,  by  which 
the  said  Butler  i)aid  to  jdaintifT  for  his  interest  in  the  lands  and 
improvements  in  dispute  and  the  furniture  in  the  Ocean  House, 

luated  on  the  premises,  the  sum  of  two  thousand  dollars,  and  the 

jilaintiir,  in  consideration  thereof,  surrendered  the  defeasance  to 

tlefendant  Butler  "  for  cancellation,  and  the  same  was  thereby  can- 

■  lied  as  against  the  sai<l  plaintiff."'     According  to  the  finding,  the 

im  i»f  eight  thousand  live  hundred  (h)llars  was  .secured  on  the 
premises,  which  premises  on  said  ".'Ttli  of  February.  1855,  were  only 
worth  seven  thousand  five  hundr-d  dollars. 

The  referee  found  that  there  was  no  fraud  in  any  of  the  particu- 
lars charged  in  the  com])laint,  and  the  finding  in  respect  to  the 
charges  of  fraud  are  sufficiently  specific,  as  it  negatives  every  allega- 
lion  of  fraud. 

lie  does  not  say  in  so  many  words  in  his  finding  that  the  mortgage 
tlebt  remained  unpaid;  but  it  is  the  necessary  result  of  the  findings 
that  such  was  the  case,  and  that  the  full  amount  was  due.  If  we 
were  jiermitted  to  re-e.xamine  the  evidence  in  the  record,  we  are  not 
jtrcpared  to  say  he  erred.  The  parties,  at  the  time  of  the  e.xeeution 
of  the  defeasance,  struck  a  balance  themselves,  and  the  evidence  to 
<listurl»  their  own  settlement  is  exceedingly  loose  and  unsatisfactory. 

The  surrender  of  the  defeasance  to  be  cancelled  with  an  intent 
to  vest  the  entire  estate  in  Butler  did  not  in  law  convert  the  mort- 
gage into  a  deed  or  oj)erate  as  a  conveyance  of  dreen's  title  to 
Butltr.  Whether  it  o])erated  by  way  of  estoppel  in  e(|uity  to  vest 
'he  title  in  Butler  or  not,  it  is  not  now  necessary  to  deti-rmine.  The 
•  t*d  to  Butler  being  absolute  on  its  face,  the  title  upon  the  n^cord 
IS  ap|)arently  in  him.  The  plaintiff  seeks  the  aid  of  a  court  of  e<]uity 
to  compel  a  conveyance  of  the  land  in  controversy  on  the  ground 
that  the  conveyance  to  Butler  was  a  mortgage,  and  that  the  mort- 
gage has  been  satisfied.  The  def»'ndant  Butler  contests  the  claim 
and  shows  that  instead  of  the  mortgage  being  satisfied  he  had  paid 
the  full  vahu'  of  the  premises  with  the  understanding  that  he  had 
purchased  the  plaintiff's  interest,  and  that  the  defeasance  was  sur- 
rendered to  be  cancelled  in  pursuance  of  the  agreement  betwix'n 
Ihe  parties.     Butler  afterward  continued  in  possession  as  owner. 


452  EQUITY   RELATIONS.  [CHAr.  ii. 

If  Butler  did  not  obtain  the  title  in  law,  he  paid  for  it  its  full 
value,  and  supposed  the  title  to  be  vested  in  him  by  the  surrender 
and  cancellation  of  the  defeasance  with  the  intention  of  so  vesting 
it.  The  surrender  of  the  defeasance  to  Butler  to  be  cancelled,  and 
the  retention  of  it  by  him,  is  in  law  a  cancellation  of  that  instrument, 
though  not  actually  destroyed. 

A  court  of  equity  will  not  aid  plaintiff  to  obtain  a  conveyance, 
under  the  circumstances  of  this  case,  in  direct  violation  of  his  own 
agreement  and  in  fraud  of  the  rights  of  defendant  Butler. 

Upon  the  allegations  of  the  plaintiff's  complaint,  it  is  at  least 
extremely  doubtful  whether  the  conveyance  to  Butler  can  be  re- 
garded as  a  mortgage  at  all.  The  distinct  allegations  of  the  com- 
plaint are,  not  that  the  land  was  conveyed  by  plaintiff  to  secure  the 
amount  due  Butler,  but  that  Butler  represented  that  there  were 
certain  mechanics'  liens  on  the  Ocean  House  which  the  claimants 
were  pressing  and  threatening  to  foreclose ;  that  "  said  Butler  was 
unable  to  procure  the  money  from  his  own  means  to  satisfy  the  said 
demands,  and  could  not  procure  the  money  for  that  purpose,  unless 
the  said  plaintiff  would  convey  to  the  said  Butler  the  said  twenty-five 
acres  of  land,  in  order  that  the  said  Butler  might  mortgage  the  said 
land  and  buildings  to  procure  the  necessary  funds;  and  that  the 
said  plaintiff,  confiding,  etc.,  did,  on  the  said  14th  day  of  x\ugust, 
1854,  make,  execute  and  deliver  to  the  said  Butler  a  deed  of  the 
said  twenty-five  acres  of  land  for  the  purpose  aforesaid,  and  not 
absolutely,  nor  for  any  other  purpose,"  and  plaintiff's  counsel  con- 
tends that  the  testimony  really  established  these  very  allegations, 
and  nothing  more,  with  respect  to  the  object  of  the  conveyance  at 
the  time ;  and  if  we  could  look  at  the  testimony,  it  does  seem  to  tend 
strongly  in  that  direction.  Now  if  this  was  the  only  object  of  the 
conveyance  at  the  time  it  was  made,  it  certainly  was  not  at  that  time 
in  any  sense  a  mortgage.  It  was  a  conveyance  of  the  title  to  Butler, 
not  to  secure  his  demand,  but  to  enable  Butler  to  mortgage  it  to 
raise  money  to  pay  off  the  liens  of  the  mechanics.  And  such  a  con- 
veyance certainly  passed  the  fee  at  the  time.  True,  Butler  would 
have  held  the  legal  title  in  trust  for  plaintiff,  but  upon  what  prin- 
ciple can  it  be  said  that  afterwards,  in  October  following,  the 
execution  of  the  instrument,  which  has  been  called  a  defeasance — • 
an  entirely  distinct  transaction — transmuted  the  original  convey- 
ance in  fee  into  a  mortgage?  In  Trull  v.  Skinner,  17  Pick.  316,  it 
was  held  that  where  a  deed  was  executed  and  at  a  subsequent  timo 
a  defeasance  was  also  executed,  the  deed  and  defeasance  subsequently 
executed  did  not  together  constitute  a  mortgage,  because  the  de- 
feasance was  not  executed  at  the  same  time  with  the  deed,  and  was 
not  a  part  of  one  and  the  same  transaction.  From  the  execution 
of  the  instrument  called  a  defeasance  and  the  facts  found  by  the 


Str.    U.]  VILLA    r.    IJODRICirEZ.  453 

nffivc  ii  is  c'viik'Hl  thai  llit-  paitii-.-,  at  the  time  of  the  execution 
of  the  JefeasaiKe,  intended  to  make  the  two  instruments  serve  the 
jiurpose  of  a  mortgage,  whatever  the  legal  elTeet  of  the  transactions 
might  be,  as  they  also  intended  to  vest  full  title  in  Butler  by  the 
subsciiuent  surrender  of  the  defeasance.  The  referee  found  the 
transaition  to  be  a  mortgage,  contrary,  perhaps,  to  these  allegations 

f  the  eomjjlaint,  and  against  the  protest  of  the  plaintiff.     If  not 
.1  mortgage,  the  legal  title  is  certainly  in  the  defendant  Butler. 

But  it  is  not  necessary  to  determine  whether  upon  the  facts 
illeged  in  the  eomi)laint  the  two  instruments  in  law  constituted 
1  mortgage  or  not ;  for  in  either  view,  taken  in  connection  with  the 

iher  findings,  we  think  the  plaintiff  is  not  entitled  to  any  relief 
upon  the  case  made  by  tlie  record. 

The  judgmenl  i^  therefore  affirmed.^ 


VILLA  V.  RODRIGUKZ. 

Supreme  Court  of  thl  United  States,  1870. 

(Vi  Wall.  323.) 

Mr.  Justice  Swayxe  delivered  the  opinion  of  the  court. 

This  is  an  appeal  in  equity  from  the  decree  of  the  Circuit  Court 
of  the  United  States  for  the  District  of  California.  The  appellant 
was  the  complainant  in  the  court  below.  The  decree  was  against 
him. 

He  seeks  to  redeem  the  premises  in  controversy  according  to  the 
l»rayer  of  his  bill.  The  defendant  Rodriguez  claims  an  indefeasible 
«state  in  them  as  regards  the  complainant  and  those  from  whom 
lie  derives  title.  The  other  defendants  claim  under  a  contract  of 
purchase  made  witli  Rodriguez.  The  validity  of  the  complainant's 
title,  if  his  grantor  had  anything  to  convey,  is  not  (piestioned.  Xor 
is  the  original  title  of  his  grantor  and  of  those  who  conveyed  to  him 
ilonied.  But  the  defendants  insist  that  the  title  of  all  those  parties 
was  vested  absolutely  in  Rodriguez  by  deeds  duly  made  and  recorded 
before  the  conveyances  to  the  complainant  aiul  his  grantor  were 
executed.  The  complainant  insists  that  Rodriguez,  after,  as  before, 
lie  legal  title  was  conveyed  to  him,  held  the  premise.«?  only  as  secur- 
ity for  a  debt.  This  is  the  hinge  of  the  controversy  between  the 
parties. 

'  Vennum  v.  liabcock.  13  In.  194  (18«!2);  West  v.  liccd,  i^Ct  111.  242 
I  1S70)  ;  Show  V.  Walbridfjc.  3.1  Oli.  St.  1  (  1S77)  ;  Ifazcmorr  v.  Mullins,  rrl 
Ark.  207  ( 1889) ,  accord.     Jones  v. /?/rtilc,  33  Minn.  302  ( 1885) ,  con (ro. 


454  EQUITY    RELATIONS.  [cilAP.   It, 

The  entire  tract,  of  which  the  premises  in  controversy  form  a  part^ 
was  conveyed  by  Jose  Maria  Villavicencia  on  the  13th  of  April, 
1852,  to  his  seven  children.  He  died  in  1853.  The  widow  and  five 
of  the  children  conveyed  to  Fulgencio,  also  one  of  the  children,  on 
the  16th  of  December,  1867.  On  the  26th  of  the  same  month  Ful- 
gencio conveyed  to  the  complainant.  By  virtue  of  this  conveyance 
he  claims  six-sevenths  of  the  tract.  That  proportion  is  his  if  his  title 
be  valid. 

The  widow  is  the  sister  of  the  defendant  Eodriguez.  On  the  4th 
of  December,  1860,  she  and  three  of  the  children,  the  other  four 
being  under  age,  executed  to  Eodriguez  for  money  then  borrowed 
a  note  for  four  thousand  dollars,  payable  a  year  from  date  and 
bearing  interest  at  the  rate  of  two  per  cent,  a  month,  payable  at 
the  end  of  each  six  months  thereafter;  the  interest,  "  if  not  so  paid, 
to  be  added  to  the  principal  and  draw  interest  at  the  same  rate, 
compounding  in  the  same  manner."  A  mortgage  upon  the  entire 
tract  was  given  at  the  same  time  by  the  makers  of  the  note  to  secure 
its  payment.  The  mortgage  contained  a  provision  that  in  default 
of  the  payment  of  the  interest  as  stipulated  the  principal  should 
become  due  and  payable  at  the  option  of  the  mortgagee,  and  that 
the  mortgage  might  thereupon  be  foreclosed  and  the  premises  sold 
to  satisfy  the  mortgage  debt;  and  that  out  of  the  proceeds  of  the 
sale  the  mortgagee  should  be  authorized  to  retain,  besides  his  debt 
and  costs,  a  counsel  fee  of  five  per  cent,  upon  the  amount  found 
to  be  due.  The  mortgage  contained  a  further  provision  that  the 
mortgagee  might  pay  all  taxes  and  incumbrances  on  the  property, 
and  that  the  amount  of  such  advances  should  be  secured  by  the 
mortgage,  and  should  also  bear  interest  at  the  rate  of  two  per  cent, 
per  month.  Eodriguez  subsequently  paid  $1172  to  redeem  the 
property  from  a  sale  for  taxes.  On  the  29th  of  April,  1864,  the 
widow  and  five  of  the  children  conveyed  to  him  by  a  deed  absolute 
in  form.  It -is  recited  in  the  deed  that  the  debt  secured  by  the 
mortgage  then  amounted  to  about  $10,000.  On  the  17th  of  Febru- 
ary, 1865,  one  of  the  children,  who  was  a  minor  when  this  deed  was 
executed,  and  hence  had  not  joined  in  it,  also  conveyed  to  Eodriguez. 
Nothing  was  paid  to  the  grantor.  On  the  20th  of  May,  1865,  the 
other  and  seventh  child,  who  had  then  become  of  age,  executed  a  like 
conveyance.     The  consideration  paid  was  $100. 

On  the  22d  of  July,  1866,  Eodriguez  demised  the  premises  so 
conveyed  to  him  to  his  co-defendants,  Edgar  W.,  Isaac  C,  and 
Eensselaer  E.  Steele.  The  defendant,  George  Steele,  subsequently 
became  interested  in  this  contract  by  an  arrangement  with  the 
lessees.  The  leasehold  term  was  for  five  years  from  the  1st  of 
August,  ensuing  its  date.  Eodriguez  stipulated  that  at  the  end  of 
the  term  or  within  five  days  thereafter  the  lessees  might  purchase 


UK*'-  "1  VI  1.1.  V   r.   i!ui»i;i(iri:z.  I')'* 

l)y  j)ayin;.;  liim  .$\.'r),(Hio  in  ^rolil,  ami  upon  >\n\\  i)aynu'nl  l>ein;,'  .-<> 
made,  he  covenanted  that  lie  would,  hy  a  sulTieient  deed,  release  and 
(juit-claini  to  the  k'ssecs  or  their  heirs  ami  assi^nis,  free  froni  all 
ineinni)ranee.s  created  hy  him.  all  the  ri;,dit  and  title  which  he  tht-n 
liad  to  the  j)remises  or  which  he  mi^'ht  tluTcafter  ac(|uire  from  thr 
United  States  or  from  any  of  the  heirs  of  Jos6  Maria  Villaviccncia. 

The  lessees  and  their  assignees  insist  that  they  are  honn  /nle 
purchasers  without  notice. 

This  |)roj)osition  cannot  he  mainlaiiifd.  Thr  (•(•ntract  gave  tiu-m 
the  option — it  did  not  hind  them — to  huy  at  the  time  specified. 
That  time  had  not  arrived  wh(>n  this  hill  was  filed.  Non  constat 
that  they  would  then  exercise  tlitir  election  alhrmatively  and  pay 
the  stij)ulatc'd  price.  But  this  j)oint  is  not  material.  The  doctrine 
invoked  has  no  application  where  the  rights  of  the  vendee  lie  in  an 
executory  contract.  It  applies  only  where  the  legal  title  has  been 
conveyed  and  the  j)urchasc-money  fully  })aid  {Xace  v.  Boijer,  30 
Pennsylvania,  110;  Huune  v.  ChUi's,  10  Peters,  177,  211).  The 
purchaser  then  holds  adversely  to  all  the  world,  and  may  disclaim 
even  the  title  of  his  vendor  {Croxall  v.  Shcrrrd.  5  Wallace,  '28!»). 

This  contract  calls  for  a  quit-claim  deed.  The  result  would  be 
the  same  if  such  a  deed  had  been  executed  and  full  j)ayment  made 
without  notice  of  the  adverse  ch^im.  Such  a  {)urchaser  cannot  have 
the  immunity  which  the  principle  sought  to  be  applied  gives  to  those 
entitled  to  its  protection  (Mai/  v.  Lc  Chiiir,  11  id.  232  ;  Oliver  v. 
Piatt,  3  Howard,  3()3).  This  contract  may,  therefore,  be  laid  out 
of  view.  It  is  no  impediment  to  the  assertion  of  the  complainant's 
rights,  whatever  they  may  be.     It  does  not  in  any  wise  affect  them. 

The  law  ujjon  the  subject  of  the  right  to  redeem  where  the  mort- 
gagor has  conveyed  to  the  mortgagee  the  etpiity  of  redemption  is 
well  settled.  It  is  characterized  hy  a  jealous  and  salutary  policy. 
Principles  almost  as  stern  are  applied  as  those  which  govern  where 
a  sale  by  a  cestui  que  trust  to  his  trustee  is  drawn  in  question.  To 
give  validity  to  such  a  sale  by  a  mortgagor  it  must  be  shown  that 
the  conduct  of  the  mortgagee  was,  in  all  things,  fair  and  frank,  and 
that  he  paid  for  the  jiroperty  what  it  was  worth,  lie  must  hold  out 
no  delusive  hopes ;  he  must  exercise  no  undue  influence ;  he  must 
take  no  advantage  of  the  fears  or  poverty  of  the  other  party.  Any 
indirection  or  ohlitpiity  of  conduct  is  fatal  to  his  title.  Kvery  doul)l 
will  be  resolved  against  him.  Where  confidential  relations  and  the 
means  of  opjjression  exist,  the  scrutiny  is  severer  than  in  cases  of 
a  different  character.  The  form  of  the  instruments  employed  is 
immaterial.  That  the  mortgagor  knowingly  surrendered  and  never 
intt'udcd  to  reclaim  is  of  no  conse(|uence.  If  there  is  vice  in  the 
transaction,  the  law,  while  it  will  secure  to  the  mortgagcv  his  debt 
with  interest,  will  compel  him  to  give  back  that  which  he  has  taken 


45G  EQUITY    RELATIONS.  [CHAP.  IX 

with  unclean  hands.  Public  policy,  sound  morals,  and  the  protectioix 
due  to  those  whose  property  is  thus  involved,  require  that  such 
should  be  the  law  {Morris  v.  Nixon,  1  Howard,  118;  Russell  v. 
Southard,  12  id.  139;  Wakemati  v.  Hazleton,  3  Barbour's  Chancery, 
148;  4  Kent's  Commentaries,  143;  Holmes  v.  Grant,  8  Paige,  245; 
3  Leading  Cases  in  Equity,  625). 

The  terms  exacted  for  the  loan  by  Eodriguez  were  harsh  and 
oppressive.  The  condition  of  the  widow  and  orphans  might  well 
have  touched  his  kindred  heart  with  sympathy.  It  seems  only  to 
have  whetted  his  avarice.  Two  per  cent,  a  month — and  this,  if  not 
paid  as  stipulated,  to  be  compounded — was  a  devouring  rate  of 
interest.  It  was  stipulated  that  the  further  advances  should  bear 
interest  at  the  same  rate.  He  demanded  an  adjustment  when,  from 
the  failure  of  the  crops  and  other  causes,  the  property  was  greatly 
depressed,  and  he  knew  the  widow  and  her  children  had  no  means 
of  payment.  The  alternatives  presented  were  an  absolute  convey- 
ance of  the  property  or  a  foreclosure  and  sale  under  the  mortgage. 
He  was  anxious  to  procure  the  deed,  and  exulted  when  he  got  it. 
The  debt  and  advances,  with  the  interest  superadded,  were  much 
less  than  the  value  of  the  property.  The  note  and  mortgage  were 
executed  by  three  of  the  children  and  the  widow — the  deed  by  the 
widow  and  five  of  the  children.  The  other  two  children  conveyed 
at  later  periods.  The  consideration  of  the  conveyance  by  the  four 
children  not  parties  to  the  note  and  mortgage  was  such  that  if  an 
absolute  title  passed,  their  deeds  must  be  regarded  as  deeds  of  gift 
of  their  shares  of  a  valuable  estate.  Dana,  who  took  the  acknowl- 
edgment of  the  deed  executed  by  the  widow  and  five  children,  testi- 
fies that  the  widow  inquired  whether  the  deed  contained  all  the 
agreements  between  her  and  Rodriguez.  Dana  translated  it  to  her. 
fShe  complained  that  the  agreements  were  omitted.  Rodriguez  in- 
sisted that  they  were  in  the  deed,  and  added  "  that  they  ought  not 
to  distrust  him,  as  he  was  taking  all  these  steps  for  their  interest." 
The  widow  and  children  then  executed  the  deed.  Dana,  speaking 
of  a  subsequent  conversation  with  Rodriguez  on  the  same  day, 
"  which  was  altogether  unsolicited,"  says :  "  He  stated  to  me  that 
his  object  in  getting  the  Villavicencia  family  to  execute  the  deed 
aforesaid  was  to  secure  his  money,  money  which  he  had  loaned  or 
advanced  to  them,  and  save  the  property  for  the  benefit  of  his  sister 
and  her  family;  while  if  it  remained  in  their  hands  he  might  lose 
his  money,  and  his  sister  and  her  children  would  lose  the  whole 
property.  He  said  they  had  done  wisely  in  trusting  him,  as  he 
intended  to  deal  justly  by  his  sister."  Rodriguez  was  examined  as 
a  witness.  Referring  to  a  period  shortly  preceding  the  execution 
of  this  deed,  he  says :  "  Afterwards  I  had  with  them  further  con- 
versation, and  told  them,  I  don't  wish  to  speculate  upon  you,  because 


**^*'-   "1  VI  1. 1. A     C    UODKIGIKZ.  457 

vou  arc  my  ri-lations,  and  you  have  treated  me  well.  If  I  can  sell 
the  ranch  for  enough  to  reimburse  myself  for  my  outlays  as  well  as 
interest,  I  will  return  you  the  surplus  money,  if  any;  and,  also,  if 
1  can  sell  a  portion  of  the  ranch  or  enougli  to  reimburse  myself  for 
my  advance,  I  will  do  the  same,  and  return  to  you  the  unsold  portion 
of  the  nrnch;  but  if  I  have  bad  luck  and  cannot  sell  it,  I  will  lose 
my  money."  Elsewhere  in  the  same  deposition  he  says:  "  I  stated 
;it  the  ranch,  and  ajj^ain  stated  to  my  sister  afterwards,  that  I  would 
return  the  surjilus  money,  but  it  was  no  obligation  of  mine.  It 
may  be  that  I  said  so  to  Charles  Dana  at  that  time." 

He  made  the  same  admissions  to  other  persons  who  are  in  no  wise 
ccmnected  with  this  litigation.  Their  testimony  is  found  in  the 
record.  It  is  unnecessary  to  extend  the  limits  of  this  opinion  by 
accumulating  and  commenting  upon  it.  The  widow  and  five  of  the 
children,  all  who  have  been  examined,  testify  that  they  understood 
the  deeds  to  be  only  security  for  the  debt.  This  explains  the  trans- 
action as  to  those  who  were  not  parties  to  the  note  and  mortgage. 
There  is  no  other  way  of  accounting  for  their  conduct.  The  testi- 
mony of  Kodriguez  alone  is  sufficient  to  turn  the  scale  against  him. 
He  cannot  repudiate  the  assurances  upon  which  his  grantors  were 
<lrawn  in  to  convey.  To  permit  him  to  do  so  would  give  triumph 
to  ini(juity.  The  facts  indisputably  established  bring  the  case 
clearly  within  those  principles  by  the  light  of  which,  in  determining 
the  rights  of  the  parties,  the  judgment  of  this  court  must  be  made 
>ip.  The  comi)lainant  stands  in  the  place  of  those  from  whom  he 
<lerives  title.  He  is  clothed  with  their  rights,  and  is  entitled  to 
redeem  six-sevenths  of  the  premises  upon  paying  that  proportion 
of  the  mortgage  debt  and  interest.  The  former  must  be  held  to 
include  the  amount  advanced,  as  well  as  that  represented  by  the  note, 
and  the  latter  be  settled  by  the  terms  of  the  contract  and  the  law 
i>f  California.  The  rents,  issues,  and  profits,  and  improvements 
nuide  u])ou  the  premises  must  also  be  taken  into  the  account. 

The  decree  is  reversed,  and  the  cause  will  be  remanded  to  the 
circuit  court  with  directions  to  enter  a  decree  and  jiroceed 

In  conformifi/  to  (his  opinion.^ 

'  \'ntin,i  V.  IhthcU.  2  Kd.ii.  110  ilTC.l)  :  Pruiih  v.  /)(/ii.'*.  nO  U.  S.  332 
(1877),  (ivroiil.     C'oiii|iai"i'  Ji'ussrll  v.  Soulhanl.  p.  l.')7.  suina. 


458  EQUITY    RELATIONS.  [CIIAP.  II. 

PRITCHARD  V.  ELTON. 

Supreme  Court  of  Errors  of  Coxnecticut,  1871. 

(38  Cotm.  434.) 

Bill  in  equity  to  redeem  mortgaged  property ;  brought  to  the 
Superior  Court  for  New  Haven  County,  and  reserved,  on  facts 
found,  for  advice.    The  facts  are  sufficiently  stated  in  the  opinion. 

Seymour,  J.  On  the  10th  of  April,  1860,  Elizur  E.  Pritchard 
mortgaged  to  John  P.  Elton  certain  premises  in  Wolcottville.  The 
mortgage  deed  is  in  the  usual  form,  with  condition  to  be  void  upon 
payment  according  to  its  tenor  of  the  mortgagor's  note,  payable 
four  months  after  date,  for  $6635.73.  The  debt  was  not  paid  ac- 
cording to  the  condition,  and  still  remains  unpaid.  Mr.  Pritchard 
died  intestate  and  insolvent  November  30th,  1860.  The  petitioners 
are  his  heirs  at  law,  and  they  bring  this  bill  to  redeem  the  mortgage. 

Upon  all  the  circumstances  of  the  case  we  think  the  petitioners 
are  not  entitled  to  relief;  but  it  must  be  conceded  that  they  have 
a  prima  facie  case  in  their  favor  upon  the  face  of  the  deeds  and 
records.  Upon  the  records  of  the  town  of  Torrington  there  is  a  quit- 
claim deed  of  the  equity  of  redemption  from  Mr.  Pritchard  to  Mr. 
Elton.  But  it  also  appears  that  Mr.  Elton  refused  to  accept  the 
quitclaim.  On  the  contrary,  he  quitclaimed  back  to  the  heirs  of 
Mr.  Pritchard,  after  the  latter's  death,  whatever  interest,  if  any,  in 
the  premises  was  conveyed  to  him  by  Mr.  Pritchard's  quitclaim  of 
the  equity.  The  records  of  the  court  also  show  a  decree  of  foreclosure 
of  the  equity  of  redemption.  But  to  that  bill  for  foreclosure,, 
brought  after  Mr.  Pritchard's  death,  his  heirs,  as  such,  are  not 
parties.  His  administrators  were  made  parties  respondent,  and,  the 
estate  being  insolvent,  it  was  probably  supposed  that  the  adminis- 
trators, representing  the  creditors,  were  solely  interested  in  tlie 
redemption.  Yet  it  is  clear  that  Mr.  Pritchard's  heirs,  as  such,  arc 
not  foreclosed  by  that  decree.  The  defence  to  this  petition  must,, 
therefore,  rest  upon  circumstances  peculiar  to  the  case,  and  these 
circumstances  are  such,  we  think,  as  to  require  us  to  deny  the  prayer 
of  the  petitioners'  bill. 

It  appears  that  these  premises  had  been  mortgaged  by  Mr.  Prit- 
chard to  one  Brady,  and  Brady  had  obtained  a  decree  of  foreclosure, 
whereby  the  right  to  redeem  would  be  barred  on  the  10th  of  April,. 
1860.  On  this  last  day  of  redemption,  Mr.  Elton,  on  the  solicitation 
of  Mr.  Pritchard,  lent  the  money  to  save  the  forfeiture.  In  con- 
senting to  make  the  loan  and  take  the  note  and  mortgage,  Elton 
relied  on  Pritchard's  promise  that  if  he  should  fail  to  repay  the 
amount  lent  within  four  months,  he  would,  by  quitclaim  deed 


sKr.  II.]  rmrciiAui)  c.  kltun.  1  •"»'•' 

conveying  the  projR'rty  t(»  lillon,  save  tlu'  troultlc  and  cxjjfnsc  of 
foreclosing  the  mortgage. 

Now.  if  (he  case  rested  here,  the  right  of  rrdcinplion  would  not 
bo  lost  by  the  mere  force  of  this  agreement  and  the  failure  hy  Mr. 
Pritchard  to  perform  it.  Courts  of  equity  look  with  distrust  ujmhi 
all  restraints  on  the  right  of  redemption,  and  it  is  a  familiar  rulf 
that,  such  agreements  notwithstanding,  courts  of  e<|uity  will  in 
general  allow  the  jiarty  in  default  to  redeem.  T\\v  principle  on 
which  the  court  in  these  cases  grants  relief  is  substantially  the  sann; 
as  that  on  which  it  relieves  against  all  penalties  and  forfeitures,  to 
wit,  that  in  general  adequate  comi)ensation  can  be  made  to  the  party 
who  is  dejirived  of  his  forfeiture,  and  that  the  exacting  of  the  for- 
feiture would  be  and  is  unconscionable. 

Now,  in  the  case  under  consideration,  it  is  found  that  on  the 
5th  of  November,  1860,  Pritchard  executed  in  favor  of  Elton  a 
quitclaim  deed  of  the  ])remises,  and  on  the  Oth  of  November  caused 
the  same  to  be  recorded,  all  without  Elton's  knowledge;  and  it  is 
furtiicr  found  "  that  although  Pritchard  would  not  have  executed 
the  deed  and  put  it  on  record  at  the  time  he  did,  if  he  had  not  been 
inlluenced  l)y  a  desire  to  badle  other  creditors,  from  whom  he  feared 
trouble,  he,  in  fact,  executed  the  deed  and  ])ut  it  on  record  in  con>f- 
(juence  of  his  promise,  and  in  tardy  fuKilment  of  it.  and  in  good 
faith  toward  I^lton."  By  this  act  Mr.  Pritchard  ratified  and  cnn- 
iirined  the  agreement  made  at  the  time  of  borrowing  the  money,  and 
it  is  ai)])arent  that  Mr.  Elton  would  have  accepted  the  deed,  wen- 
it  not  for  the  fraudulent  purj)ose  as  against  creditors  with  which 
he  supposed  it  was  tainted.  The  non-acceptance  ujjon  these  ground-; 
by  Mr.  Pulton  ought  not,  we  think,  to  impair  the  effect  of  the  died 
as  a  renunciation  l)y  Mr.  Pritchard  of  all  interest  in  the  premise^. 
Mr.  Elton,  ri'lying  uj)on  Mr.  Pritehard's  j)romise  and  this  renunc:;i- 
lion  in  pursuance  of  it.  and  upon  the  foreclosure  which  he  h.id 
obtained  against  the  administrators,  in  August,  IStl'J,  took  posM  — 
<ion  of  the  ))roperty  and  made  efforts  to  sell  it.  and,  limdly,  in 
I'ebruary,  l.Sd.S.  elTi'cted  a  sale  to  Daniel  C'urtiss.  The  committee 
tinds  that  this  sale  was  made  fairly,  in  good  faith,  and  at  the  then 
fair  market  value  of  tlu"  properly.  The  sale  was  for  $."»T.")().  Tiie 
cost  of  the  property  to  Mr.  Elton  at  that  time,  including  intere-i 
and  taxes  and  insurance  and  $(».  10  for  repairs,  was  .$SO(;'*.(;tl ;  -o 
that  his  loss  by  means  of  the  loan  was  $*..'.'n'2.<)(!.  The  prop«'rty  \\a- 
-incegone  into  several  hands,  has  been  greatly  improved  by  building 
upon  it.  and  has  risen  in  value  by  the  general  rise  in  the  value  of 
property  in  its  vicinity.  Mr.  I'^lton  conveyed  the  property  by  war- 
ranty deed,  doubtless  supposing  his  title  to  be  j)erfeet.  If  the 
petition  is  grante<l,  a  consideraitle  loss  will  be  thrown  upon  his  estate 
thnniiih  the  mt-dium  of  the  warrant v  deed. 


460  EQUITY    RELATIONS.  .[CHAP.  II. 

Upon  all  these  cireiimstaiices  it  seems  to  us  that  the  usual  grounds 
upon  which  courts  of  equity  grant  relief  are  wholly  wanting  in  this 
ease.  There  has  been  nothing  unconscionable  in  the  conduct  of 
Mr.  Elton.  To  relieve  Mr.  Pritchard's  necessities  he  lent  him  a 
large  sum  of  money,  and  has  already  in  consequence  been  subjected 
to  a  loss  of  over  $2000,  and  Mr.  Pritchard's  heirs  now  seek  to  subject 
him  to  a  still  larger  loss.  It  is,  indeed,  true  that  Mr.  Elton  might 
have  been  more  thorough  in  seeing  to  it  that  the  right  to  redeem 
was  technically,  as  well  as  equitably,  extinguished,  either  by  accept- 
ing the  quitclaim  deed  or  by  making  the  heirs  of  Mr.  Pritchard 
parties  to  the  bill  to  foreclose.  And  it  is  in  general  so  easy  for  the 
mortgagee  to  make  his  title  legally  and  technically  perfect  that  we 
do  not  wish  to  establish  a  precedent  that  will  encourage  any  neglect 
on  the  part  of  mortgagees  to  see  to  it  that  their  titles  are  perfected 
in  the  regular  and  usual  way.  But  in  this  case  it  is  obvious  that 
very  slight,  if  any,  blame  can  attach  to  Mr.  Elton,  and  that  the 
heirs  of  Mr.  Pritchard,  if  permitted  now  to  redeem,  would  do  so, 
first,  against  the  express  contract  of  their  ancestor  in  whose  place 
they  stand;  second,  against  the  renunciation  by  their  ancestor  by 
quitclaim  deed  of  all  right  to  redeem;  and,  third,  against  the  equities 
of  the  case,  growing  out  of  the  sale  of  the  property  made  by  Mr. 
Elton  fairly  and  in  good  faith.  The  legal  title  is  in  the  present 
occupants  of  the  property  under  Mr.  Elton's  deed,  and  this  legal 
title,  we  think,  ought  to  prevail  against  the  claims  of  the  petitioners, 
standing  as  they  do  in  the  place  of  Mr.  Pritchard,  with  no  higher 
equity  than  he  would  have  had  if  living. 

The  Superior  Court  is  advised  to  dismiss  the  petition. 

In  this  opinion  the  other  judges  concurred.^ 


ODELL  V.  MONTEOSS. 

Court  of  Appeals  of  N'ew  York,  187'}'. 

(G8  N.  Y.  499.) 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme 
Court  in  the  first  judicial  department  in  favor  of  defendant, 
entered  upon  an  order  reversing  a  judgment  in  favor  of  plaintiff, 
entered  upon  a  decision  of  the  court  on  trial  at  Special  Term  and 
directing  judgment  for  defendant. 

'Compare  Austin  v.  Bradley,  2  Day  (Conn.)  406  (1807),  in  wViich  a 
subsequent  agreement  by  tlie  mortgagor  to  convey  to  the  mortgagee  on  ap- 
jnaisal   was  bcld  good. 


f'Kf-   "•]  OlHA.l.  (.   MONTROSH.  4(11 

This  action  was  hrouj,Mit  t<»  have  a  deed,  ahsohitc  on  its  fae<', 
ilochiroil  a  inort|,'a;,'i',  and  for  an  accounting  and  reconveyance  <»n 
jiaynient  of  nnnnint  due. 

The  court  found,  in  substance,  that  in  July,  IHti.'),  phiinlilT,  i>ein^ 
indebted  to  defendant  for  moneys  loaned  and  advanced,  executc<l 
to  said  defendant  a  deed  of  the  premises  described  in  thi.-  complaint, 
which  deed  was  absohite  on  its  face  and  purported  to  convey  tin- 
fee,  but  that  it  was  executed  as  and  intended  as  a  security  for  the 
said  indebtedness  then  existing  and  what  might  thereafter  accrue; 
and  it  was  agreed  and  intended  by  the  parties  that  plaintiff,  upon 
payment,  should  liave  the  right  to  redeem  and  should  be  entitled 
to  a  reconveyance.  That  in  September,  18()(),  defendant  j)aid  to  th'.' 
plaintiff  at  his  request  the  sum  of  fifty  dollars,  and  plaintiff  then 
and  there  signed  and  delivered  to  the  defendant  a  paper,  of  which 
the  following  is  a  copy,  viz. : 

"New  Yoilk,  Sept.  17,  18G6. 
"  Received  from  William  Montross  fifty  dollars,  in  full  satisfac- 
tion for  all  claims  and  demands  whatsoever  as  to  the  convcyane.' 
of  propcrtv,  or  otherwise,  up  to  this  date. 

"Thomas  B.  Odell." 


That  such  payment  was  made  and  received  and  such  receipt  signed 
and  delivered  with  the  intention  of  the  parties  that  the  same  sho\ild 
be  a  full  settlement  of  all  claims  of  plaintiff  to  said  hinds  and 
])remises  and  of  all  claims  to  any  reconveyance  thereof.  As  conclu- 
sions of  law  the  court  found  that  the  deed  was  to  be  considered 
as  a  mortgage;  that  the  payment  of  the  fifty  dollars  and  the  receipt 
given  therefor  did  not  operate  to  change  the  nature  of  the  deed  from 
I  security  to  an  absolute  conveyance,  nor  to  release  ])laintifT's  right 
lo  redeem,  and  that,  upon  payment  of  the  sums  due  from  jdaintilT 
to  defendant  and  the  sums  paid  out  by  the  latter,  jjlaintifT  was 
entitled  to  redeem;  and  jiulgment  was  directe<l  adjudging  that 
upon  payment  of  such  sums  within  thirty  (hiys  defendant  shouM 
rcconvcy,  and  in  default  of  such  payment  that  the  premises  be  sold, 
IS  in  foreclosure  sales. 

Judgment  was  eiiti-red  accordingly. 

Allkn,  J.  Prior  to  the  transaction  of  the  seventeenth  of  Septem- 
Itcr,  18()(>,  when  the  defendant  uj)on  the  payment  of  lifiy  dollar-; 
lo  the  plaintilT  took  an  unsealed  pajier  signed  by  him  aiknowledging 
the  receipt  of  the  fifty  dollars  "  in  full  satisfaction  for  all  i-laims 
and  demands  whatsoever  as  to  conveyance  of  property  or  otherwi-;e 
uj)  to  this  date,"  the  relation  of  the  parties  in  respect  to  the  lands 
now  sought  to  be  redeemed  was  that  of  mortgagor  and  mortgagee 


462  EQUITY    RELATIONS.  [CHAP.  II. 

with  all  the  incidents  of  that  relation  (4  Kent's  Com.  143).  The 
plaintifE  had  conveyed  the  premises  to  the  defendant  by  deed  abso- 
lute in  terms,  but  the  conveyance  was  not  intended  as  a  sale,  but 
as  a  security  for  the  payment  of  money,  and  although  there  was  no 
defeasance  in  writing,  the  intent  could  be  and  was  shown  by  parol 
evidence,  and  the  deed  was  but  a  mortgage.  Parol  evidence  is 
admissible  to  show  that  an  absolute  deed  was  intended  as  a  mort- 
gage, or  that  a  defeasance  has  been  destroyed  by  fraud  or  mistake 
{Dey  V.  Dunham,  2  J.  Ch.  E.  183;  Clark  v.  Henry,  2  Cow.  324; 
Marks  V.  Pell,  1  J.  Ch.  R.  594;  Horn  v.  Keteltas,  46  N.  Y.  605). 
A  conveyance  absolute  in  terms  given  as  a  security  is  a  mortgage 
with  all  the  incidents  of  a  mortgage,  and  the  rights  and  obligations 
of  the  parties  to  the  instrument  are  the  same  as  if  the  deed  had  been 
subject  to  a  defeasance  expressed  in  the  bod}'  of  the  instrument  or 
executed  simultaneously  with  it  (4  Kent's  Com.,  supra).  It  must 
be  recorded  as  a  mortgage  and  not  as  a  deed.  Dey  v.  Dunham; 
supra.  This  case  was  reversed  in  15  Johnson's  Reports,  555,  but 
this  principle  was  recognized  by  the  appellate  court  that  reversed 
the  decree  of  the  chancellor.  The  reversal  was  on  the  ground  that 
the  subsequent  purchaser  claiming  adversely  to  the  deed  was  not 
a  purchaser  in  good  faith,  and  so  not  within  the  protection  of  the 
recording  acts  {James  v.  Jolinson,  6  J.  Ch.  R.  417;  2  Cow.  249). 
In  White  v.  Moore,  1  Paige,  551,  the  chancellor  held  that  the  fact 
that  there  was  no  defeasance  in  writing  did  not  taJvC  the  instrument 
out  of  the  effect  of  the  statute  requiring  all  mortgages  to  be  recorded 
as  mortgages. 

The  estate  remaining  in  the  mortgagor  after  the  law  day  has 
passed,  before  foreclosure,  is  popularly  but  erroneously  called  an 
equity  of  redemption,  retaining  the  name  it  had  when  the  legal 
estate  was  in  the  mortgagee  and  the  right  to  redeem  existed  only  in 
equity.  Although  a  misnomer,  it  does  not  mislead.  The  legal  estate 
remains  in  the  mortgagor  and  is  subject  to  dower  and  curtesy,  to 
the  lien  of  judgments,  may  be  sold  on  execution  and  may  be  mort- 
gaged or  sold  as  any  other  estate  in  lands,  while  the  mortgagee  has 
but  a  lien  upon  the  lands  as  a  security  for  his  debt,  and  the  land 
is  not  liable  to  his  debts,  or  subject  to  dower  or  curtesy,  or  any  of 
the  incidents  of  an  estate  in  lands  (2  Wash.  R.  P.  152  and  seq.: 
Jackson  v.  Willard,  4  J.  R.  41;  Powell  on  Mortgages,  258,  N.  L.). 
^I'he  mortgagor  is  possessed  of  an  estate  in  the  land  in  virtue  of  his 
former  and  original  right,  and  there  is  no  change  of  ownership. 
So  far  as  the  entire  estate  is  concerned  there  is  but  one  title,  and 
this  is  shared  between  the  mortgagor  and  mortgagee,  the  one  being 
the  general  owner  and  the  otiier  having  a  lien  which,  upon  a  fore- 
closure of  the  right  to  redeem,  may  ripen  into  an  absolute  title,  their 
respective  parts  when  united  constituting  one  title.     A  mortgagor 


SEC.  11.]  oDKi.i,  V.  .MoNiuoss.  4r>;{ 

mill  morlga^M'c  may  at  any  (iiiir  al'icr  the  creation  of  tlic  mortgage 
ami  before  foreclosure  make  any  a;,'rccmeiil  concerning  the  estate 
tlicy  please,  an<l  the  mortj^a^^-e  may  hecome  the  purcliaser  of  the 
ri<,'ht  of  redemption.  .\  transaction  of  that  Kind  is,  liowever.  re- 
^'arded  with  jealousy  hy  lowrts  of  c([uity,  and  will  he  avoided  for 
fraud,  actual  or  constructive,  or  for  any  unconscionable  advantage 
taken  by  the  mortgagee  in  obtaining  it.  It  will  bo  sustained  onlj 
when  build  fulv :  that  is,  when  in  all  resj)ects  fair  and  for  an  ade- 
(piate  consideration  (Trull  v.  Sk-iiuicr,  17  Pick.  2\'.i;  Patterson  t. 
)'ratun,  47  Maine,  3()(; ;  Ford  v.  Ohlen,  L.  K.  3  Kq.  Cases,  461; 
Kaldriihje  v.  Glllfspie.  2  J.  Ch.  H.  .10;  Wash,  on  Real  Prop.,  ch.  16, 
i;l,pl.  -^1). 

The  defendant  claims  to  have  extinguished  the  right  of  redemption 
and  ac([uiri'd  the  entire  estate  l)y  the  payment  of  the  fifty  dollars 
and  in  virtue  of  the  written  acknowledgment  of  its  payment  for  the 
]iurpo>es  named  in  it.  The  i)aj)er  is  in  its  terms  ambiguous.  It 
does  not  })urporl  to  convey  or  transfer  any  ])ro|)erty  or  estate  in 
laiuls,  but  is  di'clared  to  be  in  full  of  all  claims  and  demands  what- 
soever as  to  conveyance  of  ])roperty  or  otherwise.  It  is  but  a  parol 
admission  of  a  satisfaction  for  the  right  mentioned.  The  apparent 
meaning  of  the  instrument  is  to  admit  a  satisfaction  of  all  claims 
against  the  dcfcn<lant,  claims  and  denumds  that  nuiy  be  enforced 
whether  such  claim.-  are  of  a  right  to  a  conveyance  of  property  or 
4iny  other  matter.  The  j)laintiir  re([uired  no  conveyance  of  the 
lands  from  the  didcndant.  rj)on  the  payment  of  the  mortgage  debt 
he  would  have  been  reinvested  with  the  unincumbered  title  without 
i'onveyance  or  rcleasi'  from  the  defendant.  As  evidence  of  his  title 
lie  might  have  recpiired  a  reconveyance  or  a  satisfaction  of  the 
mortgage,  and  that  the  courts  would  have  compelled.  But  his  right 
of  ri'demption  was  not  in  any  sen.se  a  "claim  or  demand  as  to 
<onveYance  of  pro|)erty  or  otherwise."  The  reci'ij)t  had,  upon  its 
face  and  without  explamition,  n'si)ect  to  personal  claims  and 
denumds  against  the  defendant.  But  the  tran.saction  was  explained 
upon  the  trial  and  shown  to  have  been  inteiuled  as  a  full  settlement 
of  all  claims  of  the  plaint ilT  to  the  lands  and  premises  aiul  of  all 
claims  to  a  reconveyance  thereof.  If  this  payment  aiul  receipt  did 
■o|)erate  to  change  the  nature  of  the  Ar('i\  from  a  mortgage  to  an 
absolute  convi-yancc,  and  is  a  release  of  the  right  to  redeem  so 
that  the  mortgagee  became  seized  in  fee  simple  by  a  union  of  the 
♦•states  of  the  mortgagor  and  mortgagee'  discharged  of  the  mortgage, 
the  defence  to  th(>  action  is  perfect.  It  cannot  be  claimed  that  the 
writti'n  pajH-r  cr  iiro/irio  v'ujorc  could  have  that  efTect.  It  does  not 
profess  to  release'  the  right  of  redemption  or  to  convey  any  lands 
or  interest  in  lands.  No  lands  in  particular  are  referred  to.  No 
agreement  can  be  spelled  "Ut   of  the  instrument   which  could  be 


464  EQUITY    RELATIONS.  [CHAP.  11. 

specifically  performed,  and  it  could  not  be  aided  and  made  a  perfect 
contract  to  release  or  convey  lands  by  parol  proof.  The  whole  force 
of  the  transaction,  as  affecting  the  rights  of  the  plaintiff,  is  in  the 
payment  and  receipt  of  the  fifty  dollars  with  intent  to  extinguish 
the  title  of  the  plaintiff.  This  cannot  operate  as  an  estoppel  or  take 
the  case  out  of  the  statute  of  frauds.  The  mere  payment  of  money 
will  not  entitle  a  purchaser  to  a  specific  performance  of  a  parol 
contract  for  the  purchase  of  an  interest  in  lands.  That  can  be 
repaid  with  interest,  and  no  damage  ensues  from  the  non-perform- 
ance of  the  contract.  The  purchaser  can  be  made  good  for  the  use 
of  his  money,  which  is  all  that  he  has  lost.  Had  the  defendant, 
acting  upon  the  faith  of  this  transaction,  entered  into  possession 
of  the  premises  and  incurred  expenses,  and  substantially  changed 
his  situation  so  that  he  could  not  be  placed  in  the  same  situation 
in  which  he  was  before,  it  might  have  estopped  the  plaintiff  from 
taking  shelter  under  the  statute  of  frauds,  or  alleging  the  insuffi- 
eiency  of  the  written  instrument  to  carry  out  the  agreement  and 
intent  of  the  parties.  But  there  are  none  of  the  elements  of  an 
equitable  estoppel  in  the  case  as  presented  by  the  record. 

The  plaintiff  having  a  recognized  legal  estate  in  fee,  he  could  only 
be  divested  of  it  (except  by  way  of  estoppel  which  does  not  exist)  by 
some  instrument  which  would  be  valid  under  the  statute  of  fraud* 
and  in  compliance  with  the  statute  prescribing  the  mode  and  manner 
of  conveying  lands.  The  statute  of  frauds  (3  E.  S.  135,  §  8)  is 
very  explicit,  and  needs  no  interpretation  in  its  application  to  this 
case.  It  declares  that  every  contract  for  the  sale  of  any  lands  or 
any  interest  in  lands  shall  be  void  unless  in  writing  and  subscribed 
by  the  party  by  whom  the  sale  is  to  be  made.  The  whole  contract, 
that  is,  the  agreement  to  sell  and  the  description  of  the  lands  or  the 
interest  in  lands  agreed  to  be  sold,  must  be  in  writing  and  subscribed 
by  the  party.  The  other  statute  referred  to  (IE.  S.  738,  §  137)  is 
equally  applicable  to  this  case.  To  hold  that  the  plaintiff  had  not 
a  fee,  would  be  to  overthrow  the  well-established  relation  of  mort- 
gagor and  mortgagee  and  reverse  their  respective  positions  in  respect 
of  the  legal  estate  in  the  lands  mortgaged.  The  statute  declares 
that  every  grant  in  fee  or  of  a  freehold  estate  shall  be  subscribed 
and  sealed  by  the  person  making  the  grant  or  liis  lawful  agent.  If 
a  seal  only  was  wanting  to  make  the  instrument  relied  upon  by  the 
defendant  valid  for  the  purposes  intended,  it  is  possible  the  court 
might  compel  the  sealing,  but  that  would  not  supply  the  intrinsic 
defects  of  tlie  paper-writing  itself. 

What  is  said  in  Stoddard  \.  Whiting,  4G  N.  Y.  G33,  of  the  nature 
of  the  estate  of  a  mortgagor  and  the  bearing  of  the  statutes  quoted 
upon  a  conveyance  of  his  estate,  was  not  necessary  to  the  decision 
of  the  case  or  necessarily  adjudged  by  the  court.     The  plaintiff 


SEf-    "•]  I)K    MAKTIN     C.    I'MIM.AN.  l')'* 

there,  wlio  was  onforcin*;  an  oquity  of  redemption,  wliieli  was  n- 
sisted,  clainifd  under  a  written  liiit  unsealed  assi;^'nnient  (a  parol 
writing)  from  the  mortgaj^^or,  and  that  was  hehl  sullicient  to  givi; 
him  a  standing  in  eourt  and  enable  liim  to  maintain  the  e(juitaljle 
action  to  redeem.  Tiie  decision  is  not  in  conflict  with  the  views 
here  expressed.  The  defendant  could  have  acquired  the  estate  and 
interest  of  the  plaintilf  either  hy  a  deed-poll,  as  a  relea.>;e  or  a  grain. 
in  any  form  sullicient  in  terms  and  mode  of  execution  to  convey  an 
estate  in  lands.  Mr.  Powell,  in  his  treatise  on  mortgages,  vol.  1. 
p.  2G0,  in  speaking  of  the  methods  by  which  a  mortgagee  may 
acquire  the  interest  of  the  mortgagor,  says  that  it  may  be  by  inden- 
ture with  covenants  or  a  release  by  deed-poll,  for  by  that  means  tiie 
estate  of  the  mortgagor  and  mortgagee  will  become  merged,  and  the 
mortgagee  will  be  owner  in  fee  of  the  whole  estate. 

The  rights  of  the  mortgagor  and  his  estate  can  only  be  foreclosed 
by  due  jjrocess  of  law,  or  a  release  by  deed  in  proper  form,  or  a 
conveyance  sullicient  to  pass  the  title  to  an  estate  in  fee.  The 
defendant  has  not  purchased  the  equity  of  redemption  or  acquired 
the  estate  of  the  plaintilT  by  any  proper  release  or  conveyance.  No 
injustice  will  be  done  the  defendant  by  the  result  to  which  this 
conclusion  leads.  He  will  receive  his  money  and  interest,  and  will 
be  fully  indemnified,  and  he  is  not  entitled  to  speculate  in  his  deal- 
ings with  his  mortgage-debtor. 

The  judgment  of  the  Special  Term  niiglit  have  directed  a  redemp- 
tion, upon  the  projx'r  terms,  within  a  specilied  time,  or  in  default 
thereof  the  plaintil!  be  foreclosed.  That,  I  think,  would  have  been 
the  proper  judgment.  But  as  no  fault  is  found  with  the  terms  of 
the  judgment  at  Si)ecial  Term,  the  judgment  of  the  General  Term 
should  be  reversed  and  that  of  the  Special  Term  allirmed. 

All  concur,  except  Rapallo,  J.,  not  voting. 

Judgment  accordingly. 


DK    MAirriN'   V.    IMM'.T.AN'. 

SurREMK  Corur  or  (' ai.iiouma,   1807. 
(iiT)  Cnl.  r):{s.) 

Appeal  frojn  a  judgment  of  the  Superior  Court  of  the  city  and 
county  of  San  Francisco.    .lames  V.  C'olTcy,  Judge. 
The  facts  are  stated  in  the  opinion  of  the  court. 
Ti'Mri.i:.  J.     This  ajipeal   is  from  a  judgment  upon  demurrer 


46G  EQUITY    RELATIONS.  [CHAP.  II. 

to  the  complaint.  The  complaint  contains  averments  to  the  effect 
that  on  the  fourth  day  of  November,  a.d.  1881,  plaintiff  owned 
a  certain  tract  of  land  which  was  then  subject  to  mortgage  liens, 
then  owned  by  James  Phelan.  The  amount  due  on  said  mortgages 
was  $196,000.  The  real  estate  was  worth  $390,375.  The  plaintiff 
and  her  thirteen  children  were  in  indigent  circumstances,  destitute 
of  available  means  of  support,  in  great  need,  and  unable  to  secure 
an  additional  loan  upon  said  land  or  to  sell  the  same,  owing  to 
financial  stringency  then  prevailing,  and  were  wholly  dependent 
upon  the  charity  of  others.  Said  Phelan  knew  of  her  distressed 
condition,  and  also  that  her  equity  of  redemption  was  worth  at  least 
$45,500.  Still,  designing  to  take  advantage  of  her  distress  and 
necessities,  he  first  offered  her  $1000,  and  then  $10,000,  and  finally 
$19,000  for  her  equity  of  redemption.  The  offers  were  successively 
made  on  different  days ;  and  in  the  meantime,  said  Phelan  had  her 
property  advertised  for  sale,  under  execution,  on  a  decree  of  fore- 
closure of  said  mortgages,  and  had  the  sale  postponed  repeatedly  for 
the  purpose  of  securing  her  equity  of  redemption  for  a  sum  greatly 
disproportionate  to  its  value  by  taking  an  oppressive  and  unfair 
advantage  of  her  necessities  and  distress. 

Also  that  on  the  fourth  day  of  jSTovember,  1881,  decedent  made 
her  the  offer  of  $19,000,  and  threatened  to  proceed  with  the  sale 
imless  she  accepted  it.  Compelled  by  her  distress  and  necessities, 
she  finally  did  accept  said  offer,  and  conveyed  her  equity  to  him  for 
said  sum.  She  did  not  know  that  decedent  had  taken  such  advan- 
tage, or  that  he  knew  of  her  necessities  and  distress  at  that  time, 
but  that  she  discovered  such  fact  on  the  twenty-seventh  day  of 
December,  1887. 

It  is  averred  that  when  defendant  falsely  represented  that  he 
would  sell  said  property  unless  she  accepted  $19,000  for  her  equity, 
decedent  did  not  intend  to  sell  said  property,  but  had  in  fact  deter- 
mined not  to  sell  the  same  unless  he  was  unable  to  procure  plaintiff's 
interest  for  $45,500.  He  fully  intended  to  offer  her  $45,500  for 
her  equity,  if  he  could  not  procure  it  for  less.  This  intention  was 
concealed  from  plaintiff,  and  decedent  knowingly  and  designedly 
took  advantage  of  her  said  necessities  and  distress. 

A  great  many  objections  are  made  to  this  complaint,  but  I  do 
not  deem  it  essential  to  consider  any  of  them,  except  the  general 
objection  that  it  states  no  cause  of  action.  That  the  complaint  does 
not  state  a  cause  of  action  is  quite  obvious. 

The  facts  constituting  the  supposed  fraud  are:  1.  Plaintiff  was 
witliout  available  means  and  in  great  financial  distress;  2.  Decedent 
had  obtained  a  judgment  foreclosing  mortgage  liens  upon  her  land, 
amounting  to  $196,000.  Her  land  was  worth  much  more  than  this ; 
but  owing  to  a  temporary  stringency  in  the  money  market,  she 


pKr.  II. 1  i)i;  MAiniN    /.   I'lir.i.A.v.  407 

rcuM  not  liorrow  mow  niom'v  uj)()n  tlu-  laml  or  .-ell  il  for  more  than 
ilii-  inort^'a^c  debt ;  3.  llotcdcnt  knew  that  her  e(|uity  of  redemption 
was  worth  $l."»,r)00,  and  was  willing;  t<i  \)i\y  her  that  for  it  if  he  eoidd 
not  iret  it  for  less,  hut  eoneeah'd  from  lier  his  estimate  of  its  vahu- 
ami  his  willingness  to  pay  that  sum,  proviiled  she  would  nf)t  take 
k>s ;  4.  He  eaused  the  property  to  he  advertised  for  sale  under  the 
<leerce,  and  then  caused  the  sale  to  l)e  repeatedly  postjmned,  in  the 
meantime  makin<,'  her  sueeessive  offers  for  her  e(|uity  of  $1000, 
.vcood.  $10,000,  and  $li>,000,  whieh  last  olTer  she  accepted,  in  i<;no- 
rance  that  deceased  would  have  given  her  more  had  she  insisted 
iip»»n  it,  and  induced  by  her  necessities  and  fears  of  losing  her 
jiroperty  in  case  of  a  sale  under  the  decree. 

It  is  impossible  to  believe  counsel  serious  in  their  contention 
that  it  constituted  fraud  or  opj)ression  on  the  part  of  IMielan  to 
<onceal  from  her  the  fact  that  he  intended  to  ofTer  her  as  much  as 
$45,500  for  her  e([uity,  if  he  could  not  succee*!  in  getting  it  for 
k'ss.  It  would  constitute  a  new  departure,  both  in  business  and 
legal  ethics.  If  the  obligation  to  make  sueh  disclosures  rested  upon 
I'helan.  of  course  the  like  obligation  rested  upon  the  ])laintifT  to 
state  to  Phelan  the  very  least  sum  her  necessities  could  induce  her 
to  accej)!  rather  than  jiermit  a  sale.  Xegotialions  under  such 
<onditions  would  surely  be  novel. 

The  real  point  in  the  case  is,  I  presume,  that  the  relations  between 
mortgagor  and  mortgagee  are  in  a  sen.se  fiduciary,  and  the  mort- 
gagee must  obtain  no  advantage  over  the  mortgagor  by  the  use  of 
the  least  unfairness  or  opj^ression ;  and  it  is  maintained  that  it  was 
oppression  on  the  part  of  Phelan  to  get  the  proi)erty  for  an  iiiade- 
<iuate  price,  taking  advantage  of  her  necessities. 

1.  In  the  first  ])lace,  the  relation  between  the  j)artii's  was  in  im 
flense  fiduciary.  At  common  law  the  mortgagee,  at  least  after  con- 
dition broken,  was  the  legal  owner  and  could  oust  the  mortgagor. 
He  was  really  u  trustee.  Under  our  system  he  occupies  no  such 
))Osition,  and  ordinarily  has  no  control  over  the  mortgaged  estate. 
In  those  cases  in  whicli  he  is,  by  the  mortgage,  given  some  power 
or  control  over  the  estate  before  foreclosure  the  (dd  rule  may  prevail. 
There  is  nothing  to  show  the  nature  of  the  mortgages  f«>rmerly  held 
by  Phelan,  nor  does  it  now  matter.  When  the  wrongs  detailed  in 
the  complaint  were  enacted  tlu*  mortgages  had  been  foreclosed,  and 
Phelan  had  only  his  decree.  1 1  does  not  appear  that  a  receiver  h.id 
been  appointed  or  that  jiroceedings  to  that  end  were  threati'iied. 

2.  The  sale,  even  after  the  decree  was  obtained,  was  not  hastened. 
The  negotiations  between  the  parties  were  protracted  and  deliberate. 
I'laintilT  was  fully  aware  of  the  situation,  and  knew  all  the  e.s.sential 
facts  of  the  case.  The  sale  was  adjourned  many  times,  and  sueirs- 
^ive  offers  were  made  to  lier   for  her  equity.     She  >;iy>  >be  was 


468  EQUITY   RELATIONS.  [CilAr.  ii. 

threatened  with  a  sale  under  the  decree  if  she  did  not  sell.  Of 
course  she  knew  without  being  told  that  such  sale  was  inevitable  if 
she  did  not  pay  the  debt  or  sell  her  equity.  The  financial  stringency 
was  not  brought  on  by  Phelan.  It  is  not  charged  that  he  interfered 
to  prevent  her  selling  to  another  or  to  prevent  the  obtaining  of 
a  loan. 

I  can  discover  no  element  of  fraud,  oppression,  or  unfairness  in 
the  case.^ 

The  judgment  is  a/firmed. 

Henshaw,  J.,  and  McFarland,  J.,  concurred. 

» Compare  West  v.  Reed,  55  111.  242  (1870). 


*EC-  111.]  WILLETT    I'.    WINNELL.  4G9 

CHAPTER  II.   {Continued). 
Section  III.     Agreements  kou  C'oll.vtkkal  Advantage. 

WILLETT  V.  WIXXELL. 

High  Court  of  Ciianckry.  1G87. 

(1    Vcrn.  ISS.) 

Tlio  plaint ifl"  wn?  tho  youngest  son  of  his  father,  who  was  sei.sed, 
according  to  the  custom  of  the  manor  of  Wolverly,  of  a  copyhold  ten- 
ement of  the  nature  of  Borough  English  of  tho  value  of  £15  per 
iinnum  :  and  in  April,  KJTl,  the  ])laintifl"s  fatlier,  having  horrowed 
£vH)0  of  the  defendant's  father,  for  securing  the  same  made  a  con- 
ditional surrender  into  the  hands  of  two  customary  tenants  of  the 
manor,  to  he  void  on  payment  of  the  £200  and  interest  in  April, 
l<iT2:  and  at  the  same  time  the  defendant's  father  entered  into  a 
lumd,  C(jnditioned  that  if  the  £200  and  interest  should  not  be 
paid  at  the  day,  then  if  the  defendant's  father  should  pay  to  the 
plaintiff's  father,  his  executors,  administrators  or  assigns,  the  fur- 
llur  sum  of  /7S  in  full  for  the  purchase  of  the  premises  within  ten 
<lays  afterwards,  that  the  hond  should  he  void,  or  otherwise  stand  in 
full  force. 

The  plaintiff's  father  died  in  Xovemher,  lOTl.  hefore  the  mort- 
gage was  forfi'ite(l,  leaving  the  ])laintitr  an  infant  of  two  years  did; 
and  the  £200  with  interest  not  being  paid  at  the  day,  the  defendant 
pays  the  £78  the  next  day  after  the  mortgage  was  forfeited,  to  the 
administrator  of  the  plaintiff's  father,  according  to  the  condition  of 
the  bond. 

The  plaintiff's  bill  was  to  redeem,  on  repayment  of  the  £200  with 
interest,  discounting  the  profits.  The  defendant  by  answer  insisted 
it  was  an  absolute  purchase. 

Tm:  CoiUT  d«rrei'd  a  redemption,  making  no  doubt  but  it  con- 
tinued a  mortgage,  and  was  not  an  al)solute  purcha.'^e:  but  as  to  the 
£T8  declared  that  to  be  well  paid  to  tiie  administrator,  and  therefore 
ovderetl  the  whole  moneys,  with  interest,  to  be  repaid  and  costs,  dis- 
louuting  the  mesne  profits. 


470  EQUITY    RELATIONS.  [CHAP.  lU 

JENNINGS  V.  WAED. 

High  Court  of  Chancery,  1705. 

(2  Veni.  530.) 

The  defendant  Ward  lends  money  to  Neale,  the  groom  porter,  to 
carry  on  his  buildings  in  Cock  and  Pye  fields,  and  took  a  mortgage 
from  him  to  secure  sixteen  thousand  pounds  with  interest  at  £6  per 
cent., and  in  another  deed,  executed  at  the  same  time,  took  a  covenant 
from  Neale  that  he  should  convey  to  the  defendant,  if  he  thought  fit, 
ground  rents  to  the  value  of  sixteen  thousand  pounds,  at  the  rate  of 
twenty  years'  purchase.  The  bill  being  to  redeem,  the  defendant 
insisted  on  that  agreement;  but  the  Master  of  the  Rolls  [Sir  J. 
Trevor]  decreed  a  redemption,  on  payment  of  principal,  interest 
and  costs,  without  regard  to  that  agreement ;  but  set  aside  the  same 
as  unconscionable.  A  man  shall  not  have  interest  for  his  money, 
and  a  collateral  advantage  besides  for  the  loan  of  it,  or  clog  the 
redemption  with  any  by-agreement. 


ORBY  V.  TRIGG. 

High  Court  of  Chancery,  1822. 

(9  Mod.  Rep.  2.) 

The  brother  of  the  now  plaintiff  mortgaged  his  lands  to  the  de- 
fendant, and  afterwards  died.  In  the  deed  of  mortgage  there  was  a 
covenant  to  reconvey  upon  six  months'  notice  of  the  payment  of  the 
principal  sum  and  interest;  and  another  covenant  that,  in  case  the 
estate  was  to  be  sold,  the  mortgagee  should  have  the  pre-emption. 
After  the  death  of  the  brother,  who  was  the  mortgagor,  his  widow 
delivered  up  the  counterpart  of  the  mortgage  to  the  attorney  of  the- 
mortgagee. 

The  plaintiff  having  given  the  defendant  six  months'  notice  that 
he  would  pay  the  principal  and  interest,  and  having  it  ready  to  pay,, 
the  defendant  refused  to  accept  it.  The  plaintiff  thereupon  ex- 
hibited his  bill  for  a  reconveyance  of  the  estate,  having  entered  intO' 
articles  with  a  purchaser  for  the  sale  thereof.  The  defendant,  by 
his  answer,  insisted  on  the  covenant  in  the  deed  to  have  the  pre- 
emption. 

But  it  appearing  that  neither  the  plaintiff  nor  the  purchaser  knew 
anything  of  this  covenant,  for  that  the  counterpart  of  the  mortgage 


«*:<'.   III.]  ///    re    i;i)\\  AUDS'    KSTATK.  V,  I 

was  delivered  up  as  aforesaid ;  and  llial  the  plainlilT  liad  often  made 
application  to  the  niort^'a^'ee  for  a  copy  thereof,  which  was  as  often 
denied,  he  insisting  only  to  have  the  principal  and  interest  paid, 
for  that  the  security  was  too  narrow  for  the  money  which  he  had 
lent ;  and  that  if  it  was  not  paid  hy  such  a  time,  he  would  foreclose 
the  eciuity  of  redemption,  hut  never  mentioned  that  he  was  to  have 
the  benefit  of  j)re-emj)tion  until  after  the  estate  was  sold ;  therefore 
he  oujrht  not  now  to  claim  it,  to  (he  prejudice  of  the  purchaser  and  of 
the  plaintifT,  having  so  long  time  for  that  purpose  l)efore  the  estate 
was  sold. 

And  it  was  decreed  accordingly,  and  the  mortgagee  to  rcconvey 
upon  payment  of  the  principal  and  interest,  &c. 


7.V  RE  EDWARDS'  ESTATE. 

Landed  Estates  Court  in  Ikkland,  18G1. 

(11  Ir.  Ch.  3(;7.) 

The  question  in  this  case  was  raised  on  a  motion  by  the  petitioner 
to  make  the  conditional  order  for  sale  previously  granted  by  the 
court  absolute.  Cause  was  shown  against  making  the  order  absolute 
by  P.  W.  Jackson,  a  mortgagee  on  the  estate.  Jackson  grounded 
his  opposition  on  his  deed  of  mortgage,  dated  the  3rd  of  May,  IS.")!). 
This  deed  contained  a  proviso  that  Jackson  w(mld  not  call  in  the 
sum  secured  (£".^500)  until  two  years  had  elai).sed  or  twelve  months' 
interest  had  accrued  due ;  and  "  that  in  case  one  full  year's  interest 
on  said  principal  sum  of  .£*,^r)0()  shall  become  due  and  l)e  unpaid  at 
any  time  during  the  said  period  of  two  years,  or  in  ease  the  ilohn  K. 
Edwards  shall,  at  the  expiration  of  the  said  period  of  two  years,  be 
unable  to  redeem  the  mortgaged  premises,  it  shall  and  may  be  lawful 
for  the  said  Peter  W.  Jackson,  his  executors,  administrators,  nr 
assigns,  if  he  or  they  should  so  elect  or  ])refer.  to  purciiase  for  hi'* 
or  their  own  use  and  benelit ;  and  the  said  .1.  K.  Ivlwards  doth 
hereby  for  himself,  his  heirs  and  assigns,  promise  and  agree  to  .sell 
and  ab.solutely  convey,  by  all  necessary  deeds  and  assurances  in  the 
law,  to  the  said  IV  \V.  Jackson,  his  heirs  and  assigns,"  the  part  i)f 
the  mortgaged  premises  called  Old  Court  for  such  sum  as  with  the 
sum  of  £'.2r)()()  and  interest  then  due  thereon  would  nuike  £IOiMt. 
Jackson  now,  relying  on  this  agreement,  contended  that  Edward-» 
was  bound  to  comj)lcte  the  conveyance  of  Old  Court  to  him. 

Mr.  Ix.  li.  Worrrn  appeared  for  the  owner  and  the  petitioner. 


472  EQUITY    RELATIONS.  [CIIAP.  II. 

Mr.  Brereton  appeared  for  the  objector,  P.  W.  Jackson. 

Mr.  Warren.  The  cause  alleged  is  a  proviso  or  condition  of  for- 
feiture of  the  mortgagor's  equity  of  redemption  contained  in  the 
deed  of  mortgage  itself.  This  condition  is  void,  for  it  is  inconsistent 
with  the  doctrine  "  once  a  mortgage,  always  a  mortgage."  The 
very  terms  of  the  proviso  are  that,  in  default  of  redemption  in  two 
years,  the  right  to  redeem  should  be  lost  forever,  and  the  mortgagor 
obliged  to  sell  to  the  mortgagee  out  and  out.  Even  if  the  condition 
were  good  in  law,  it  is  gone ;  for  it  is  not  shown  that  the  mortgagor 
Avas  unable  to  redeem  on  the  day  named;  and  on  that  day  the 
mortgagee  should  have  elected  to  take  advantage  of  the  condition. 
The  case  is  like  a  condition  of  re-entry  at  common  law  for  non- 
payment of  rent,  when  demand  must  be  strictly  made. 

Keference  was  made  to  the  cases  collected  at  Sec.  1019  of  Story's 
Eq.  Jur.  and  Coote  on  Mortgages,  p.  14;  Cruise's  Dig.,  tit.  Mort- 
gage, p.  71,  4th  ed. ;  Jennings  v.  Ward,  2  Yern.  520;  Willet  v. 
Winnell  1  Vern.  488. 

Hargreave,  J.  I  have  no  doubt  that  this  agreement  on  the  part 
of  Mr.  Edwards  to  sell  the  Old  Court  estate  for  £4000  in  the  event 
of  his  not  being  able  to  redeem  the  mortgage  on  the  4th  of  December, 
1860,  is  totally  void,  and  ought  to  be  disregarded  ])y  a  court  of 
equity. 

The  rule  of  equity  is  that  no  onerous  engagement  of  any  descrip- 
tion can  be  entered  into  by  a  mortgagor  with  his  mortgagee  on  the 
occasion  of  the  mortgage.  I  do  not  doubt  that  if  this  contract  had 
been  entered  into  by  Mr.  Edwards  with  Mr.  Jackson,  after  the 
completion  of  the  mortgage  transaction,  and  when  Mr.  Edwards 
had  got  the  money  in  his  pocket,  it  would  be  perfectly  valid;  but 
then  the  mortgagor  would  be  under  no  kind  of  pressure,  and  he 
would  be  able  to  exercise  his  unbiassed  judgment  as  to  whether  it 
was  a  fair  contract.  But  when  the  contract  is  part  of  the  arrange- 
ment for  the  loan,  and  is  actually  inserted  in  the  mortgage  deed,  it 
is  presumed  to  be  made  under  pressure,  and  is  not  capable  of  being 
enforced. 

If  the  land  had  fallen  in  value  below  £4000,  Mr.  Jackson  would 
have  insisted  on  being  treated  as  a  mortgagee;  but  as  it  has  risen 
he  says  he  is  a  purchaser — that  is,  he  gets  a  collateral  benefit  over 
and  above  his  principal  and  interest,  which  a  court  of  equity  never 
])ermits. 

This  contract  is  virtually  a  clause  of  foreclosure  on  a  fixed  day ; 
and  even  in  England,  where  foreclosure  is  possible,  it  only  takes 
place  after  a  bill  has  been  filed  for  the  purpose,  and  after  the  mort- 
gagor has  had  one  or  more  days  fixed  for  paying  the  debt. 


sKc.  III.]  iii;<»Ai»  /•.  >i;i.i-i:.  473 

I'.IJOAI)  \.  si;i,Fi:. 
Cocur  «»!•  ('iiANci;in .   Isd.'J. 

(11     ]\'rrl,h/  J,'rp.     lone.) 

Tliis  was  a  foreclosure  suit.  Tlic  plaint ilTs  prayod  an  account  of 
■what  was  due  to  them  for  principal  moneys  and  interest,  commission 
and  expenses,  under  the  agreement  liereinafter  set  forth;  payment 
l»v  the  defendant  of  the  amount  so  to  he  found  due.  or,  in  default, 
foreelosure. 

It  appeared  ihat  in  June,  1801,  the  |)laintilTs  lent  to  the  defendant 
£'^U0  on  his  promissory  note,  which  was  due  in  the  Septemhcr  fol- 
lowing, hut  was  dishonored.  On  the  30th  of  September,  18G1,  the 
defendant  gave  to  the  jjlaintiffs  a  new  promissory  note  for  the  same 
amount,  and  also  signed  a  ^lemorandum  of  Agreement,  as  follows: 

"  Memorandum  of  Agreement  made  this  30th  day  of  September, 
1801.  l)etween  Teter  Broad  and  Taylor  Pritchard.  of  28  Poultry,  in 
the  city  of  London,  auctitmeers,  and  John  Sdfe,  of  Surbiton  Ilill,  in 
the  county  of  Surrey.  Whereas,  in  consideration  of  the  said  Peter 
Broad  and  Taylor  Pritchard  advancing  to  the  said  John  Selfe  the 
sum  (if  £200  upon  the  security  of  a  piece  or  parcel  of  laud  known 
as  'The  Park,'  Surbit«m  Hill,  &c..  the  said  John  Selfe  herd »y  au- 
thorizes nnd  instructs  tlie  said  Peter  Broad  and  Taylor  Pritchard  to 
sell  and  dispo.se  of  the  whole  or  any  portion  of  the  land  as  above 
named,  either  by  ])rivate  or  public  sale,  at  and  for  the  best  price  that 
can  be  obtained;  and  further,  to  repay  themselves  out  of  the  pro- 
ceeds of  such  sale  l!u'  said  sum  of  £200,  with  interest  at  the  rate  of  5 
per  cent.  i)cr  annum  from  the  date  hereof,  with  a  commission  of  5 
per  cent,  on  the  amount  realized,  and  the  expenses  attending  the  sale 
thereof:  and  in  the  event  of  the  said  John  Selfe  repaying  the  said 
IV'ter  Broad  and  Taylor  Pritchard  the  aforesaid  sum  of  £200  and 
interest,  the  said  John  Selfe  shall  i)ay  to  the  said  Peter  Broad  and 
Taylor  Pritchard  a  commission  of  .'>  per  cent,  on  the  value  of  the  said 
jiroperty,  together  with  all  the  ex])enses  incurred  by  them,  whether 
the  projH-rty  or  any  ])ortion  thereof  is  sold  by  any  other  agency  or 
retaincti  by  the  .<aid  John  Selfe.  Th<'  said  dohn  Selfe  further  under- 
takes to  execute  a  legal  mortgage  oi  the  above-nu-ntioncd  lands  and 
buildings  to  the  .said  IVti-r  Broad  ..'ul  Taylor  Pritchard  at  his  own 
I'XjH'nse  whenever  called  u|)on  by  them  so  to  ilo.  such  mortgage  to 
contain  all  the  usual  ami  customary  covenants,  and  particularly 
]iower  of  sale,  cither  l»y  private  contract  or  public  aucti«tn." 

The  plaint  ills,  in  pursuance  of  the  authority  given  to  theni  by  the 
agreement,  made  all  the  nece.-sary  arrangemcJits  for  proceeding  to  a 
cale  of  the  premises  nientioneil  in  the  Memorandum,  and  iu  so  doing 


474  EQUITY    RELATIONS.  [CHAP.  IT. 

incurred  considerable  expense ;  but  in  February,  1862,  the  defendant 
gave  the  plaintiffs  notice  that  he  revoked  the  authority  so  given,  and 
the  premises  were  accordingly  not  sold.  The  value  of  the  property 
was  about  £8,000.  The  plaintiffs  applied  to  the  defendant  for  pay- 
ment of  the  principal,  interest,  and  5  per  cent,  commission  (£400), 
and  expenses,  which  they  alleged  to  be  due  to  them;  but  the  de- 
fendant declined  to  recognise  their  claim  to  the  5  per  cent,  commis- 
sion, and  in  March,  1863,  the  defendant  tendered  to  the  plaintiffs  the 
sum  of  £200  and  interest,  and  £15  for  any  expenses  the  plaintiff* 
might  have  incurred  in  the  matter. 

The  present  suit  was  afterwards  instituted,  and  the  cause  now 
came  on  upon  motion  for  decree. 

T.  A.  Roberts,  for  the  defendant,  contended  (1)  that  the  plaintiff* 
were  not  entitled  to  charge  in  the  foreclosure  suit  a  commission  of 
5  per  cent,  upon  the  value  of  the  property  in  addition  to  the  prin- 
cipal, interest,  and  costs  due  in  respect  of  the  mortgage  security.  It 
was  a  principle  of  the  Court  that  a  mortgagee  should  not  be  allowed 
any  collateral  advantage  beyond  his  mortgage  security.  A  mort- 
gagee could  not  stipulate  to  be  a  receiver  of  the  mortgage  property  at 
a  salary:  Chambers  v.  Goldivin,  9  Yes.  271 ;  Coote  on  Mortgages,  21, 
391,  444;  ^Vebb  v.  Rorke,  2  Sch.  &  Lef.  661;  Langstaffe  v.  Fenwicl; 
10  Ves.  405;  Leith  v.  Irvine,  1  My.  &  K.  277;  Jennings  v.  Ward, 
2  Vern.  520 ;  Edmunds  v.  Povey,  1  Vern.  188 ;  Fisher  on  Mortgages, 
300;  MaUhison  v.  Clarke,  3  Drew,  3 ;  3  W.  R.  2.  (2)  This  was,  in 
effect,  a  suit  for  specific  performance  of  the  contract ;  and  as  there 
was  no  mutuality  between  the  parties,  the  Court  could  not  enforce  it. 

Cole,  Q.  C,  in  reply. 

The  Master  of  the  Rolls  [Lord  Romilly]  said  the  contract 
in  this  case  was  only  a  contract  of  mortgage  to  the  extent  of  £200 
principal,  and  the  interest  upon  it ;  but  not  beyond  this.  His  Honour 
thought  that  the  cases  referred  to  by  Mr.  Roberts,  and  several  others 
which  he  had  consulted,  showed  the  principle  that  the  Court  would 
not  permit  a  person,  under  the  colour  of  a  mortgage,  to  obtain  a  col- 
lateral advantage  not  belonging  or  appurtenant  to  the  contract  of 
mortgage.  Although  this  principle,  in  its  origin,  probably  had 
reference  to  the  usury  laws,  it  went,  in  his  Honour's  opinion,  beyond 
them,  and  was  not  affected  by  their  repeal.  The  remedies  of  fore- 
closure and  redemption  were  co-extensive,  and  it  was  clear  that  if  the 
mortgagor  had  come  to  redeem  the  security,  he  would  have  been 
allowed  to  do  so  on  payment  of  the  principal  sum  of  £200,  interest, 
and  costs,  and  then  his  Honour  would  have  had  to  consider  whether, 
under  the  recent  Act  of  Parliament,  the  Court  could  not  direct  an 
inquiry  as  to  what  was  properly  due  to  the  mortgagees  in  respect 
of  services  rendered  as  to  the  property  under  the  agreement  entered 
into  between  them  and  the  mortgagor.     The  case  was  the  same  in 


SEC.   III.]  BIOGS    V.     IIODDINOTT.  1T."> 

forrcl(».<urr.  TluTi'furf.  in  iiiakiii;,'  tin-  u.<ual  foreclosure  decree,  Ijis 
Honour  propo.^^eil  to  ilireit  ii  reft-rciice  to  (•liiiml)ers,  to  iii<|uire  wliat 
(if  anything,')  \va.s  due  to  the  plaintilLs  in  rfsjM'ct  of  e.xpen.serf  and 
services  rendered  by  them  under  the  a^reenicnt.  \\  ith  repird  to  the 
question  of  t-osts,  generally  speaking,  in  foreclosure  suits,  the  mort- 
gagee addeil  his  costs  to  his  security;  but  it  was  e(|ually  clear  that 
where  the  mortgagor  had  tendered  his  niortgage-moni-y  and  interest 
prior  to  the  suit,  if  the  mortgagee  came  to  foreclose,  he  must  pay 
the  costs  of  the  suit.  Here,  no  doubt,  a  tender  had  been  made  of  th<! 
£'vJOO  j)rincij)al  and  interest,  and  t'15  for  expenses,  which  the  plain- 
tiils  did  not  considi'r  enough,  and  refused  to  accept.  It  was,  Imw- 
evcr,  to  be  remembered  that  the  defendant  had  entered  into  this  con- 
tract with  the  jdaintilTs  to  pay  them  a  commission  with  his  eyes 
open;  and,  although  this  was  a  contract  which  the  Court  could  not 
enforce  by  reason  of  want  of  mutuality — the  Court  not  being  able 
to  compel  the  plaintiffs  to  perform  the  services  required  by  the  agree- 
ment— yet,  as  the  defendant  entered  into  this  contract,  he  could  not 
claim  the  same  benefit  from  the  tender  which  he  might  have  done 
in  a  case  of  ordinary  mortgage.  The  Court,  therefore,  coidd  not  give 
him  the  costs  of  the  suit.  Neither  were  the  plaintiffs  entitled  to  the 
costs  of  the  suit,  because  they  did  not  come  simply  to  enforce 
a  mortgage  security,  but  they  came  to  enforce  what  the  Court 
considered  they  were  not  entitled  to  enforce.  There  would, 
accordingly,  be  no  costs  on  either  side  up  to  the  hearing. 
An  account  would  be  directed  of  what  was  due  to  the  plaintiffs  for 
the  principal  sum  of  £*2U0  and  interest  at  £5  per  cent.,  and  the  mort- 
gagee's costs  other  than  the  costs  of  the  suit,  with  the  usual  fore- 
closure decree.  An  in(iuiry  what,  if  anything,  was  due  to  the  plain- 
tiffs in  respect  of  expenses  incurred  and  services  rendered  in  n-la- 
tion  to  the  property  mentioned  in  the  Memorandum  of  Agreement, 
and  further  consideration  on  that  jiart  of  the  case  and  the  future 
costs,  would  be  reserved.^ 


BIGGS  V.   llonDlNOTT. 

SUPREMK  CoiHT  OF  J  IHICVTIIU: — ClI.VNCKKV   DiVI.SION',   1898, 

( is!)s.  '.'  ch.  :]{):.) 

MoTiox  AM)  .\n.i()(i{Ni:i)  Simmons. 

The  plaintiff  Biggs  was  a  brewer  at  Cardiff,  the  defendants  Ko.l- 

'  S!ii It  V.  l/./r./Hc.s.f  of  Xorthiinipton,  [1S92]  .Vpp.  Ca».  1   (1891),  accord. 


4TG  EQUITY    RELATIONS.  [CIIAP.  II. 

diiiott  were  the  owners  of  the  Witchill  Hotel,  Cadoxton,  Glamorgan- 
shire, in  which  they  carried  on  their  husiness  as  hotel  keepers.  The 
plaintiff  had  a  mortgage  on  the  hotel  for  £7654,  which  was  secured 
by  an  indenture  of  March  18,  189G,  by  which  the  defendants  cov- 
enanted, in  the  usual  way,  for  payment  of  the  principal,  with 
interest  at  £5  per  cent.,  on  September  18  next.  This  deed  also  con- 
tained a  joint  and  several  covenant  by  the  defendants  that  "  they, 
their  respective  executors,  administrators,  and  assigns,  owners,  or 
tenants  for  the  time  being  of  the  said  premises,  will  during  the  con- 
tinuance of  this  security  take  of"  and  deal  with  the  plaintiff,  his 
executors,  administrators,  or  assigns  only  for  all  beers  and  stout  or 
any  other  description  of  malt  liquors  (except  bottled  beers)  which 
shall  be  vended  to  be  consumed  on  or  off  the  said  hotel  and  premises ; 
and  while  any  money  is  owing  on  the  security  of  these  presents  deal 
exclusively  with  the  plaintiff,  his  executors,  administrators  and 
assigns  for  all  malt  liquors  as  aforesaid  sold  thereupon  or  upon  any 
premises  taken  or  used  in  connection  therewith,  or  in  an3'wise  under 
or  by  virtue  of  the  license  or  licenses  now  existing  or  being  in  force 
in  respect  of  the  same  premises,  including  any  occasional  or  sub- 
sidiary license,  and  will  not  sell  or  permit  the  sale  or  consumption 
upon  the  said  premises  of  any  such  liquors  as  aforesaid  (except 
bottled  beers),  other  than  such  as  shall  have  been  purchased  or  taken 
of  the  plaintiff,  his  administrators  or  assigns."  There  was  a  proviso 
that  "  if  the  defendants,  their  executors,  administrators,  and  assigns 
shall  observe  fully  and  in  all  respect  the  covenants  on  their  part 
hereinbefore  contained,"  then  the  plaintiff  would  not  call  in  the  loan 
for  five  years.  The  deed  also  contained  a  proviso  that  notwithstand- 
ing the  proviso  for  redemption,  the  defendants  should  not  be  entitled 
to  require  or  compel  the  plaintiff  to  receive  his  principal  before  the 
expiration  of  five  years  from  the  date  of  the  deed.  The  plaintiff  also 
covenanted  with  the  defendants  during  the  continuance  of  the 
security  to  supply  them  with  beer  and  stout  or  other  malt  liquors  of 
the  usual  quality  at  certain  scheduled  prices;  but  the  deed  in  no  way 
charged  any  money  payable  for  beer,  &c.,  upon  the  mortgaged 
jj  remises. 

In  the  spring  of  1898  the  defendants  ceased  to  purchase  their  beer 
and  stout  from  the  plaintiff,  and  intimated  that  they  did  not 
intend  to  purchase  any  more  malt  liquors  from  him.  as  they  were 
advised  that  tliey  were  not  bound  by  the  covenant  to  do  so ;  and  they 
also  claimed  to  be  entitled  to  redeem  the  mortgage  at  once. 

On  May  4,  1898,  the  defendants  tendered  to  the  plaintiff  the 
amount  of  his  principal  and  interest  to  date,  with  a  further  sum  for 
six  months'  interest  in  lieu  of  notice;  but  the  plaintiff'  declined  to 
accept  it. 


f^*'('-   '"  1  BKICS    c.     lloDDIMilT.  1"^ 

Oil  May  li»  the  iiiortgajjors  took  out  nn  orij^'iiialin;;  ^nuuniMi-; 
against  tliu  niortgagrc  tr)  coin])*'!  rcclciiiptioii. 

On  May  '^'.'5  the  plaintilT  comnienrL'd  this  artion.  claiming  an  in- 
junction R'strainiug  thf  ck'fc'n<lants  during  tliu  contiinianco  of  tlio 
mortgage,  tlu'ir  servants  or  agents,  from  selling  or  j)erniitting  tin- 
sale  <»r  eonsunijition  ujxtn  the  Witcliill  Hotel  of  any  beer,  stout,  f)r 
other  malt  liquors  (other  than  bottle<l  heers),  whieh  shall  not  have 
been  purehaseil  and  taken  from  the  plaint ilf,  and  for  damages. 

The  plaintitl  moved  before  Konier,  J.,  on  June  10,  ].S!>8,  for  an 
interim  injunelion  in  the  terms  of  his  elaim.  The  defendants'  sum- 
mons for  re(lemi»tion  was  adjourned  into  eourt,  and  came  on  f^r 
hearing  with  the  motion. 

Levctt,  Q.  ('..  and  R.  F.  Xoiiuii  for  the  motion.  The  eovenani  lo 
purchase  malt  liquors  from  the  mortgagee  during  the  continuance 
of  the  mortgage  in  no  way  clogs  the  redemi)tion ;  any  money 
owing  to  us  for  beer  is  not  charged  on  the  mortgaged  property.  A 
proviso  for  the  continuance  of  the  loan  for  a  term  certain  is  verv 
usual,  and  is  a  lawful  provision:  see  the  remarks  of  Jes.sel,  M.  K.,  in 
Tccvan  v.  .s'/»i7/t  (IM.S-J),  20  Cli.  D.  T-Jl,  T'.'!) ;  and  the  mortgagor 
cannot  compel  the  mortgagee  to  accept,  against  his  will,  repayment 
otherwise  than  in  accordance  with  the  contract:  West  Dcrhif  i'nlon 
V.  Metropolitan  Life  Assurance  Society  {lS[)7^,  A.  V.  G47.  The 
covenants  for  the  purchase  and  s\ipply  of  beer  have  nothing  t<>  do 
with  the  equity  of  redemption.  Covenants  of  this  kind  are  valid 
and  can  be  enforced  :  Lukcr  v.  Dennis  ( ISs;  ).  :  (h.  I).  *>': ;  protits 
made  under  a  covenant  of  this  kind  are  lawful,  ami  would  not  have 
to  be  accounted  for  by  a  mortgagee  in  pos.session :  Wliili-  v.  Citi/  nf 
London  lireucnj  Co.  (1888),  :{!»  Ch.  1).  5.50.  There  is  nothing  uii- 
rea.sonable  or  oppressive  in  these  provisions:  it  was  part  of  tiie 
terms  of  the  loan  that  the  mortgagor  should  buy  l)eer  from  us  dur- 
ing the  continuance  of  the  security  ;  it  nuiy  be  a  collateral  advantage, 
but  Mainland  v.  Upjohn,  41  Ch.  1).  Vi{\,  shews  that  this  may  be  d..n.- 
under  a  bargain  deliberately  entered  into  by  the  i)arties  whib-  en 
e(|ual  terms  and  without  any  improper  pressure  or  unfair  dealing  .ui 
the  part  of  the  nu)rtgagee.  No  charge  of  imi)ro|>er  pressure  or 
unfair  dealing  is  nuule  against  this  mortgagee.  For  these  reasons 
we  are  entitled  to  have  the  bargain  entered  into  by  the  mort- 
gagors, when  the  loan  was  nuule,  enforced  by  injunction. 

Farnell,  (^.  ('..  and  Imjpcn  for  the  mortgagors.  The  ((tMii.iiu 
binding  the  mortgagors  to  buy  all  uudt  Ii(pu)rs  from  the  mortgagee 
during  the  ccuitinuance  of  the  security  is  bad  as  a  collateral  ad- 
vantage stipulated  for  by  a  nu)rtgagee:  Janirs  v.  Knr  (1880).  10 
Ch.  1).  1  10:  a  mortgagee  is  not  entitled  to  anything  more  than  Iujj 
principal,  interest,  and  costs:  Jrnnintjs  v.  Want.  *  Vern.  ."i^'O ;  Firld 
v.  IIi>phins  (IS'JU),  il  Ch.  1).  :y>l.     h  is  well  known  what  largo 


478  EQUITY    RELATIONS.  [CHAP.  II. 

profits  are  made  by  brewers  out  of  tied  houses,  and  it  may  be  that  a 
covenant  of  this  kind  will  give  the  mortgagee  the  whole  amount 
of  his  principal  and  interest  by  way  of  profits,  and  that  is  an  unfair 
collateral  advantage,  which,  if  Jennings  v.  Ward,  2  Yern.  520,  is 
good  law,  cannot  be  maintained. 

[RoMER,  J.  The  proposition  stated  in  Jennings  v.  Ward,  2 
Yern.  520,  seems  to  me  to  be  too  wide,  having  regard  to  the  later 
authorities.] 

The  rule  was  recognized  by  Lord  Braniwell,  though  unwillingly, 
in  Salt  V.  Marquis  of  Northampton,  [1892]  A.  C.  1,  19.  This  is  an 
attempt  by  a  brewer  under  the  guise  of  a  mortgage  to  get  all  the 
advantages  of  a  tied  house :  a  bargain  that  the  Court  has  never 
allowed  between  mortgagor  and  mortgagee. 

With  reference  to  the  summons  to  redeem,  we  submit  that,  not- 
withstanding the  provisoes  for  the  continuance  of  the  loan,  we 
are  entitled  under  the  circumstances  to  redeem  now.  A  simple 
proviso  for  continuance  of  the  loan  for  a  term  certain  is  good;  but 
this  is  not  a  simple  proviso  for  continuance  of  the  loan:  the  two 
provisoes  depend  on  each  other,  and  are  in  effect  one  transac- 
tion; this  is  a  clogging  of  the  redemption,  and  therefore  the  whole 
is  void.  The  mortgage  is  to  be  irredeemable  for  five  years  in  order 
to  give  effect  to  this  covenant,  and  an  unreasonable  bargain  of  this 
kind  cannot  be  enforced :  Fisher  on  Mortgages,  5th  ed.  p.  669 ;  Tal- 
l)0t  V.  BraddiU  (1683),  1  Yern.  183;  Cowdrij  v.  Day  (1859),  1  Giff. 
316.  For  these  reasons  we  submit  that  the  mortgagors  are  entitled 
to  redeem  at  once. 

RoMER,  J.  With  regard  to  the  summons  by  the  mortgagors  to 
redeem,  I  do  not  require  to  hear  counsel  for  the  mortgagee,  and  I 
think  it  will  be  convenient  to  dispose  of  that  application  at  once 
before  hearing  the  reply  on  the  motion. 

It  appears  to  me  that  I  am  bound  by  authority,  and  also  on  prin- 
ciple, to  dismiss  this  summons. 

I  take  it  that  what  was  said  by  Sir  George  Jessel  in  Teevan  v. 
Smith,  20  Ch.  D.  729,  is  good  law,  at  any  rate,  so  far  as  I  am  con- 
cerned, and,  indeed,  I  trust  good  law  in  whatever  court  the  question 
may  ultimately  be  raised,  namely,  that,  "  Although  the  law  will  not 
allow  a  mortgagor  to  be  precluded  from  redeeming  altogether,  yet  he 
may  be  j^recluded  from  redeeming  for  a  fixed  period,  such  as  five  or 
seven  years."    The  period  in  the  present  case  is  five  years. 

Now,  I  am  of  opinion  that  it  is  obviously  to  the  advantage  of 
both  the  mortgagor  and  mortgagee  that  such  a  provision  should  be 
enforced.  Of  course,  that  does  not  prevent  the  Court  in  a  proper 
case  from  preventing  the  application  of  the  clause  if  it  is  too  large, 
or  there  are  circumstances  connected  with  the  proviso  which  renders 
it,  in  the  opinion  of  the  Court,  unreasonable  or  oppressive.     In 


•**»■«•   '"1  BIGGS    /•.    IloDDINoTT.  470 

llif  present  cast'  1  cmii  liml  iiothiii;,'  uiircii.-oiialtlc  or  oppressive  in 
the  proviso  which  jtrevents  the  niort^'a^jors  from  redecinini^  for 
tlie  live  years.  The  term  is  not  unreasonahle,  nor  is  there  anything 
lonnected  with  the  proviso  whieh  would  render  it  unreasonable  or 
<ippressive  in  the  eyes  of  the  Court.  It  is  said  that  it  is  not  in  itself 
had,  hut  that  it  is  made  so  hy  reason  of  the  covenant  in  the  mortgage 
which  compels  tlic  mortgagors  during  the  continuance  of  the 
x'curity  to  buy  their  beer  from  the  mortgagee,  who  is  a  brewer, 
wen,  that  covenant  is  either  in  itself  unreasonable,  or  not  unreason- 
alilc.  There  is  nothing  before  me  to  shew  that  as  a  covenant  it  is 
unreasonabli',  under  the  eireumstances,  there  being  a  covenant 
almost  corresponding  by  the  mortgagee,  the  brewer,  to  supjdy. 
There  is  nothing  o])pressive  in  it  itself.  There  is  no  evidence  to  shew 
me  that  it  is  unreasonable  or  opj)ressive.  Whether,  i\]niTi  from  be- 
ing unreasonable  or  oppressive  in  fact,  it  ought  to  be  void  as  infring- 
ing any  princij)le  of  ecjuity,  I  need  not  now  decide,  though  I  shall 
have  to  decide  that  hereafter.  Either  that  covenant  is  void,  or  not 
void,  on  such  a  ])rineij)le.  If  it  be  void,  then  I  do  not  see  why 
I  should  make  the  proviso  precluding  tiie  redemption  for  five 
years  bad,  because  there  is  also  another  void  i)rovision  in  the  deed. 
And  if  it  is  not  void,  why  should  I  disregard  the  proviso  restricting 
the  power  to  redeem  for  five  years  l)ecause  of  the  existence  of  a 
covenant  which  the  Court  considers  enforceable,  and  which  is  not 
unreasonable?  It  seems  to  me,  therefore,  that,  looking  at  the 
mortgage  as  a  whole,  there  is  nothing  here  which  in  my  opinion 
would  prevent  this  proviso  precluding  the  redemjition  for  five  years 
Ix'ing  enforced  by  the  Court.  I  accordingly  enforce  it.  I  am 
of  oj)inion  that  it  is  a  proviso  which  stands  by  itself,  and  is  distinct 
from  the  prior  covenant  in  the  deed  which  deals  witii  the  time 
during  which  the  mortgagees  are  to  be  prevented  from  calling  in 
tlicir  money.  For  these  reasons,  I  hold  that  the  mortgagors  are 
w  rong  in  claiming  to  rech'cm  at  once,  i.e.,  before  the  iive  years  have 
expired  ;  and  I  therefore  dismiss  this  summons  with  costs. 

Fonrell,  (J.  C.  I  am  afraid  that  the  dismissal  of  an  action  or 
summons  for  redem|)tion  operates  as  a  foreclosure.  I  would  sug- 
gest that  the  order  should  be.  '*  The  Court  being  of  opinion  that 
Ihc  a))plication  by  the  mortgagors  was  j)rematun',  no  orch-r  except 
that  they  do  pay  the  costs  of  the  summons." 

K<)Mi:i:.  J.  That  is  iiuile  right:  take  your  order  in  that  way. 
I  certaiidy  did  not  iuteiid  you  to  be  fori'closed. 

Lnrlt.  (J.  ('..  in  reply.  The  elTeet  of  the  decision  in  JcnniiKj.'i 
V.  Wiird.  v'  \'ern.  'r2<K  as  stated  in  the  text-books,  is  misleading;  all 
that  ease  decided  was  that  no  fetter  can  he  put  on  the  redemption. 
Fnnrh  V.  linran  (ITIO).  ".'  .\tk.  TJO.  is  to  the  same  effect.  The 
result  of  all  the  authorities  when  carefullv  examined  is  this — that 


480  EQUITY    TxELATIOXS.  [CIIAP.  II. 

for  purposes  of  redemption  the  Court  will  not  allow  in  the  accounts 
any  bargain  increasing  by  collateral  means  the  sum  payable  for 
principal,  interest,  and  costs.  Xone  of  the  cases  relied  on  by  the 
mortgagors  shews  that  a  reasonable  stipulation  of  this  kind  cannot 
be  enforced. 

EOMER,  J.  There  is  a  great  principle  which  I  think  ought  to 
be  adhered  to  by  this  Court,  and  l)y  every  Court  where  it  can 
possibly  do  so ;  that  is  to  say,  that  a  man  shall  abide  by  his  contracts, 
and  that  a  man's  contracts  should  be  enforced  as  against  him. 
Undoubtedly  there  are  certain  principles  of  equity,  especially  those 
relating  to  mortgagors  and  mortgagees,  which  have  to  a  certain 
extent  interfered  with  that  general  principle,  and  with  those  cases 
I  shall  have  to  deal.  But  before  I  do  so  I  wish  in  the  first  place  to 
point  out  that,  unless  there  is  some  doctrine  of  equity  which  would 
otherwise  prevent  me  enforcing  the  covenant  here,  the  covenant  is 
one  which  in  my  opinion  ought  to  bo  enforced ;  that  is  to  say,  look- 
ing at  the  circumstances  (and  there  is  no  evidence  before  me  which 
alters  the  circumstances  as  appearing  on  the  face  of  the  mortgage 
deed  itself)  it  appears  to  me  that  the  transaction  entered  into  was  a 
reasonable  and  proper  one.  The  covenants  entered  into  by  the  mort- 
gagors and  the  mortgagee  with  reference  to  the  supply  and  purchase 
of  beer  appear  to  me  to  have  been  reasonable  and  entered  into  in  good 
faith,  and  are  in  no  sense  oppressive  upon  the  mortgagors.  Unless, 
therefore,  there  is  some  principle  of  equity  affecting  mortgagors  and 
mortgagees  which  prevents  me  from  enforcing  this  covenant,  I 
ought  to  enforce  it.  I  should  be  very  sorry  indeed  if  I  found 
there  was  any  such  principle ;  and  on  considering  the  principles  to 
which  my  attention  has  been  called,  and  the  authorities  bearing 
upon  them,  I  am  glad  to  say  that  I  do  not  think  there  is  any 
principle  or  any  authority  which  prevents  -me  from  enforcing  this 
covenant  as  against  the  mortgagors. 

Now,  there  is  a  principle  which  I  will  accept  without  any  qualifi- 
cation for  the  purpose  of  my  present  judgment  (although  possibly 
even  that  principle  might  have  to  be  considered  narrowly  with 
reference  to  special  cases)  that  on  a  mortgage  you  cannot,  by  con- 
tract between  the  mortgagor  and  mortgagee,  clog,  as  it  is  termed,  the 
equity  of  redemption,  so  as  to  prevent  the  mortgagor  from  redeem- 
ing on  payment  of  principle,  interest,  and  costs.  Of  course,  I  mean 
redeeming  at  the  time  agreed  upon  between  the  parties  for  re- 
demption. 

Does  that  principle  apply  to  the  case  before  me  so  as  to  prevent 
this  covenant  by  the  mortgagors  from  being  enforced  against  them  ? 
I  am  clearly  of  opinion  that  it  does  not.  There  is  nothing  in  this 
covenant  which  clogs  the  equity  of  redemption.  The  mortgagors' 
right  to  redeem  under  the  mortgage  deed  stands  exactly  the  same 


•'^':<-   '"•]  BIGGS    V.     IIODDINOTT.  1)^1 

■wlic'tluT  this  covcn.iiit  to  lake  the  hccr  from  the  hrcwcr,  tlw  iiiort- 
giv^i'r,  is  ill  tlu'  cU'i'd  or  not.  Tlic  morljL,M;,'('('  hy  virtiK-  or  in  respect 
of  that  covenant  has  no  right  to  stop  or  clu'ck  rcdi-inplion.  Ho 
( ould  not  stop  redemption  because  there  had  been  any  breach  of  tluit 
( ovcnant.  There  is  no  charge  upon  the  mortgaged  premises  in  favour 
of  the  mortgagee  for  any  sums  which  might  become  due  to  him 
under  or  by  virtue^  or  by  rea.son  of  any  Ijreach  of  that  covenant  l)y  the 
mortgagors.  It  therefore  appears  to  me  impossible  to  say  that  this 
(  ovenant  in  any  way  interferes  with  the  principle  about  not  clogging 
the  ecjuity  of  redemption.  But  then  it  is  said  on  behalf  of  the  mort- 
gagors that  there  is  a  much  larger  principle  which  would  prevent 
this  covenant  from  being  held  binding  on  them,  and  they  say  that 
the  })rinciple  is  stated  in  the  case  of  Jennings  v.  Ward,  2  Vern.  5'iO, 
which  is  a  well-known  authority,  where  the  Master  of  the  RolU 
undoubtedly  said  that  a  man  shall  not  have  interest  for  his  money 
and  a  collateral  advantage  besides  for  the  loan  of  it,  or  clog  the 
redemption  with  any  by-agreement.  I  have  already  dealt  with  tlie 
question  of  clogging  the  redemption.  It  is  said  that  the  observations 
of  the  Master  of  the  Rolls  are  to  be  taken  to  their  fullest  extent, 
and  that  in  every  case  it  is  to  be  taken  that  a  mortgagee  shall  not 
have  interest  for  his  money  and  a  collateral  advantage  besides  for  the 
loan. 

Now.  I  must  say  it  appears  to  me  always  a  good  principle  in  deal- 
ing with  general  observations  to  bear  in  mind  the  case  in  which  those 
observations  were  made,  and  with  reference  to  what  circumstances 
they  were  made.  And  when  I  turn  and  look  at  the  circumstances  of 
Jennings  v.  Ward,  "2  Vern.  520,  two  things  appear.  In  the  first 
place,  the  Master  of  the  Rolls  was  dealing  in  fact  with  a  case  where 
a  mortgagor  came  to  redeem,  aiul  it  was  sought  to  clog  his  redemp- 
tion by  saying  that  there  was  a  collateral  agreement  with  regard  to 
other  property  which  ought  to  prevent  his  being  allowed  to  redeem. 
It  was,  in  fact,  a  case  of  clogging  the  ecpiity  of  redemi)tion.  But 
In'yond  that,  when  you  look  and  see  what  was  the  collateral  agree- 
ment in  (piestion  there,  it  is  to  be  observed  it  was  one  about  which  tin? 
Master  of  the  Rolls  said  that  it  must  be  set  aside  as  unconscionable. 
So  that  it  was  a  case  where  the  collateral  agreement  was  unconscion- 
al)le  in  itself,  ami  it  was  in  ri'ft'rence  to  a  case  like  that  that  th«' 
Masters  of  the  Rolls  made  the  observatit)n  that  he  did.  Moreover, 
it  is  very  important  to  bear  in  mind  that  when  the  Master  of  the 
Holls  ma.ie  tluU  observation  the  usury  laws  were  in  force,  and  the 
Courts  wi-re  very  anxious  to  i)revent  a  person  getting  a  rale  of 
interest  beyond  what  he  was  entitled  to  receive  under  the  guise  •)f 
collateral  advantages  not  e.xpres.sed  to  be  in  the  form  of  interest. 
Xow,  can  I  lind  in  any  subsequent  case  any  decision  which  shews 
that  the  observation  of  the  Master  of  the  Rolls  is  to  be  taken  us 


482  EQUITY    RELATIONS.  [CHAP.  II. 

imlimitecl  ?  I  can  find  no  such  case.  The  cases  to  which  I  have  been 
referred,  and  which  I  have  considered,  are  really  cases,  when  you 
examine  them,  where  it  is  sought  to  clog  the  equity  of  redemption  by 
saying  that  the  mortgagor  seeking  to  redeem  has  to  pay  some 
sura  beyond  what  was  really  due  for  principal,  interest,  and  costs. 
That  is  so,  for  example,  in  French  v.  Baron,  2  Atk.  120,  and 
other  authorities,  where  the  question  concerned  the  costs  of  a  receiver 
of  the  rents  and  profits  of  the  mortgaged  premises.  In  these  cases 
the  question  was  one  of  account.  The  question  was,  What  was 
due  wlien  you  came  to  redeem? — not  the  question,  in  substance, 
Avhether  an  honest  and  proper  agreement,  entered  into  without 
oppression  and  reasonable,  ought  to  be  held  void  simply  because  it 
was  a  contract  between  mortgagor  and  mortgagee.  And  I  point  out 
that  you  must  certainly  put  aside  the  cases  before  the  repeal  of  the 
usury  laws,  which  stand  on  a  different  footing,  and,  of  course,  cases 
of  oppression  and  unreasonableness.  Lord  Eldon,  in  the  case  of 
Chambers  v.  Goldiviii  (1804),  9  Yes.  254,  stated  the  law  of  the 
Court  at  the  time  on  the  subject  in  question.  I  need  not  repeat 
that  judgment  now,  because  it  is  set  forth  in  Kay,  J.'s,  judgment 
in  Mainland  v.  Upjohn,  41  Ch.  D.  136.  I  need  only  say  that 
I  agree  with  what  Kay,  J.,  says  at  the  top  of  page  138  of  that  report 
as  summing  up  how  the  law  stood.  He  says:  "I  read  that  for  this 
reason  that  Lord  Eldon  there,  although  no  doubt  one  objection  he 
makes  to  these  exactions  was  that  they  tend  to  usury,  still  does  not 
rest  his  objection  entirely  upon  that  ground.  He  says,  besides,  that 
they  are  oppressive,  and  are  exactions  that  a  mortgagee  is  not 
allowed  to  make." 

Putting  aside  questions  of  usury,  and  putting  aside  contracts 
which  are  oppressive,  or  which  are  exactions  that  a  mortgagee  is  not 
allowed  to  make,  I  see  no  reason  why  a  contract  between  mort- 
gagor and  mortgagee,  entered  into  in  good  faith  as  a  reason  for  the 
mortgagee  advancing  his  money,  should  not  stand  and  receive  the 
support  of  this  Court,  subject  to  the  limitation  I  have  already 
])ointed  out  as  to  clogging  the  equity  of  redemption.  It  appears  to 
me,  notwithstanding  some  observations  that  you  may  find,  especially 
some  made  by  Kay,  J.,  in  some  of  his  decisions,  which  I  think  ought 
to  be  interpreted  by  reference  to  the  special  facts  of  the  cases  in 
which  those  observations  were  made,  it  is  not  true  to  say  that  in 
every  contract  for  a  mortgage,  every  provision  is  void  whereby  a 
mortgagee  gets  more  than  the  principal  he  advances,  and  his 
interest  and  costs.  I  think  there  is  no  objection  (within  the  lines 
I  have  mentioned)  to  an  advantage  being  derived  by  a  mortgagee  in 
his  contract  at  the  time,  and  as  a  term  of  the  advance.  Where  such 
an  advantage  is  part  of  the  consideration  for  the  advance,  and  the 
mortgagor  has  the  benefit  of  the  advance,  he  is  prima  facie  bound 


'-^'•   '"1  HKidS    r.    IIODDINOTT.  483 

hy  it.  uiiK'ss  ho  can  l>iiii^'  liiiiiscir  within  >unii'  of  the  liniitalicnis 
hiid  (l(iu  11  by  the  cases  to  wliich  1  have  already  ri'ferrcd. 

Now.  tliat  the  ))rinii]il('  is  not  so  wi<h'  as  has  hecn  ur;,'cd  ht-forc 
iiif  on  Ix'hair  o4"  the  nioit^i:a;,'ors,  and  that  the  words  of  the  Master 
"i  the  Kolls  in  Jenniiii/s  v.  Ward.  '2  \'riu.  o'iO,  are  to  be  taken 
with  some  limitation,  is  clear  on  the  authorities.  I  need  only  men- 
tion two:  J'olhr  v.  Edwanis  (IS.".:),  'it;  L.  .1.  (Ch.)  4(;s,  ami 
the  case  of  Mniiildinl  v.  ['pjoliii,  -11  Ch.  I).  ]".'<I,  to  which  I  have 
i>reviously  refi-rri'd.  They  shew,  for  e.\amj)le,  this:  that  a  mort- 
.i<,'ee  can  lontract  with  his  inort<ija<^or  that  in  consideration  of  an 
advance  of,  say,  £7U(t,  he  sliall  he  repaid  Cjooo  at  a  future  time, 
with  interest  on  the  £1000  in  the  meantime.  In  that  case  the  bar- 
ain  stands  and  cannot  he  disturi)ed,  and  for  a  very  good  reason 

the  mortgagor  obtained  his  advance  on  the  footing  and  faith 
f  the  contract.  Here  the  mortgagors  have  obtained  this  advance, 
and  probably  at  a  reduced  rate  of  interest,  on  the  very  terms  of  thi.- 
tiivenant,  or  because  of  the  existence  of  this  covenant — an  advan- 
tage which  they  ]\:\\\'  derived  and  imw  seek  to  escape  the  con- 
M'cjucnces  of.  As  1  have  said,  1  can  find  no  authority  wliich 
would  shew  that  such  a  covenant  as  this  by  tiie  mortgagors  is,  under 
t!ie  lircumstances,  to  be  held  void.  Certainly  the  ca.-^es  specially 
relied  on  before  me  on  behalf  of  the  mortgagors  do  not  amount  to 
•  (instituting  such  authority.  Take  the  case  of  James  v.  Kerr,  40 
C  h.  I).  449.  When  looked  at  it  will  be  found  that  the  facts  shew 
that  the  agreement  there  relied  upon  by  the  mortgagee  was  oppres- 
>ivi'  and  imj)roper,  and  moreovi'r  clogged  the  equity  of  redemp- 
tion. Then  take  the  case  of  Brvad  v.  Selfe  (1803),  11  W.  K.  1030, 
which  lias  been  referred  to.  That  was  peculiarly  a  case  affecting  a 
<l\iestion  of  account — the  right  to  redeem — ([uestions  affecting  the 
(logging  of  the  cMjuity  of  redemption.  The  case  of  Fiidd  v.  Ilophins. 
I  1  Ch.  1).  524,  was,  again,  a  mere  question  of  on  what  terms,  as  to 
amount,  the  mortgagor  should  be  permitted  to  redeem,  and,  more- 
over, was  a  case  where  the  mortgagee  was  claiming  to  charge  items 
Mhich,  under  the  circumstances,  certainly  he  never  ought  to  have 
sought  to  charge  as  against  the  mortgagor.  It  is  to  lu>  noticed  that 
when  that  case  came  before  the  Court  of  Appeal,  as  it  did,  they  dealt 
with  it  purely  as  a  question  of  construction,  and  did  not,  as  they 
undoubtedly  would  had  the  argument  before  nie  been  correct,  say 
that  the  mortgagee  was  not  entitU'd  to  makt'  the  charges  in  question. 
I'ccause  the  contract  with  regard  to  those  charges  was  altogether 
invalid.  It  is  impossible  to  sujipo.se  that  the  Court  of  Appeal,  witli 
;lie  learned  and  ex|)erieneed  judges  sitting  then*,  would  have  over- 
looked a  point  of  this  kind  if  sucii  a  point  i-ould  have  luH'n  made. 

Lastly,  the  case  before  the  IIoikm'  of  Lords,  Salt  v.  Maniuis  of 
Xurthanipton^  [18'J'2]  A.  C.  1,  had  nothing  whatever  really  to  do 


484  EQUITY    RELATIONS.  [CHAP.  II, 

with  the  point  I  have  to  decide  here.  That  was  merely  a  question 
whether  a  certain  policy  was  mortgaged;  and  when  the  House 
of  Lords  held  that  the  policy  was  mortgaged,  it  of  course  followed 
that  in  equity  a  bargain  seeking  to  prevent  the  mortgagor  from 
having  the  right  to  redeem  it  could  not  be  enforced.  I  need  scarcely 
point  out,  therefore,  that  that  has  no  bearing  really  upon  the  ques- 
tion before  me. 

Finding,  therefore,  as  I  do  in  the  result,  an  honest  bargain 
entered  into,  the  benefit  of  which  has  been  obtained  by  the  mort- 
gagors, and  finding,  as  I  am  glad  to  say  and  as  I  think,  no 
principle  or  authority  which  prevents  me  from  enforcing  this  con- 
tract on  the  mortgagors'  part,  I  enforce  it  accordingly,  and  therefore 
grant  the  injunction  in  the  terms  of  the  notice,  limiting  it  according 
to  those  terms  during  the  continuance  of  the  security;  and  the 
defendants,  of  course,  must  pay  the  costs. 

C.  A. 

The  defendants  appealed  from  the  order  on  the  motion.  The  ap- 
peal was  heard  on  July  G,  1898. 

Farwell,  Q.  C,  and  Ingpen  for  the  appeal.  We  contend  that  the 
covenant  to  take  beer  from  the  mortgagee  alone  is  invalid. 

[Collins,  L.  J.  A  mortgagee  may  now  stipulate  for  any  rate  of 
interest  he  likes.  Why  may  he  not  take  a  lower  rate  and  stipulate 
for  a  collateral  advantage  of  this  kind  ?] 

Jennings  v.  Ward,  2  Vern  520,  lays  down  the  broad  principle  that 
a  mortgagee  shall  not  by  the  inortgage  deed  stipulate  for  any 
advantage  beyond  principal,  interest,  and  costs.  Chappie-^.  Million 
(1870),  Ir.  E.  5  Eq.  235,  does  not  merely  say  that  a  covenant  for  a 
collateral  advantage  to  the  mortgagee  will  not  be  enforced  in  a 
foreclosure  or  redemption  suit,  but  that  it  is  void.  In  re  Edwards's 
Estate  (1861),  11  Ir.  Ch.  Eep.  367,  affirms  the  same  principle. 
Romer,  J.,  appears  to  lay  down  that  any  bargain  between  mortgagor 
and  mortgagee  which  is  not  unconscionable  and  does  not  clog  the 
equity  of  redemption  is  valid,  but  in  this  he  ignores  the  above 
rule.  In  Chambers  v.  Goldwin,  9  Ves.  271,  Lord  Eldnn  lays  it  down 
that  a  mortgagee  cannot  stipulate  to  be  a  receiver  of  West  India 
estates  with  a  commission,  nor  stipulate  for  any  advantage  beyond 
the  interest.  Afterwards  mortgagees  of  West  India  estates,  if  not 
in  possession,  were  allowed  to  be  consignees  and  to  charge  commis- 
sion; but  Lord  Brougham  in  Leith  v.  Irvine  (1833),  1  My.  &  K.  277, 
refused  to  extend  the  practice  to  a  mortgagee  in  possession,  and 
expressed  a  doubt,  ihid.  292,  295,  whether  Bunhunj  v.  Winter 
(1820),  1  Jae.  &  W.  255,  was  rightly  decided,  and  whether  Cox  v. 
Champneys  (1822),  Jac.  576,  supported  the  case  of  the  mortgagee. 
In  Potter  v.  Edwards,  26  L.  J.  (Ch.)  468,  a  mortgage  was  given  for- 


^'*'-  '"1  UKUis  r.   uoithiNOTr.  48.0 

11(»(KI.  tlu.U-ll  clllv    l":i»l»  \\a>  ;l(l\;lll.c.l,  and    l\ill.l.T>|rV,   V.  ('.,  lirld 

thai  tliriv  coiilil  only  Ik'  ivdcinption  on  i)ayiu('nt  of  £1000  with 
.intrivst  and  co.sts.  'I'his  may  be  treated  as  if  the  mort^'a^a-e  had 
j>aid  the  £1000,  and  hy  >uhse<|uent  ^'ift  received  (lie  £:?00  hack 
ai:ain.  In  this  case  the  point  here  in  <|uestion  was  n<»t  ar^^'ued. 
M<iinl(inil  V.  Upjohn,  -11  C'h.  1).  I'.'O,  follows  I'olfrr  v.  Eilinirds, 
t.H;  L.  J.  (C'h.)  4G8,  hut  is  ojjposed  to  the  decision  of  Lord  Hoinilly 
in  Broad  v.  Sclfc,  11  W.  K.  10;?(;,  there  referred  to,  and  it  is  suh- 
niitted  that  this  authority  ou{j;ht  to  have  been  followed.  Kijre  v. 
Ihiijhvs  (ISrC),  ?  V\\.  I).  MS,  atlinns  the  rule  that  a  inortgafjee  will 
not  be  allowed  in  the  niortga<,'e  deed  to  .stipulate  that  he  shall  be 
allowed  coinniission  on  rents  received  by  him.  The  cases  of  James 
V.  Kn;\  10  C'h.  D.  -11!),  400,  Field  v.  Ilojdnns,  II  C'h.  D.  531,  and 
Salt  v.  Manjiiis  of  Xorthaiiiploii,  [l.SH'JJ  A.  ('.  1.  10,  all  su])i)ort 
the  i)rinciple  that  a  mort<ra<,a'e  not  only  cannot  do^'  the  equity  of 
redemjUion,  but  cannot  ljar;:ain  for  any  collateral  advantage. 
Moreover,  in  this  case  the  ecjuity  of  redemption  is  clogged,  for  the 
mortgagors  cannot  let  the  ])roperty  to  the  same  advantage  when 
it  is  burdened  with  a  covenant  of  this  nature. 

Levetl.  (J.   I'.,  and   /.'.   /■'.   Xoiioii    for  the  mortgagee  were  not 
vailed  on. 

LiNUi.EY,  ^I.  li.  We  have  listened  to  a  very  ingenious  and 
l-arned  argument  with  the  view  of  inducing  us  under  jiressure  to  lay 
■l(jwn  a  proposition  of  law  which  would  be  very  unfortunate  for 
I'usiness^mci!.  The  proposition  contended  for  comes  to  this — that 
while  two  people  are  engaged  in  a  mortgage  transaction  they  can- 
not entei  into  any  other  tran.-action  with  each  other  which  can 
possibly  benefit  the  mortgagee,  and  that  any  sudi  transaction  must 
be  before  or  after  the  mortgage,  and  be  inde|)end(>nt  of  it.  so  that  it 
<annot  be  said  that  the  mortgagee  got  any  additional  benefit  from 
the  mortgage  transaction.  Mr.  Farwell  did  not  attem|)t  to  uphold 
this  on  any  rational  principle,  but  relied  on  authority.  Of  course, 
we  must  follow  settled  authorities  whether  we  like  them  or  not;  but 
do  they  sup|)ort  this  proposition?  Jenniiu/s  v.  ]Viird.  3  Vern.  530, 
was  the  first  cuse  relied  upon.  'IMiat  was  a  redemption  suit,  and  the 
-lipulation  w'li'ch  was  in  (piestion  serio\isIy  interferi'd  with  the 
ii'dcmption  of  t'he  mortgaged  j)roj)erty,  and  llw  Master  of  the  Rolls 
(Sir  .1.  rrev(>r)ulecreed  redemption  without  regard  to  that  stipula- 
tion. He  is  rcitorted  to  have  said:  "  A  man  shall  not  have  interest 
for  his  money,  and  a  collateral  advantage  besides  for  the  loan  of  it. 
or  clog  the  redem|)tion  with  any  by-agre»'nu'nt.'*  That  has  Imvu 
understood  as  meaning  exa(ily  what  was  said,  without  regard  to  the 
« ircumstances  of  the  ca.«e.  and  has  found  its  way  into  the  text-book-; 
■^  establishing  that  a  mortgagee  cannot  have  principal,  interest, 
aud  costs,  and  also  some  collateral  advanta^'c     Hut  that  supposed 


486  EQUITY    RELATIONS.  [CIIAP.  II. 

rule  has  been  departed  from  again  and  again.  Take  the  case  of 
West  India  mortgages :  it  has  been  repeatedly  decided  that  the  mort- 
gagee, if  not  in  possession,  may  stipulate  that  he  shall  be  appointed 
consignee.  The  proposition  stated  in  Jennings  v.  Ward,  2  Vern. 
520,  is  too  wide.  If  properly  guarded  it  is  good  law  and  good  sense. 
A  mortgage  is  regarded  as  a  security  for  money,  and  the  mort- 
gagor can  always  redeem  on  payment  of  principal,  interest,  and 
costs ;  and  no  bargain  preventing  such  redemption  is  valid,  nor  will 
unconscionable  bargains  be  enforced.  There  is  no  case  where  col- 
lateral advantages  have  been  disallowed  which  does  not  come  under 
one  of  these  two  heads.  To  say  that  to  require  such  a  covenant  as 
that  now  in  question  is  unconscionable  is  asking  us  to  lay  down  a 
proposition  which  would  shock  any  business  man,  and  we  are  not 
driven  to  it  by  authority.  The  proposition  laid  down  by  Hargreave, 
J.,  in  In  re  Edwards's  Estate,  11  Ir.  Ch.  Eep.  367,  that  where  an 
onerous  contract  entered  into  by  a  mortgagor  with  his  mortgagee 
is  part  of  the  arrangement  for  the  loan,  and  is  actually  inserted  in 
the  mortgage  deed,  it  is  presumed  to  be  made  under  pressure,  and  is 
not  capable  of  being  enforced,  goes  too  far,  though  the  decision  of 
the  learned  judge  was  correct;  for  the  stipulation  with  which  he 
had  to  deal  was  unreasonable,  and  one  which  ought  not  to  be 
enforced.     The  appeal  will  be  dismissed. 

Chitty,  L.  J.  The  mortgage  here  is  a  mortgage  of  a  public 
house  for  a  time  certain  by  publicans  to  a  brewer,  effected  in  the 
usual  way,  and  it  contains  a  covenant  by  the  mortgagors  during  the 
continuance  of  the  security  to  take  all  their  beer  from  the  mortgagee, 
and  a  covenant  by  the  mortgagee  to  supply  it.  It  is  contended  that 
the  covenant  by  the  mortgagors  is  void  in  equity.  The  first  objec- 
tion I  have  to  make  is  that  it  in  no  way  affects  the  equity  of  redemp- 
tion, for  it  is  not  stipulated  that  damages  for  breach  of  the  covenant 
shall  be  covered  by  the  security,  and  redemption  takes  place  quite 
independently  of  the  covenant;  so  this  is  not  a  case  where  the 
right  to  redeem  is  affected.  Equity  has  always  looked  upon  a  mort- 
gage as  only  a  security  for  money,  and  here  the  right  of  the  mort- 
gagors to  redeem  on  payment  of  principal,  interest  and  costs  is 
maintained.  It  has  been  contended  that  the  principle  is  estab- 
lished by  the  authorities  that  a  mortgagee  shall  not  stipulate  for  any 
collateral  advantage  to  himself.  I  think  the  cases  only  establish 
that  the  mortgagee  shall  not  impose  on  the  mortgagor  an  uncon- 
scionable or  oppressive  bargain.  The  present  appears  to  me  to  be  a 
reasonable  trade  bargain  between  two  business  men  who  enter  into  it 
with  their  eyes  open,  and  it  would  ])e  a  fanciful  doctrine  of  equity 
that  would  set  it  aside. 

As  regards  the  authorities,  Jennings  v.  Ward,  2  Vern.  520,  was 
relied  on.    That  was  a  redemption  suit,  and  the  Master  of  the  Eolls 


st;< '•   "1.]  HUiCS    r.     IIiiKDINOTT.  48T 

tlt'iTci'd  rt'dcmptioii  wiilidui  i(Mrar<l  (o  a  certain  a^'rccriK'nt  which 
lie  considered  unconscionable  and  set  aside  as  being  "  unreasonable," 
as  appears  from  the  re<fistrar's  book,  which  we  have  now  in 
Court:  Reg.  Lib.  ITO."),  fol.  ■1!»."').  The  statement  hy  llargreavr.  .F., 
in  ///  /•(•  Edinirds's  Esinlc,  11  Ir.  Ch.  Rep.  'Mu,  that  a  mortgagor  is 
considered  to  be  under  pressure  is  not  a  universal  principle.  The 
lirst  great  dej)artun'  from  any  such  principle  is  found  in  West  India 
mortgages,  where  a  mortgagee  is  allowed  toJ)e  consignee  if  not  in 
possession.  It  wa-^  found  that  the  sup])osed  rule  to  the  contrary, 
founded  on  the  dicta,  not  the  decisions,  of  judges,  would  not  work, 
for  that  mortgagors  could  not  obtain  money  except  on  these 
terms.  Potter  v.  Edwards,  2G  L.  J.  (Ch.)  4G8,  is  a  clear  authority 
the  same  way.  There  it  is  said  that  the  money  was  j)aid  and  partly 
repaid  as  commission;  but  that  is  a  fiction.  The  plain  transaction 
was  that  the  mortgagor  agreed  to  receive  £700  and  give  a  mortgage 
for  £1000.  Mainland  v.  Upjohn,  41  Ch.  D.  Iv'G,  is  another  illustra- 
tion. The  decision  of  Ilargrcave,  J.,  in  In  re  Edwards's  Estate,  11 
Ir.  Ch.  Rep.  3(i7,  was  right,  for  in  that  case  there  was  an  uncon- 
scionable bargain,  and  a  direct  clog  on  the  right  to  redeem.  It  is 
unnecessary  to  say  more :  the  covenant  in  this  case  is  not  avoided  by 
any  such  supposed  rule  of  equity  as  has  been  contended  for. 

CoLLixs,  L.  J.  I  am  of  the  same  o|)inion.  Apart  from 
authority,  no  one  would  say  that  this  stipulation  was  invalid,  for 
it  seems  a  reasonable  and  businesslike  one.  But  it  is  said  that  mort- 
gages are  subject  to  a  long  series  of  decisions,  and  no  doubt  equity 
judges  have  tried  to  lay  down  .some  principle  which  would  explain 
.•satisfactorily  the  decisions  of  their  predecessors  and  account  lor 
their  own,  but  in  so  doing  they  have  sometimes  laid  down  principles 
which,  when  applied  to  other  cases,  are  too  wide.  The  fact  is  that 
those  decisions  were  given  in  particular  hard  cases,  and  judges  have 
afterwards  endeavored,  not  always  successfully,  to  reiluce  them  to  a 
general  rule.  The  only  safe  thing  is  to  see  how  far  the  decisions 
have  gone.  It  is  clear  that  a  mortgage  in  the  view  of  a  Court  of 
Equity  is  simply  a  loan  on  security,  and  nothing  inconsistent  with 
that  can  be  im|)orted  into  the  dee(].  and  ilargrcave,  J.,  in  In  /•»• 
Edwards's  Estate,  11  Ir.  Ch.  Rej).  3tiT,  probably  had  in  his  mind 
the  princij)le  that  provisions  inconsi.stcnt  with  the  nature  of  a 
mortgage  are  illegal.  Hut  the  principle  whicii  he  laid  down,  that  no 
onerous  engagement  of  any  description  can  be  entered  into  by  a 
mortgagor  with  his  mortgagee  on  the  occasion  of  the  mortgage.  wa> 
not  necessary  for  the  decision  of  the  ca.se  before  him.  for  the 
^ti|)ulation  there  was  one  which  interfered  with  the  right  of  redemp- 
tion on  ))ayment  of  j)rincij)al.  interest,  and  costs. 

On  wiiat  jirinciple  can  any  stipulation  in  a  mortgage  deed  which 
does  not  fetter  the  right  of  redemption  he  held  invalid?     I  think 


488  EQUITY    RELATIONS.  [CHAP.  II. 

only  on  the  general  principle  that  effect  will  not  be  given  to  what  is 
unconscientious  and  oppressive.  No  narrower  principle  will  work. 
Here  the  provision  is  reasonable  and  does  not  fetter  the  equity  of 
redemption.  The  wide  proposition  in  Jennings  v.  Ward,  2  Vern. 
520,  was  not  necessary  for  the  decision  in  that  case,  and  there  is 
nothing  in  this  case  to  bring  it  within  that  decision.  The  mere 
fact  that  a  stipulation  for  the  benefit  of  the  mortgagee  is  contained 
in  the  mortgage  deed  does  not  necessarily  make  that  stipulation 
invalid. 


Saxtley  v.  Wilde,  [1899]  2  Ch.  474.— The  plaintiff.  Miss  Kate 
Santley,  being  the  sub-lessee  of  the  Eoyalty  Theatre,  and  having  an 
option  to  acquire  the  reversion  of  the  head-lease  on  paying  £3000 
Avithin  a  limited  time,  borrowed  that  sum  of  the  defendant,  S.  J. 
Wilde,  on  the  terms  of  the  loan  being  repaid  with  six  per  cent,  inter- 
est and  secured  by  a  legal  mortgage,  which  was  also  to  provide  for 
payment  to  said  Wilde  of  one-third  of  the  clear  net  profit  rental  of 
the  theatre.  The  mortgage,  executed  in  pursuance  of  the  agreement, 
was  for  the  whole  of  the  term  acquired  by  the  plaintiff,  less  one  day, 
and  contained  a  covenant  by  her  for  repayment  of  the  £2000  by 
twenty  quarterly  instalments  of  £100  each,  and  also  a  covenant  to 
pay  the  one-third  of  the  profit  rental  during  the  whole  of  the  mort- 
gagor's term,  although  the  £2000  and  interest  should  all  have  been 
paid.  The  property  was  redeemable  only  on  the  payment  of  £2000 
and  interest,  and  all  other  moneys  covenanted  to  be  paid.  Some  of 
the  instalments  being  in  arrears,  defendant  gave  plaintiff  three 
months'  notice  to  pay  off  all  the  principal  moneys  and  interest 
secured  by  the  mortgage.  Plaintiff  paid  the  instalments  in  arrear, 
and  within  the  three  months  tendered  the  balance  of  the  £2000,  with 
interest  to  the  end  of  the  three  months  and  the  costs,  but  Wilde 
refused  to  accept  the  money. 

Plaintiff  then  brought  the  present  action,  claiming  (1)  a  declara- 
tion that  the  mortgage  ought  to  stand  as  a  security  for  the  £2000, 
or  so  much  thereof  as  remained  owing,  with  interest,  and  that  so  far 
as  the  same  deed  provided  for  payment  to  the  defendant  of  a  share 
of  the  rents  and  profits,  or  precluded  the  plaintiff  from  redeeming  on 
payment  of  principal  and  interest,  such  deed  was  invalid  and  not 
binding  on  the  plaintiff;  (2)  redemption  and  reconveyance. 

The  defendant  counter-claimed  for  (1)  a  declaration  that  during 
the  residue  of  the  leasehold  term,  notwithstanding  that  all  the  prin- 
cipal and  interest  had  been  paid,  he  was  entitled  to  be  paid  one- 


.•,M-.    Ill]  SAXTI.KV     V.     WlLDi:.  480 

third  uf  tlio  clear  lu-t  \)rul\[  rt'iital ;  ('!)  an  actouut  of  what  was  due 
II  the  footing  of  tliat  declaration.* 
LiNDLKY,  M.  li.  Tlie  (juestion  raisi-d  on  this  appeal  is  extremely 
important :  I  do  not  profess  to  he  ahle  to  decide  it  on  any  principle 
which  will  he  in  harmony  witii  all  the  cases;  hut  it  appears  to  me 
that  the  true  principle  running  through  them  is  not  very  didicult 
to  discover,  and  I  think  tliat  it  can  he  applitnl  so  as  to  do  justice  in 
this  case  and  in  all  other  cases  on  the  suhject  that  may  arise.  The 
jirincijile  is  this:  a  mortgage  is  a  conveyance  of  land  or  an  assign- 
ment of  chattels  as  a  security  for  the  payment  of  a  debt  or  the 
discharge  of  some  other  obligation  for  which  it  is  given.  This  is 
the  idea  of  a  mortgage:  and  the  security  is  redeemable  on  the  pay- 
ment or  discharge  of  such  debt  or  obligation,  any  provision  to  the 
contrary  notwithstanding.  Tliat,  in  my  opinion,  is  the  law.  Any 
provision  inserted  to  prevent  redemption  on  payment  or  performance 
of  the  debt  or  obligation  for  which  the  security  was  given  is  what  is 
meant  by  a  clog  or  fetter  on  the  equity  of  redemption,  and  is  there- 
fore void.  It  follows  from  this,  that  "once  a  mortgage  always  a 
mortgage;"  but  I  do  not  understand  that  this  principle  involves  the 
further  proposition  that  the  amount  or  nature  of  the  further  debt  or 
ol>ligation  the  ])aymont  or  performance  of  which  is  to  be  secured  is 
a  clog  or  fetter  within  the  rule:  see  1  Powell  on  Mortgages,  Gth 
'  <1.  pp.  IIG  et  seq.:  title,  "How  a  Mortgage  is  considered  in 
llcjuity."  The  right  to  redeem  is  not  a  personal  right,  but  an 
M|uitable  estate  or  interest  in  the  property  mortgaged.  A  "clog" 
r  "  fetter  "  is  something  which  is  inconsistent  with  the  idea  of 
security":  a  clog  or  fetter  is  in  the  nature  of  a  repugnant  con- 
dition. If  I  convey  land  in  fee  subject  to  a  condition  forbidding 
lienation,  that  is  a  rej)ugnant  condition.  If  I  give  a  mortgage  on 
condition  that  I  .-hall  not  redeem,  that  is  a  repugnant  condition. 
The  Courts  of  Equity  have  fought  for  years  to  maintain  the  doctrine 
that  a  security  is  redcemal)lc.  But  when  and  under  what  circum- 
stances? On  the  j)erformance  of  the  obligation  for  which  it  was 
given.  If  the  obligation  is  the  payment  of  a  debt,  the  security  is 
redeenuil)le  on  the  jtayment  of  that  debt.  That,  in  my  opinion,  is  the 
true  principle  applicable  to  the  cases,  and  that  is  what  is  meant  when 
it  is  said  there  must  not  he  any  clog  or  fetter  on  the  equity  of 
redemption.  If  so,  this  mortgage  has  no  clog  or  fetter  at  all.  Of 
"Urse.  the  debt  or  obligation  may  be  imj)eachal)le  for  fraud, 
ppression,  or  over-reaching:  there  the  obligation  is  tainted  to  thai 
•  \tent  and  is  iinaliil.  lint.  |)iilting  .such  cases  out  of  the  question, 
uhen  vou  <:et  a  seeuritv  for  a  debt  or  oblijjation.  that  securitv  can 


'  This  stntonuMit  of  fiu't'<  i-  iil>l>ir\  iuti'd  from  tlip  ii-pdrt  of  tlu'  caHc  in  Xhv 
>urt  liclow:    [ISSO]    1  Cli.  747. 


490  EQUITY    RELATIONS.  [CHAP.  II. 

be  redeemed  the  moment  the  debt  or  obligation  is  paid  or  performed, 
but  on  no  other  terms. ^ 


GLEASON'S  ADMX.  v.  BUKKE. 

Court  of  Chancery  of  New  Jersey,  1869. 

(5  Green,  300.) 

This  cause  was  heard  upon  bill,  answer,  and  proofs. 

The  Chancellor.  The  complainant's  intestate,  in  April,  1862,. 
leased  of  H.  M.  Post  a  lot  of  land  of  twenty-five  feet  by  one  hundred 
feet  at  the  southeast  corner  of  Prospect  and  North  First  Streets,  in 
Jersey  City,  for  the  term  of  fifteen  years,  with  a  provision  for  a 
renewal  for  ten  years  longer.  He  leased  it  for  the  purpose  of  erecting 
upon  it  a  building  for  his  business,  to  front  on  North  First  Street. 
He  applied  to  Burke,  with  whom  he  had  been  in  the  habit  of  deal- 
ing, for  a  loan  of  $1500  for  that  purpose.  Burke  agreed  to  advance 
this  loan  after  he  should  have  expended  $500  on  the  building. 
Gleason  proposed  to  secure  it  by  mortgage,  but  upon  applying  to 
Mr.  Clark,  the  counsel  of  Burke,  to  arrange  the  matter,  he  advised 
that  a  mortgage  should  not  be  taken,  but  that  for  the  $1500  Gleason 
should  assign  the  lease ;  to  this  Gleason  assented,  and  executed  the 
assignment  on  June  1st,  1862,  absolute  on  its  face,  reciting  the 
consideration  of  $1500.  Before  this  assignment  was  made.  Gleason 
had  offered  to  Burke  to  let  him  put  up  a  building  on  twenty-five 
feet  of  the  rear  of  the  lot  without  charge,  and  that  he,  Gleason, 
would  permit  Burke  to  occupy  that  part  during  the  whole  term,  and 
he  would  pay  the  rent,  taxes,  and  assessments  for  and  upon  the 
whole  lot,  so  that  it  should  not  cost  Burke  anything.  He  alleged 
as  the  ground  of  this  offer  that  this  rear  part  was  of  no  value  to 
him,  and  that  such  a  building  would  bring  business  to  him  and  add 
to  the  value  of  his  premises. 

^  "I  take  it  that  it  is  clearly  established  now,  in  the  first  place,  that  there 
is  no  such  principle  as  is  suggested,  namely,  that  a  mortgagee  shall  not 
stipulate  for  any  collateral  advantage  for  himself.  He  may  so  stipulate : 
and,  if  he  does,  he  may  obtain  a  collateral  advantage:  nothing  can  be  said 
against  it,  and  he  can  enforce  it,  always  assuming  that  the  bargain  is  not 
unconscionable  or  oppressive.  In  the  second  place,  I  take  it  also  to  be  clear 
that  there  is  now  no  such  principle  as  is  suggested,  namely,  that  where  a 
collateral  advantage  is  stipulated  for  by  the  mortgagee  as  a  condition  of 
the  loan,  that  advantage  or  contract  is  to  be  presumed  to  have  been  given 
or  made  under  pressure.  There  is  no  such  presumption,  but  each  case  must 
be  decided  according  to  its  own  circumstances.  The  Court  will  look  into 
the  circumstances  of  each  case  and  see  whether  the  bargain  come  to  ia 
unconscionable  or  oppressive." — Per  Komer,  L.  J.,  in  s.  c.  id.  p.  478. 


sKt-.  III.]  oleason's  admx.  r.  lu  i;ki;.  K'l 

At  or  .shortly  aflur  the  a^si^'iiniciit  of  tlir  lease  it  was  agreed  that 
Cileason  shouhl  pay  tlic  $1500  hy  semi-annual  instalments  of  $125, 
until  the  same  and  all  inlerest  on  it  should  he  j)aid :  and  that  upon 
-ueh  payment  Burke  should  reassi;,Mi  to  (Jlcason  the  lot,  except  the 
twenty-five  feet  of  the  rear,  which  he  should  retain  for  the  residue 
of  the  term  and  the  renewal ;  and  it  was  agreed  that  for  the  term 
and  its  renewal  Gleason  should  pay  all  rents,  taxes,  and  assessments 
on  the  whole  lot.  This  agreement  was  made  hy  parol  only,  hut  was 
to  he  reduced  to  writing  and  signed;  it  was  reduced  to  writing  hy 
Mr.  Clark,  but  both  parties  neglected  to  sign  it.  After  the  assign- 
ment of  the  lease  Gleason  finished  ids  house,  and  Burke  advanced 
the  loan  as  needed  for  that  purpo.se.  Burke  built  a  house  on  the 
twenty-five  feet,  on  wliich  he  expended  about  $1800;  it  was  finished 
in  the  fall  of  that  year,  after  (Jleason's  hou.se  was  finished;  both 
were  being  erected  at  the  same  time.  Burke  has  since  received  the 
rents  of  the  rear  building,  amounting  to  about  $1800,  and  Gleason 
and  the  eomi)lainant  have  paid  all  rents,  taxes,  and  assessments  for 
the  lot.  Gleason  died  in  ()ctol)er,  ISi;."),  and  until  his  death  contin- 
ued dealing  with  Burke,  who  sold  him  the  goods  used  in  his  business 
on  credit. 

After  the  complainant  became  administratrix  she  tendered  to 
Burke  the  balance  of  the  loan  and  the  interest  accrued  on  it,  and 
ilemanded  a  reassignment  of  the  lease.  Burke  refused  to  accept  the 
jiaymcnt  or  to  reassign  tiie  lea.se,  unless  he  retained  the  twenty-live 
feet  of  the  rear  of  the  lot  and  complainant  would  agree  to  pay  all 
the  rents,  taxes,  and  assessments  for  the  whole  lot  for  tlie  residue 
of  the  term ;  this  she  refused  to  do. 

Upon  this,  comi)lainant  brought  this  suit,  alleging  that  the 
assignment  of  the  lease  is  a  mortgage  only,  and  that  she  is  entitled 
to  redeem  the  whole  premises,  and  praying  for  a  reconveyance  upon 
paying  the  amount  of  the  loan  still  unpaid,  with  inter(>st,  and 
upon  paying  tlu'  amount  expended  l)y  Burke  for  the  building  on 
the  twenty-five  feet,  above  the  amount  received  by  him  for  rents,  of 
both  which  she  prays  an  account  may  be  taken. 

.The  defendant  contends  that  tliis  was  an  absolute  sale  of  the 
lea.se,  with  an  agreement  to  convey  part  of  the  premises  upon  pay- 
ment of  $1500  and  interest. 

One  may  convey  lands  for  a  certain  price,  and  agree  to  repurcha.sc 
them  at  a  fixed  tinu",  for  a  certain  amount  exceeding  tiie  price 
received  and  the  interest,  without  the  sale  lu-ing  construi'd  a  mort- 
gage or  the  transaction  being  alTccted  with  usury.  But  such  trans- 
actions are  suspicious;  they  are  an  easy  cloak  for  usury,  and  their 
bona  fides  must  be  clear,  and  the  court  must  be  satisfied  that  it  was 
not  intended  to  cover  iisury  or  to  take  away  the  right  of  redemption 
uj»on  what  was,  in  fact,  intended  as  a  mortgage  to  secure  a  loan. 


493  EQUITY    RELATIONS.  [CHAP.  II. 

Courts  of  equity  are  very  jealous  of  every  device  or  contrivance 
intended  to  take  away  the  right  of  redemption  of  what  is  the  security 
for  a  loan.  And  one  proof  that  the  formal  conveyance  was  intended 
as  a  mortgage  only  is  that  the  transaction  commenced  by  negotia- 
tions for  a  loan  and  conveying  the  land  as  security  for  the  loan.  In 
this  case  the  original  agreement  was  for  a  loan,  and  the  property 
was  offered  by  way  of  mortgage,  and  the  form  only  was  changed  at 
the  suggestion  of  counsel.  The  transaction  must  be  considered  as 
a  mortgage  only,  and  not  as  a  sale  and  agreement  to  reconvey  part 
on  payment  of  a  fixed  sum.  Another  indication  of  the  transaction 
being  a  mortgage  existing  in  this  case  is  that  Gleason  agreed  to 
pay  back  the  principal  and  interest  at  fixed  times. 

In  a  mortgage  any  agreement  to  pay  more  than  the  sum  loaned 
and  lawful  interest  is  usury;  so  also  must  an  agreement  to  allow 
the  lender  to  retain  part  of  the  land  mortgaged  after  being  repaid 
the  loan  in  full  be  treated  as  usurious ;  and  neither  will  be  enforced 
by  courts  of  law  or  equity.  If  this  was  the  whole  of  this  transaction, 
the  complainant  would  be  entitled  to  the  full  relief  sought. 

But  a  borrower  and  lender  may  lawfully  make  other  bargains, 
even  relating  to  the  mortgaged  property ;  and  if  they  are  not  in 
consideration  of  the  loan  or  the  condition  of  its  being  made,  and 
are  otherwise  lawful,  they  niay  be  enforced. 

If  Gleason  had  not  borrowed  money  of  Burke,  he  might  lawfully 
have  given  him  without  consideration  the  right  to  occupy  part  of 
his  lot  for  the  term  on  the  conditions  here  agreed  upon;  and  if 
Burke  had  erected  the  building  in  accordance  with  the  gift,  the  gift 
would  be  valid,  and  would  be  enforced  in  equity.  In  this  case  it 
needed  no  agreement  in  writing,  the  legal  title  to  the  land  for  the 
term  was  in  Burke  by  the  assignment ;  and  effect  can  be  given  to  it 
Ijy  limiting  the  quantity  of  land  to  be  reconveyed  in  ordering  re- 
demption according  to  the  actual  agreement  between  the  parties. 
It  is  certainly  a  case  in  which  the  gift  should  be  shown  by  clear 
proof.  But  it  is  sustained  by  the  testimony  of  Scott  and  Burke,  and 
the  subsequent  agreement  in  conformity  with  it  is  proved  by  Clark 
and  by  the  fact  that  Gleason,  in  his  life,  permitted  Burke  to  buiW, 
to  rent  the  building,  and  receive  all  the  rents,  while  he  paid  all  the 
ground  rent  and  the  taxes  and  assessments  for  the  whole  lot.  These 
facts  and  the  testimony  of  Clark  are  consistent  with  the  fact  that 
the  gift  of  the  twenty-five  feet  was  a  usurious  premium  for  the 
loan.  But  the  evidence  of  Burke  and  Scott  shows  that  the  gift  was 
made  for  other  reasons,  and  was  not  connected  with  the  loan  or 
a  condition  of  its  being  made.  There  is  no  evidence  and  no  circum- 
stance to  contradict  or  impeach  these  witnesses. 

The  complainant  is  entitled  to  a  reconveyance  of  the  seventy-five 
feet  of  the  north  part  of  the  1(H  upon  being  paid  the  balance  of  the 


■EC-  III.]  TiiOLEN  r.  DiiFV.  49:3 

$1500  unpaid  with  intLTft^l,  and  ujion  (.'xecutiug  an  iigrccnitiil 
making  that  part  liahk'  for  the  ground  rent,  taxes,  and  assossmeuls 
on  tiu>  whole  lot,  but  not  for  taxes  and  assessments  on  the  rear 
building. 


TiiOLEN  V.  DiFFY,  7  Kans.  lO.")  (1S71).  Brkwefj.  J.  The 
stipulation  in  tiie  mortgage  in  regard  to  attorney's  fees  is  in  the^^! 
words:  "  And  the  said  parties  of  the  first  i)art  herein'  agree  that  ten 
per  cent,  upon  the  amount  due  on  said  note  at  time  of  any  judgment 
thereon  shall  be  added  to  the  same  and  judgment  rendered  therefor 
for  attorney's  fees  for  collection  and  services."  The  learned  judge 
who  tried  the  case  cliarged  the  jury  that  this  stipulation  was  valid, 
and  that  they  might  add  to  the  amount  found  due  uj)on  the  note 
ten  per  cent,  thereof,  and  bring  in  a  verdict  for  such  sum.  Tin- 
verdict  they  returned  really  included  only  between  six  and  seven 
j)er  cent,  for  attorney's  fees.  Stipulations  like  this  have  been  sus- 
tained bv  the  decisions  of  manv  courts,  and  properly  so  (7  Watts. 
126;  SlPenn.  St.  78;  3  Wis.  454;  10  Wis.  41  ;  12  Wis.  170,  4r)-.> ; 
15  Wis.  522;  16  Wis.  672;  8  Blackf.  140;  1  Xev.  Kil ;  2  Nev.  190; 
21  La.  An.  607). 

It  does  not  violate  the  usury  law,  because  it  is  no  stijjulation  to 
pay  for  the  use  of  the  money  borrowed,  but  only  an  agreement  to 
compensate  the  mortgagee  for  the  expenses  of  compelling  the  mort- 
gagor to  perform  his  contract.  If  the  mortgagor  pay  the  money 
borrowed  at  the  time  it  becomes  due,  as  he  has  promised  to  dtt,  ho 
incurs  no  loss  by  reason  of  this  clause  in  the  mortgage,  lie  is 
wholly  released  by  the  payment  of  the  money  borrowed  and  the 
stipulated  interest.  Where  by  the  term  of  a  contract  a  party  can 
discharge  himself  by  paying  the  real  amount  due,  the  tran>action 
is  not  usurious  (Bae.  Abr.,  title.  Usury,  6;  HilliiiiisU'ii  v.  Dftm.  11 
Ind.  331;  Lawrence  v.  Cowhe,  13  111.  577;  Guuld  v.  The  Jilshui> 
Hill  Co.,  35  III.  325).  Nor  is  it  against  i)ublic  policy  that  the 
expense  of  a  litigation  should  be  borne  by  tiie  party  whose  bn-acii 
of  his  contract  neeessitates  such  litigation.  On  the  contrary,  it 
accords  fully  with  the  soundest  principles.  Our  statutes,  as  well 
as  those  of  nearly,  if  not  (piite,  all  of  the  States,  i)rovide  that  the 
costs — using  the  term  in  tiie  limited  sense  as  embracing  the  anjounts 
due  the  sheritf,  the  clerk,  and  oilier  odieers  of  the  court,  for  their 
services  in  the  case — shall  be  paid  by  the  losing  j)arty.  Tlu'  theory  is 
that  the  determination  of  the  suit  has  shown  that  his  wrong  i-au.sed 
the  litigation,  and,  therefore,  he  should  bear  the  expen.><e.  .\n<l  in 
many  Stales  the  court  is  authorized  to  award  to  the  successful  party, 
in  addition  to  the  amount  found  due  ami  the  lourt  expeiiM-. 
lertaiu  sums  for  liis  attorney's  costs.     Our  statutes  do  not  provide 


494  EQUITY    RELATIOXS.  [CHAP.  II. 

for  this  additional  allowance.  But  this  omission  to  provide  for  such 
compensation  in  all  cases  is  no  argument  against  the  right  of  the 
parties  to  contract  for  it  in  some.^ 


FooTE  V.  Sprague,  13  Ivans.  155  (1874).  Valentine,  J.  The 
petition  recites  the  conditions  of  the  mortgage,  which  show  that  the 
mortgagors  agreed  to  pay  not  only  the  principal  of  the  deht  secured 
by  the  mortgage  and  interest  thereon,  but  also,  in  case  of  foreclosure 
of  the  mortgage,  costs  "  and  fifty  dollars  as  liquidated  damages 
for  the  foreclosure."  The  petition  then  prays  for  a  judgment  that 
the  mortgaged  property  be  "ordered  to  be  sold  and  the  proceeds 
applied  to  the  payment  of  said  debt,  costs,  attorney  fees,  etc."  The 
court  rendered  a  judgment  for  fifty  dollars  as  attorney  fees  for  the 
foreclosure  of  the  mortgage  in  addition  to  the  debt,  interest,  and 
costs.  This  the  plaintiffs  in  error  claim  was  erroneous.  Upon  this 
question  we  are  inclined  to  think  the  plaintiffs  in  error  are  correct. 
The  case  seems  to  fall  within  the  decision  made  in  the  case  of  Kurtz 
V.  Sponahle,  G  Kas.  395.  The  stipulation  in  the  mortgage  in  this 
case,  as  it  was  in  that,  is  for  a  certain  sum  to  be  paid  by  the  debtor 
as  liquidated  damages  over  and  above  the  debt  and  interest  and  all 
legitimate  costs.  Now,  what  was  the  term  "  liquidated  damages" 
in  this  mortgage  designed  to  cover?  If  it  was  designed  to  cover 
attorney  fees,  why  did  not  the  parties  say  so  in  the  mortgage?  If 
it  was  designed  to  cover  any  legitimate  charge  or  expense,  why  did 
they  not  say  so?  Why  did  not  the  parties  state  precisely  and 
definitely  just  what  it  was  designed  to  cover — just  what  the  damages 
Avere  intended  to  be  for.  so  that  the  courts  could  see  whether  the 
damages  were  such  as  could  be  allowed  by  law  or  not  ?  If  the  dam- 
ages were  for  usurious  interest,  then,  of  course,  they  could  not  be 
allowed.  And  would  it  be  proper  to  allow  an  issue  to  be  framed  and 
a  trial  had  to  determine  whether  these  "  liquidated  damages"  were 

'  This  represents  the  prevailing  view  in  the  United  States.  Pierce  v. 
Kneeland,  1(5  Wis.  072   (1863)  ;  Weatherby  v.  8mith,  30  Iowa,  131    (1870). 

"  In  the  case  now  before  us  it  is  agreed  in  express  terms  by  the  mortgagor, 
in  case  of  default  in  payment,  that  the  attorney's  fee  shall  be  paid  as  a  part 
of  the  costs  of  collecting  the  sum  of  money  secured  by  the  mortgage.  The 
agreement  to  pay  such  fees  is  a  part  of  the  security  itself,  and  no  reason 
is  perceived  why  the  costs  incident  to  the  collection  of  the  sum  of  money 
secured  by  the  mortgage  should  not  be  made  a  part  of  the  judgment  or 
decree  in  case  the  mortgage  had  to  be  foreclosed." — Per  Scott,  J.,  in  Clawson 
V.  Munson,  5  111.  394  (1870).  And  see  Barton  v.  Farmers'  National  Bank, 
122  111.  352   (1887). 

In  a  few  States,  however,  such  stipulations  are  regarded  as  usurious  and 
oppressive.  Thomasson  v.  Tovnscnd,  10  Ilush.  (Ky.)  114  (1873);  Myer  \. 
Uart,^  Mich.  517  (1879)  ;  Kittcrmastcr  v.  Brossard,  105  Mich.  219  (1895). 


*^^'"-    '"I  DAI.V     r.     MAIII-AM).  I!*.") 

intended  to  cover  soinc  Ic^itiiuatc  cliar^'c  or  expense  or  to  covrr 
usurious  interest  ?  'I'lir  two  eases  of  Kurtz  v.  Hpunnble,  supra,  and 
Thulcn  V.  Duffy,  ",  Kas.  lO,').  show  nearly  what  the  opinion  of  the 
<'<)urt  is  upon  this  (juestion.  If  the  sti|)whition  in  tlic  niort;;aj,M'  is 
for  thi'  payment  of  somethiii";  which  the  court  can  see  is  Icfjai  and 
a  valid  and  Ic'^itiniate  charj^e  or  expense,  then  the  court  will  upholil 
the  same;  but  if  the  stij)ulation  is  so  indefinite  that  the  court  cannot 
tell  whether  the  j>aynient  was  intended  to  he  for  something;  lej^al  or 
ille^'al,  then  tiie  court  will  not  upJKtid  the  stipulation.  We  think 
the  stijjulation  is  void,  and,  therefore,  the  niortfjapje  is  the  same  as 
tlKnigh  there  were  no  such  stipulation  contained  in  it;  and,  there- 
fore, the  judfjnicnt  for  fifty  dollars  as  attorney  fees  is  erroneous 
(liioLcr  V.  Juhnni/cake,  9  Kas.  'M\7). 


D.\LV  V.   MAl'I'L.WD. 

SurHK.MK  C'orirr  or  Pknnsyi.vama.  ISTO. 

(88  Pa.  .s7.  ;]84.) 

January  1(5,  18T0.  Before  SiiAitswooi),  C.  J.,  MEijcrR.  Gordox, 
Paxson,  Woodwaku,  Thlnkey,  and  Sti:kki:tt,  J.T. 

Hrn)r  to  the  Court  of  Common  Pleas,  No.  'i,  of  Philadelpliia 
I'ounty.    Of  July  Term,  1878,  Xo.  '2. 

Scire  facias  sur  nu)rtji:a<je  hy  Henry  Mailland  a^^ainst  Henry  M. 
Daly  and  others,  executors  of  John  Daly,  deceased. 

The  mort^^age  was  for  $14,000.  dated  May  Gth,  1871,  for  five 
years,  between  John  Daly  and  Henry  Maitland.  John  Daly  having 
<lied  before  the  commencement  of  the  suit,  the  writ  was  issut'd 
a<,'ainst  the  executors  and  trustees  undt-r  his  will  after  the  nuiturity 
of  the  mortf^age. 

The  pleas  were  nil  debet  and  payment. 

The  mortgage  contained  the  following  clause,  "  and  provided  also 
tliat  it  shall  and  may  he  lawful  t(»  and  for  the  .siid  Henry  Maitland, 
his  heirs,  executors,  administrators,  and  assigns,  when  and  as  soon 
as  the  principal  sum  hereby  secured  shall  become  due  ...  to  sue 
out  forthwith  a  scire  facias  u|)on  this  indentun*  of  mi>rtgage  and 
to  proceed  therein  to  judgment  and  execution  f(»r  the  recovery  of  the 
whole  of  the  said  principal  debt  and  all  interest  and  taxes  due 
thereon,  together  with  an  attorney's  commi.ssiou  for  collection,  viz. : 
live  per  cent.,  besides  costs  of  suit,  without  any  stay,  any  law  or 
Usage  to  the  contrary  notwithstanding." 

On  the  trial,  after  tlu-  olTcr  of  the  mortgage  in  cvideme,  tlu>  de- 


496  EQUITY    RELATIONS.  [CH^.  II. 

fendants  admitted  plaintiff's  claim  for  the  2>rincipal  of  the  mortgage 
and  interest,  bnt  resisted  his  claim  for  five  per  cent,  commission  on 
the  principal  of  the  mortgage. 

The  defendants  submitted  the  following  points,  which  the  courts 
Mitchell,  J.,  refused: 

1.  That  the  plaintiff  is  entitled  to  recover  upon  the  mortgage 
above  the  amount  of  the  mortgage  and  interest,  a  reasonable  attorney 
fee  for  the  collection  of  the  mortgage,  and  what  is  a  reasonable  fee 
must  be  proved  by  plaintiff  to  recover  it. 

2.  That  the  plaintiff  is  entitled  to  recover  under  the  mortgage 
sued  on  only  a  reasonable  attorney  fee  in  addition  to  the  amount 
of  the  mortgage  and  interest. 

The  court  charged  as  follows : 

"  The  plaintiff  is  entitled  to  recover  the  full  amount  of  his  debt 
covenanted  in  the  mortgage  to  be  paid,  including  the  five  per  cent, 
upon  the  amount  of  the  mortgage  debt  for  collection,  that  being 
expressly  stipulated  for  in  the  mortgage  to  be  paid  on  a  contingency, 
which  is  admitted  to  have  happened." 

The  verdict  was  for  $14,862.40,  which  included  interest  and  the 
five  per  cent,  commission.  After  judgment  the  defendants  took  this 
writ  and  assigned  for  error  the  refusal  of  the  foregoing  points  and 
the  portion  of  the  charge  noted. 

Chief  Justice  Sharswood  delivered  the  opinion  of  the  court 
March  17th,  1879. 

In  Huling  v.  Drexel,  7  Watts,  126,  it  was  decided  by  this  court 
that  a  stipulation  in  a  mortgage  that,  in  the  event  of  the  necessity 
of  proceeding  to  recover  the  mortgage  by  suit,  the  mortgagee  shall 
be  entitled,  in  addition  to  the  debt  and  interest,  to  damages  for  cost 
and  expenses  incident  thereto,  was  not  usurious,  and  might  be 
enforced  in  the  scire  facias.  In  consequence  of  this  decision,  it  has 
become  common  to  insert  a  provision  not  only  in  mortgages,  but 
notes  and  other  instruments  for  the  payment  of  money,  that  the 
creditor,  in  the  event  of  being  obliged  to  resort  to  a  suit,  shall 
recover  a  certain  percentage  as  commissions  to  the  attorney  who  is 
retained  by  him  to  collect  the  debt.  This  commission,  it  has  been 
held,  does  not  belong  to  the  attorney,  but  to  the  creditor.  It  can- 
not be  collected  as  costs,  but  must  be  included  in  the  judgment 
{Mahoning  County  Bank's  Appeal,  8  Casey,  158;  McAllister's  Ap- 
peal, 9  P.  F.  Smith,  204;  Faulhner  v.  Wilson.  3  W.  N.  C.  339; 
Schmidt  £•  Friday's  Appeal,  1  Xorris,  524).  In  Robinson  v.  Loomis, 
1  P.  F.  Smith,  78,  it  was  ruled  that  such  commission  was  not  a 
penalty,  but  an  agreed  compensation  to  the  mortgagee  for  expenses 
incurred  by  the  default  of  the  mortgagor. 

It  is  undoubtedly  true  that  the  parties  to  a  contract  may  lawfully 
agree  that  the  damages  in  case  of  a  breach  shall  be  liquidated  at 
a  certain  amount.    Equity  will  not  relieve  against  such  a  contract 


•'*'^^-   '"J  l)\\.\    (.    M  AH  LAND.  4!»i 

fairly  cntorrd  into,  unless  it  is  (.'vidi-iitly  a  penally.  This  princijde 
of  liquidated  damages  is  not  aj)plicablc,  however,  to  a  contract  (or 
the  loan  of  money — at  least  sueh  stipulation  is  subject  to  the  control 
of  courts  of  equity.  As  in  the  days  of  Solomon,  "  the  borrower  !.■< 
servant  to  the  lender,"  and  courts  of  ecpiity  from  the  earliest  period 
have  assumed  the  jurisdiction  of  relieving  the  borrower  from  un- 
reasonable and  oppressive  stipulations,  exacted  from  his  necessities, 
altogether  apart  from  the  statutes  against  usury.  Especially  has 
this  always  been  the  case  as  to  mortgages.  Agreements  embarrass- 
ing or  restraining  the  ecjuity  of  redemption  have  invariably  been 
set  aside.  The  stipulated  commission  for  the  attorney  may  be  so 
far  beyond  the  ordinary  rate  charged  for  such  services  as  to  require 
imperatively  the  interj)osition  of  the  equitable  j)()wers  of  the  court. 
Equity  has  always  been  a  part  of  the  law  of  Pennsylvania.  In  tlie 
administration  of  equitable  principles  it  is  the  court  and  not  the 
jury  who  exercise  the  functions  of  the  ciiancellor,  even  where  the 
action  is  in  the  common-law  form.  The  jury,  like  the  same  tribunal 
in  an  issue  directed  by  the  chancellor,  decide  dis|)uted  facts;  but 
it  is  the  court  that  must  be  .satisfied  and  apply  the  equity  on  the 
facts  found  or  undisputed.  If  they  think  an  equitable  title  to  relief 
not  made  out  by  the  proofs,  it  is  their  duty  so  to  direct  the  jury,  and 
contra  if  they  think  the  ecjuity  has  been  established.  These  rule- 
are  so  familiar  and  well  settled  that  it  would  be  a  work  of  sujwrero- 
gation  to  cite  the  numerous  cases  which  su))port  them. 

We  think  these  })rinciples  api)ly  to  the  c|uestions  raised  upon  {\u< 
record.  The  lender  of  money  on  any  species  of  security  cannot  exact 
an  unreasonable  stijiulation  in  the  shape  of  an  agreed  licpiidation 
of  damages.  Equity  interposes  her  shield  to  protect  the  borrower. 
The  debtor  in  ca.ses  of  this  kind  will  readily  yield  to  the  demaml  of 
the  creditor,  as  he  would  be  apt  to  regard  collection  by  suit  as  a  remote 
and  improltal)le  contingency.  Even  at  law  what  is  reasonable  is 
often,  indeed,  a  (piestion  of  fact,  but  in  many  cases  it  is  a  pure 
question  of  law.  Thus,  notice  of  the  non-payment  of  a  promissory 
note,  though  it  was  at  first  submitted  to  the  jury  to  decide  whether 
it  was  within  reasonable  time,  is  now  uiKpiestionaiily  the  exclusive 
province  of  the  court ;  so  it  is  now  held  that  after  a  lapse  of  seven 
years  an  abandonment  of  a  title  by  settlement  is  a  conclusive  pre- 
sumption of  law.  No  court  has  ever  thought  of  sending  an  issue 
to  a  jury  to  determine  wiiat  is  reasonable  compensation  to  trustees. 
They  would  be  a  tribunal  entirely  unsafe  to  intrust  with  >\u\\  a 
question.  'I'hese  decisions  have  been  reached  by  the  necessity  of 
certainly  in  the  rules  in  such  cases.  Many  other  illustration-;  could 
be  given.  It  is  important,  unless  we  are  pre|)arcd  to  say  that  the 
lender  may  stipulate  for  any  amount  as  i-ommissions  for  the  colh>c- 
tioii  of  his  del»t,  that  there  should  i)e  some  more  certain  riile  than 
could  be  reached  by  submitting  every  case  to  a  jury.      It  would 


498  EQUITY    RELATIONS.  [CHAP.  n. 

practically  in  a  great  number  of  cases  have  the  effect  of  destroying 
the  stipulation  altogether.  If  the  question  must  in  every  case  be 
referred  to  a  jury,  the  creditor  will  abandon  the  claim  sooner  than 
encounter  the  delay  and  the  risk  of  a  very  small  sum  being  allowed. 
The  court,  from  practical  knowledge  of  professional  work,  are  able 
to  say  in  every  particular  case  what  ought  to  be  the  compensation 
or  rate  of  commissions  for  collecting  a  debt  by  suit.  Whatever  is 
stipulated  beyond  a  reasonable  rate  should  be  relieved  against  upon 
equitable  principles.  Certainly,  no  certain  commission  can  be  deter- 
mined upon  to  be  applied  to  all  cases.  As  responsibility,  as  well  as 
labor  and  skill,  is  involved,  in  reason  and  the  usage  of  the  profession 
h  depends  upon  the  amount  collected,  but  not  absolutely  so.  If 
there  should  be  no  defence  to  the  mortgage  or  other  instrument  of 
writing  for  the  payment  of  money,  the  court  in  giving  jvidgment  can 
decide  whether  the  stipulated  rate  is  too  large,  and  enter  judgment 
for  what  is  right.  Should,  however,  a  defence  be  set  up  in  whole  or 
in  part,  and  the  case  necessarily  go  to  a  jury,  it  would  be  the  prov- 
ince of  the  court  to  instruct  the  jury  what,  under  all  the  circum- 
stances, should  be  allowed,  of  course  not  exceeding  the  agreed  rate. 

It  does  not  appear  by  the  paper-books  that  there  was  in  this  case 
any  rule  for  judgment  for  want  of  an  affidavit  of  defence,  though 
it  does  appear  that  there  was  no  other  defence  than  the  amount  of 
the  collection  fee.  Had  there  been  such  a  rule,  the  court  should 
have  decided  the  question,  and  not  have  sent  the  case  to  the  jury. 
We  think  the  learned  judge  below  was  right  in  refusing  to  leave  it 
to  the  jury  to  determine  the  rate  of  commission,  but  he  was  wrong 
in  instructing  them  to  find  the  full  amount  agreed  upon.  Five  per 
cent,  upon  $14,000,  in  other  words,  $700,  was  far  beyond  what  was 
reasonable,  even  in  view  of  the  fact  that  the  defendant  below  had 
interposed  a  defence  against  the  commission,  and  that  the  case 
might  be  carried  by  writ  of  error  to  this  court.  We  think  even 
under  these  circumstances  two  per  cent,  would  have  been  an  ample 
and  liberal  allowance,  and  the  jury  should  have  been  so  instructed. 
In  general,  this  court  will  not  review  the  exercise  of  a  sound  dis- 
cretion by  an  inferior  court  upon  such  a  question,  and  the  presump- 
tion will  always  be  in  favor  of  their  decision  unless  it  is  plainly 
excessive,  or,  as  appears  to  have  been  the  case  here,  founded  on  the 
mistaken  idea  that  they  had  no  equitable  power  to  interpose  and 
moderate  the  agreed  amount. 

Judgment  reversed,  and  venire  facias  de  novo  aivarded.^ 

Mercur,  J.,  dissented. 


Vilas  v.  McBride,  63  Hun   (N.  Y.)   324  (1891).     Learned, 

^Wilson  V.   Oft,  173   Pa.   St.  253    (1896),  accord.     Clawson  v.   Munson, 
5o  111.  394  (1870),  contra. 


SEC.   111.]  VILAS    V.    MlUKlUi:.  4'jJ 


r.  J.  This  i>  an  npponl  from  u  decision  in  an  action  of  foreclosure. 
Two  questions  were  sultinitted  to  the  jury:  tlie  first,  whether  the 
mortgage  was  usurious;  the  seeond,  wiiether  David  Mcliride, 
grantee,  assumed  payment  of  tlie  mortgage  as  part  of  the  considera- 
tion. Tlie  jury  found  tlie  first  in  the  allirmative.  the  .second  in  the 
negative.  The  K-anu'd  justice  a(h)pted  the>e  liiidings  as  correct,  and 
<leiiiled  in  favor  of  thi'  det'eiKhiiits.  It  set'ius  hardly  necessary  to  add 
anything  to  the  careful  opinion  written  hy  liini.  But  the  amount 
involved  is  considerable,  and  the  points  in  the  ease  have  been 
strongly  j)resented  on  both  sidis.  We  will,  therefore,  state  our 
views. 

The  bond  and  mortgage  in  (juestion  were  executed  Xovember  9, 
18GT,  by  Hiram  D.  Witherill  to  Samuel  F.  Vilas,  now  deceased,  for 
$8000,  payable  in  instalments,  the  last  in  1871,  with  interest  at 
seven  per  cent.  The  property  mortgaged  was  the  Witherill  Hotel. 
The  testimony  of  Mr.  Wever  is  that  when  Witherill  applied  to 
Vilas  for  the  loan  Vilas  objected  on  the  ground  that  money  was 
worth  more  than  seven  per  cent.,  and  that  h»  could  not  make  the 
loan  unless  he  had  more  than  the  legal  rate;  that  they  then  agreed 
that  the  manure  from  the  hou.<e  should  i)e  called  worth  $100  pvr 
year;  and  that  so  long  as  Vilas  carried  the  mortgage  he  sliouhl  have 
the  manure  from  the  house  as  extra  interest.  The  hotel  was  opened 
in  18C)8.  It  was  proved  that  Vilas  did  have  the  manure  year  after 
year,  and  that  it  was,  in  fact,  worth  $1()0  jkt  year.  In  1881,  one 
Velsey  kept  the  house,  and  A'ilas  claimed  the  manure  as  his  right, 
said  he  had  it  all  along;  but  Velsey  refused  to  let  him  have  it  unless 
he  paid  fifty  dollars  per  year,  which  he  did  for  one  year. 

The  plaint ilTs  urg(>  that  as  the  house  was  not  then  finished  and 
the  manure  would  not  be  in  existence  until  the  lioust"  was  tinisheil, 
and  as  Vilas  was  to  have  it  only  as  long  as  he  carried  the  mortgage, 
the  contract  was  not  usurious.  The  proof,  however,  establishes  that 
this  was  intended  as  an  additional  compensation  for  the  use  of  the 
money,  and  it  was  actually  received  for  many  years.  Where  a  con- 
tingent advantage  is  reserved  to  tlu>  lender  without  putting  capital 
or  interest  in  any  kind  of  risk,  the  contract  must  be  usurious 
(liarnard  v.  Yomuj.  17  Ves.  41;  ClcvvUiml  v.  Lodcr,  7  Paige,  'uu  ; 
/v'(/,s/  Jiiicr  lidnh-  V.  IIoi/l.  32  N.  V.  110;  Hriilnilwinur  v.  Mnt/rr. 
\'2  X.  Y.  Supr.  r)Or)).  There  seems  to  be  no  room  to  doubt  here 
that  the  agreement  was  that  the  lender  should,  at  the  least,  have 
the  probability  of  getting  an  additional  advantage,  and  that  this 
agreement  was  made  in  order  that  he  might  have  more  than  legal 
rate.     We  think  the  vt'rdict   and  the  decision  on  this  j>oint   were 

edirect.' 

'  .\fl'innf(l  by  tlic  Coint  of  .\|iiu<;iIh  on  at.ovi-  .i|iiiiion,  Nov.  CO.  1S92  (KUJ 
N.  Y.  034 ) . 


500 


EQUITY   RELATIONS. 


[CHAP.  11, 


CHAPTEE    II.   (Continued). 


Sec.  IV.    Tacking  Collateral  Claims. 


BAXTER  V.  MANNING. 


High  Court  of  Chancery,  1684. 


(1  Vern.  244.) 

The  plaintiff  makes  a  mortgage  of  his  estate  to  the  defendant,  and 
afterwards  the  mortgagee  advances  and  lends  more  money  unto  the 
plaintiff,  the  mortgagor,  on  his  bond.  The  plaintiff  brings  his  bill 
to  redeem.  The  defendant  insists  to  have  his  bond  debt  as  well  as 
the  mortgage-money  paid  him. 

Per  Curiam.*  Although  there  is  no  special  agreement  proved 
in  this  case,  that  the  land  should  stand  as  a  security  for  the  bond 
debt,  yet  the  mortgagor  shall  not  redeem  without  paying  both.' 

Challis  v.  Casborn,  Finch,  Pre.  Ch.  407  (1715).  Before  Lori> 
Cow^PER,  L.C.  In  this  case  it  was  said  by  Mr.  Vernon,  and  agreed 
to  by  the  court,  that  if  a  man  has  a  debt  owing  to  him  by  mortgage 
and  another  on  bond  from  the  same  person,  that  he  cannot  tack 
them  together  against  the  mortgagor,  but  that  he  shall  be  let  into 
a  redemption  on  payment  of  the  mortgage  money  only;  but  the 
heir  in  such  case  shall  not  be  let  into  a  redemption  without  payment 
of  both,  because  the  land  in  his  hands  is  chargeable  with  the  bond, 
even  at  law;  and  now,  since  the  statute  against  fraudulent  devises, 
the  devisee  of  the  equity  of  redemption  is  in  the  same  case,  and 
cannot  redeem  without  payment  of  both,  because  the  statute  make- 
such  devise  void,  as  against  creditors,  and  then  the  devisee  stand- 
in  the  same  place  as  the  heir  must  have  done  if  no  devise  had  been 
made;  but  before  that  statute  such  devisee  would  not  be  liable  to 
the  bond  debt  any  more  than  the  mortgagor  himself. 

'  Sir  Francis  North,  Lord  Keeper. 

'Reg.  Lib.  1683.  A.  fol.  730.  It  was  referred  to  the  Master  to  enquire 
whether  the  debts  secured  in  this  ease  by  bond  were  separate  or  included 
in  the  mortgage,  and  in  case  they  should  prove  distinct  debts,  then  the 
decree  to  be  as  above,  and  so  made  31st  January  subsequent.  Reg.  Lib. 
]r,84.  A.  fol.  252. 


*■=''■  '^1  COLEMAX    V.    WINCH.  601 


COLEMAN  V.  WJXCII. 

High  Court  of  Chancery,  1721. 

(1  /'.  Wms.  775.) 

A.,  seised  in  fee  of  lands,  makes  a  mortgage  to  B.  for  £100  and 
afterwards  borrows  £100  more  of  13.  upon  bond,  and  dies;  the  heir 
at  law  conveys  the  inheritance  and  equity  of  redemption  of  the 
jiremises  to  trustees  in  trust  for  payment  of  all  the  bond  and  simplc- 
luutract  debts  of  his  father  equally;  after  which  the  trustees  bring 
tlu'ir  bill  to  redeem  B.,  who  insists  on  being  paid  his  debt  by  bond 
as  well  as  that  by  mortgage;  and  for  the  mortgagee  it  was  objected, 

First,  that  as  he  had  the  estate  at  law  absolutely,  and  the  trustees 
eould  not  come  at  it  without  the  interposition  of  e(|uitv,  it  seemed 
not  agreeable  to  reason  that  he  should  be  hindered  by  this  court 
from  receiving  what  was  due  to  him  by  bond  as  well  as  by  mort- 
gage, the  former  being  as  just  a  debt  and  as  much  due  in  conscience 
as  the  latter. 

Secondly,  that  if  the  heir  had  brought  a  bill  to  redeem  the  mort- 
gage, it  was  plain  he  must  have  j)aid  as  well  the  bond  debt  as  that 
by  mortgage;  and  if  the  heir  must  have  paid  it,  why  should  any  one 
claiming  under  him  be  in  a  better  condition  than  he  himself? 

Lord  Chancellor  [Macclesfield].  The  bond  of  the  ancestor, 
wherein  the  heir  is  i)ound,  becomes,  upon  the  ancestor's  death,  the 
heir's  own  debt,  for  which  he  is  suable  in  the  debet  and  dclinet; 
and,  therefore,  if  he  comes  to  redeem  the  mortgage  made  by  his 
ancestor,  he  nmst  pay  the  debt  by  bond  as  well  as  that  bv  mortgage ; 
but.  though  this  be  the  debt  of  the  heir,  it  cannot  be  said  to  be  due 
from  the  heir's  assignee,  the  bond  being  no  lien  upon  the  land: 
which  appears  most  plainly,  in  that  it  was  no  lien  on  the  land,  even 
against  the  mortgagor  himself,  who  happened  to  be  indebted  to 
the  same  person  by  mortgage  aiul  by  bond.  Suppose  one  be  indebted 
to  A.  by  mortgage  of  a  term  for  years,  and  also  indebted  to  him 
by  bond;  if,  on  the  death  of  the  mortgagor,  his  e.vecutor  brings 
a  bill  to  redeem  the  mortgage,  he  must  pay  both;  but  if  the  executor 
assigns  over  the  ecpiity  of  redemption  of  the  mortgaged  term,  and 
the  assignee  of  the  executor  brings  a  bill  to  redeem,  he  shall  only 
!'ay  the  mortgage  money.  So  if  the  testator,  being  possessed  of 
.  term,  mortgages  it  to  A.,  and  becomes  al.so  indebted  to  A.  by 
^mple  contract  and  dies,  his  executor,  bringing  a  bill  to  redetMU. 
-hall  pay  both  the  mortgage  and  the  debt  by  simple  contract,  because 
he   very   equity   of   retlemption    is   assets   to   pay   simple-contract 


503  EQUITY  RELATIONS.  [CHAP.  II. 

debts;  but  if  any  creditor  of  the  testator  brings  a  bill  to  redeem 
this  mortgage,  he  shall  pay  only  the  mortgage. 

Lord  Chancellor  farther  said  that  the  law  of  England  in  suits 
against  heirs  imitated  the  civil  law,  where  an  heir  sued  by  a  bond 
creditor  is  sued  as  for  his  own  debt  in  the  debet  and  detinet,  and  is 
lirima  facie  supposed  to  have  assets,  but  that  the  heir  might  dis- 
charge himself  by  saying  that  at  the  time  of  the  writ  brought  he 
had  no  assets ;  or  if  he  has  assets  descended,  may  show  those  assets, 
of  which  the  plaintiff  may,  if  he  pleases,  take  judgment ;  and  that 
in  case  the  heir  had  aliened  before  action  brought,  though  at  law 
there  was  no  remedy  against  him,  yet  in  equity  he  was  responsible 
for  the  value  of  the  land  aliened ;  but  now  the  heir  is  made  liable- 
at  law  for  the  value  of  the  assets  he  has  aliened. 


POWIS  V.  COKBET. 

High  Court  of  Chancery,  1747. 

(3  Atk.  556.) 

Lord  Chancellor  [Hardwicke].  The  estate,  made  subject  tO' 
a  five  hundred  years'  term  by  the  will  of  Corbet  Kynaston  for  the 
payment  of  debts,  must  first  be  applied  before  the  creditors  can 
come  upon  the  estate  descended  on  his  heir  at  law ;  for  if  a  testator 
has  created  a  particular  trust  out  of  particular  lands,  and  subject 
to  that  trust  devised  it  over,  the  devisees  can  take  no  benefit  but  of 
the  remainder  after  the  whole  burden  is  discharged  upon  it;  and 
as  to  that  the  heir  at  law  stands  in  a  better  place  than  the  devisees  do. 

The  next  question  is  between  the  devisees  of  the  real  estate  which 
passes  by  the  codicil  and  the  heir  at  law  of  the  testator ;  undoubtedly,, 
according  to  the  determination  of  Galion  v.  Hancock,  June  11, 
1743,  the  assets  descendible  on  the  heir  at  law  must  be  applied  to 
the  payment  of  debts  before  the  lands  can  be  charged  which  are 
specifically  devised. 

Another  defendant  in  this  cause,  and  mortgagee,  Amye  Kynaston, 
was  likewise  a  bond  creditor  to  Corbet  Kynaston;  her  counsel 
insisted  she  had  a  right  to  tack  it  to  the  mortgage  as  against  the 
heir,  because,  assets  being  descended,  he  cannot  redeem  one  without 
paying  off  the  other,  for  the  court  will  not  make  a  circuity  by  put- 
ting her  to  the  necessity  of  suing  on  the  bond ;  and  they  insisted, 
further,  that  the  rule  was  the  same  with  regard  to  a  devisee,  and 


8KC'.   IV. ]  IIEAMS  t'.  BAXCE.  50^ 

that  the  court  will  not  oblige  a  mortgagee,  who  is  likewise  a  creditor 
hy  bond,  to  sue  him  under  the  statute  against  fraudulent  devises. 
Loud  C'iianckllou  agreed  this  was  the  rule  of  the  court  as  to 
a  mortgagee  who  is  likewise  a  bond  creditor  against  the  heir,  but 
did  not  reniemluT  it  was  ever  determined  in  favour  of  such  mort- 
gagee where  there  are  intervening  incumbramcrs  of  a  superior 
nature  l)etween  his  mortgage  and  the  bond,  and,  therefore,  would 
not  direct  that  Mrs.  Kynaston's  bond  should  be  tacked  to  her 
mortgage. 


HEAMS  v.  BAXCE. 

High  Court  of  Chancery,  1T48. 

(3  Atk.  G30.) 

Lord  Chancellor,  since  Hilary  term  last,  ordered  this  cause  to 
stand  over,  to  search  the  register's  book  for  the  case  of  Ridont  v. 
Lord  Plymouth,  which  had  been  mentioned  at  that  time  as  an 
authority  in  point,  but,  being  looked  into,  it  did  not  appear  to  be 
at  all  similar  to  the  present,  in  which  the  question  is  whether  a 
mortgagee  who  lent  a  further  sum  afterwards  upon  bond  should 
be  allowed  to  tack  it  to  his  mortgage  in  preference  to  other  creditors 
under  a  trust  for  payment  of  debts  created  by  the  will  of  the  mort- 
gagor ? 

Lord  Chancellor  [Hardwicke].  I  have  considered  this  case, 
and  am  inclined  to  think  the  mortgagee  shall  not  be  allowed  ti» 
tack  the  bond  to  the  mortgage;  with  regard  to  the  heir  of  th.' 
mortgagor,  tiie  reason  why  he  shall  not  redeem  the  mortgage  with- 
out paying  the  bond  likewise  is  to  prevent  a  circuity,  because  the 
moment  the  estate  descends  upon  him  it  become.<<  assets  in  hi' 
hands  and  liable  to  the  bond;  a  devisee,  too,  of  the  mortgaged 
premises  for  bis  own  benefit  is  subject  to  the  same  rule  since  the 
statute  of  fraudulent  devises  made  in  favor  of  bond  creditors. 

But  this  is  a  devise  in  trust  for  the  payment  of  debts,  and  the 
descent  is,  consequently,  broke;  so  that,  as  T  am  at  present  advised. 
I  am  of  opinion  the  mortgagee  can  have  no  priority  with  regard 
to  his  bond,  but  a.s  to  that  must  come  in  pro  rata  with  tlie  rest  of 
the  creditors  under  the  tnist ;  but  if  the  counsel  for  the  mortgagee 
have  an  inclination  to  ]>e  heard  on  this  point,  it  shall  stand  over. 

The  Attorney  Cieneral,  of  counsel  for  him,  i?aid  he  thought  the 


504  EQUITY  RELATIONS.  [CHAP.  II. 

point  was  too  strong  against  the  mortgagee  to  be  maintained,  and 
the  court  thereupon  made  their  decree  accordingly.^ 


Lee  v.  Stone,  5  Gill  &  J.  1  (Maryland  Ct.  of  App.,  1832). 
Dorset^  J.  (p.  21).  It  has  been  further  contended  that  the  appel- 
lants are  to  be  first  paid,  as  well  the  balance  due  them  from  Key 
as  that  which  appears  on  the  auditor's  account — Booth,  as  the  secur- 
ity, being  answerable  for  the  defalcations  of  the  guardian;  that, 
the  appellants  being  seized  of  the  legal  estate  in  the  land  sold,  their 
legal  title  could  not  be  taken  from  them  until  they  were  paid,  not 
only  the  remaining  balance  of  the  purchase  money,  [but  all 
other  debts]  upon  whatever  account  due  from  Booth  to  them; 
and  this  pretension  is  rested  upon  the  familiar  principles  of  equity, 
"that  he  who  seeks  equity  must  do  equity ;"  "that  a  multiplication 
or  circuity  of  action  should  be  avoided." 

But  these  principles  have  never  been  carried  to  the  extent  that 
would  be  necessary  to  their  atfording  relief  to  a  party  in  the  predica- 
ment of  the  present  appellants.  They  stand  here  in  the  character 
of  complainants  seeking  to  enforce  their  lien  for  a  balance  of  the 
purchase  money  by  a  sale  of  the  premises  on  which  their  lien 
attaches,  and  require  this  court  not  only  to  enforce  their  lien,  but 
to  tack  to  it  another  debt,  apart  from  such  their  application  entitled 
to  no  priority  over  other  creditors,  and  this  to  the  exclusion  of 
<inother  creditor  before  the  court,  whose  debt  is  secured  by  a  lien 
on  the  premises.  If  there  be  any  case  to  warrant  this  requisition, 
it  has  not  been  presented  to  our  notice  in  the  argument,  and  has 
certainly  escaped  our  researches  upon  the  subject.  It  is  true  that  if 
a  mortgagor  goes  into  chancery  to  redeem,  upon  the  axioms  of  equity 
above  mentioned  he  will  not  be  permitted  to  do  so  but  upon  pay- 
ment, not  only  of  the  mortgage  debt,  but  of  all  other  debts  due 
from  him  to  the  mortgagee.     In  this  there  is  no  prejudice  to  the 

^  "  Lord  Chancellor  [Tliurlow]  said  the  only  reason  why  the  mortgagee 
<'an  tack  his  bond  to  his  mortgage  is  to  prevent  a  circuity  of  suits:  it  is 
solely  matter  of  arrangement  for  that  purpose,  for  in  natural  justice  the 
right  has  no  foundation."— Lowf/i fan  v.  Hasel,  3  Bro.  C.  C.   1G2    (1790). 

"  I  have  looked  into  all  the  cases,  which  are  very  dissatisfactory.  The 
present  practice,  that  a  bond  cannot  be  tacked  to  a  mortgage  as  against 
the  mortgagor,  but  may  against  his  heir,  does  not  seem  to  have  been 
always  the  course.  .  .  .  Now,  at  least  by  the  modern  cases,  it  is  laid  down 
Ihat  the  mortgagee  cannot  tack  a  bond  against  the  mortgagor,  nor  against 
creditors,  but  may  against  the  heir,  merely  to  prevent  circuity  of  action. 
Why  not  against  the  mortgagor,  if  the  rule  is  that  where  a  man  having 
one  security  lends  more  money  to  the  same  person,  that  person  shall  pay 
his  whole  debt,  or  shall  not  redeem  at  all." — Per  Sir  Richard  Pepper  Arden, 
M.  R.,  in  Jones  v.  Smith,  2  Ves.  372   (1794). 


SKf.    IV.]  1,|-,.;    (•_    sTt»Ni:.  50.") 

li-^'lUs  of  ollioFs;  nobody  luis  a  ri<,'ht  to  toini)lain  ;  no  injustice  i- 
done  to  anyl)ody. 

Hut  it  is  also  true  that  if  the  inortjjfa^co  seok  a  forcclcsurc  in 
chancery,  the  mortgagor  will  he  permitted  to  redeem  upon  payment 
of  the  mortgage  debt  only,  no  matter  to  what  amount,  on  other 
aeeounts,  lie  may  stand  indebted  to  the  mortgagee.  And  it  is  equally 
clear  that  if  a  subse(|uent  mortgagee  or  judgment  creditor  fib- 
a  bill  to  redeem,  he  will  be  ]ierniitted  to  do  so  u|)on  the  payment 
of  the  mortgage  debt  alone.  Whilst  these  well  settled  princ-iples  of 
equity  remain  unshaken,  upon  no  system  of  analogy  or  consistency 
can  the  claim  of  the  api>ellants  be  gratified.  Their  doctrine  is  in 
clTect  simply  this,  that  in  all  cases  where  the  sale  of  the  real  estate 
of  a  deceased  debtor  is  decreed,  the  debts  due  to  the  heirs  at  law  to 
whom  such  estate  has  descended,  be  their  nature  what  they  may. 
must  first  be  paid,  even  to  the  exclusion  of  judgment  creditors. 
To  such  a  length  the  doctrine  of  tacking  has  never  yet  been  carried.' 

' '■  Tlierc  is  no  doubt  as  to  the  liglit  of  the  plaintifT  ( inortgajror )  to 
ifilooin  the  wliole  of  tlie  promises  nioitrrafrcd :  but  as  he  wlio  will  have 
oijuity  must  do  equity,  it  must  be  on  eontlition  not  only  of  |)ayin{;  the  sum 
rhaitxe<l  upon  the  land,  but  the  debt  collaterally  due  to  the  mortgagee.'" — 
I'lr  Ilosnier,  Ch.  J.,  in  iicripture  v.  Johnson,  3  Conn.  211  (1819).  ^yaUinii 
V.  Aihvn,  1  MaeM.  Ch.  1  (1840)  ;  Lake  v.  Shumate,  20  S.  C.  23  (1883)  ; 
Anthonif  v.  Anthony,  23  Ark.  479  (18t!l),  and  (scmhJc)  Rowan  v.  Sharps 
liiflc  ilfg.  Co.,  33  Conn.  28   (1865),  accord. 

The  ea.ses  generally  are  contra:  Dorroic  v.  Kelly,  1  Dall.  (Penn.)  142 
(1785);  Bridgcn  v.  'Carharit,  1  Ilopk.  Ch.  (N.  Y.)  234  (1824);  Prcsbi/- 
tcrian  Corporation  v.  Wallace,  3  Rawle  (Penn.)  109.  l.')5  (1831)  ;  Bacon  v. 
Cottrell,  13  Minn.  194  (18()8)  ;  Mahoncy  v.  Boaticicl:,  9G  Cal.  53  (1892)  ; 
Brooks  V.  Brooks,  109  Mass.  38   (1897;. 


506  EQUITY    RELATIONS.  [CHAP.  II. 

CHAPTER  II.     (Continued.) 

Section  V.    Mortgagee's  Account, 

(a)     Waste,  Repair  and  Improvements. 

HANSOM  V.  DERBY. 

High  Court  of  Chancery,  1700. 

(3  Fern.  392.) 

The  bill  being  to  redeem  a  mortgage,  on  the  hearing  an  account 
was  decreed  and  £240  reported  due;  to  which  report  the  plaintiff 
had  taken  exceptions.  The  cause  thus  standing  in  court,  the 
Lord  Keeper  [Sir  Nathan  Wright],  on  a  motion  and  reading 
affidavits  that  the  defendant  had  burnt  some  of  the  wainscot  and 
committed  waste,  ordered  the  defendant  to  deliver  up  possession 
to  the  plaintiff,  who  was  a  pauper,  giving  security  to  abide  the 
event  of  the  account.^ 


RUSSELL  V.  SMITHIES. 

Court  of  Exchequer,  1792. 

(1  Anstr.  96.) 

On  a  bill  of  foreclosure,  it  was  referred  to  the  Deputy  Remem- 
brancer to  take  account  what  the  mortgagee  had  received  from  the 
rents,  &c.,  or  might  have  received,  without  wilful  neglect  in  her. 
It  appeared  that  the  premises  (malt  house,  etc.)  had  been  allowed 
to  fall  so  much  out  of  repair  that  the  rent  fell  from  £23  to  £18. 
Plaintiff  had  done  some  repairs  and  had  held  40  years. 

Graham.  &  Stanley  argued  that  the  mortgagee  in  possession,  bc- 

'  "So,  whero  a  mortgagee  in  fee  in  possession  commits  waste  by  cutting 
down  timber,  and  the  money  arising  by  the  sale  of  the  timber  is  not  applied 
in  sinking  the  interest  and  principal  of  his  mortgage,  the  court,  on  a  bill 
brought  by  the  mortgagor  to  stay  waste  and  a  certificate  thereof,  will 
grant  an  injunction." — Per  Lord  Ch.  Hardwicke,  in  Farrant  v.  Lovel,  3 
Atk.  723   (1750). 


SKf.  v.]  WIJACCi    r.    liKMIAM.  •*((); 

in^'  only  ;i  trusUv  till  fun-ilosiirc,  is  Ixniml  in  keep  the  prfriii.-.f-  in 
the  same  repair  as  if  he  was  owiu-r;  '.'  X'trii.  iiH  v ;  .5  Atk.  518; 
and  that  the  diminution  in  value  shouhl  iiave  Ixtii  (•har;,'ed  on  the 
plaintilT,  as  she  nii^'hl  have  reeeived  the  dilTerence  if  she  had  re- 
paired. 

By  Tin:  C'oritr:  Thi-  niort.u'ii^'ee  has  done  sonu-  re|)airs;  and,  as 
the  only  proof  of  these  repairs  hein<;  insul1iei«'nt  is  (lie  diminution 
in  value,  we  must  eonnrm  the  report  ;  for  it  cannot  Ih'  supposed 
that,  after  40  years  j)ossession,  the  mort;ia;;ee  is  hound  to  leave  the 
premises  in  as  good  condition  as  lie  found  tlnin. 


Wh'ACC  V.  DFAil AM. 

CouKT  OF  Kxt'iinyri;!!,  is.if!. 

(•v>  }'.  a-  CuU.  117.) 

In  the  year  182S  the  ))lainliir  contracted  with  the  defendant 
Denhain  for  the  purchase  of  two  third  parts  of  a  freehold  messuage 
and  lands  situate  at  llandley,  in  Derhyshire,  for  ;?.")<)/. ;  and  shortly 
afterwards  contracted  with  some  persons  of  the  name  of  ilawksley 
for  the  purchase  of  the  remaining  third  j)art.  The  i)laintifr  nor 
heing  ahle  to  pay  the  .'JoO/.  to  Denham,  it  was  arranged  that  the 
whole  of  the  propi-rty  should  he  mortgaged  to  Denham  to  secure 
the  repayment  of  that  sum  with  interest.  This  arrangement  was 
didy  carried  into  eirect  hy  deeds  hearing  date  in  June,  1828.  Those 
deeds  were  prepared  hy  the  defendant,  Thomas  Clarke,  who  acted 
as  the  solicitor  for  hoth  parties. 

In  the  same  month  of  .Tune,  IS^'S,  (he  jjlainiiir  i»eing  seised  of 
some  fri'ehold  and  eojiyhold  jiroperty  situate  at  Woodhead,  in  the 
county  of  Derhy,  hy  indentures  hearing  date  the  l(!(h  and  17th 
of  that  month,  reciting  that  there  was  due  to  one  Boot,  on  the 
security  of  those  premises,  140/..  and  (ha(  (he  defendan(s.  Thomas 
and  John  Clarke,  had  agreed  (o  i)ay  o(T  (he  same,  and  also  to 
advance  to  the  plaintifT  200/.  more,  it  was  witnessed,  that  in  con- 
sideration of  140/.  paid  hy  the  Clarkes  to  Boot,  and  of  200/.  paid 
hy  them  to  the  plaintilT,  (he  la((er  covenan(ed  to  surrender  tin- 
cojiyholds,  and  rele;ised  and  conveyed  the  fre«'hoIds  (o  the  de- 
fendants Thomas  and  John  Clarke  ami  (heir  heirs,  in  trust  to  .<iell 
the  premi.>5es,  and  o\it  of  the  proee(>ds  of  the  sale  to  n'injhurse  them- 
selves their  costs  antl  expenses;  then  to  re|>ay  (hemselves  (he  3(0/. 


508  EQUITY    RELATION'S.  [CHAP.  II. 

with  interest ;  then  to  repa}'  Denham  his  350/.  with  interest,  and  to 
pay  tlie  surplus,  if  any,  to  the  plaintiff. 

In  1830  the  interest  on  these  mortgages  heing  greatly  in  arrear, 
the  defendants  turned  the  plaintiff  and  his  family  out  of  the  prem- 
ises, sold  the  crops,  and  took  and  retained  possession  of  the  property. 
The  Woodhead  property  was  advertised  for  sale,  but  no  sale  was 
effected. 

The  plaintiff  now  brought  his  bill  to  redeem  both  mortgages, 
charging  that  the  defendants  had  ])een  guilty  of  gross  negligence 
in  the  management  of  the  property  while  in  their  possession,  and 
ought  to  be  made  answerable  for  the  damage  done  througli  their 
neglect ;  charging  also  that  the  money  stated  to  have  been  advanced 
l)y  the  defendant  Clarke  was  the  alleged  amount  of  his  bill  of  costs, 
l)ut  was  in  fact  not  justly  due  to  him  from  the  plaintiff,  and  that 
in  fact  no  bill  of  costs  iiad  ever  been  delivered;  praying  accounts 
of  the  rents  and  profits  of  all  the  premises,  that  the  defendants 
might  be  chargeable  for  damage  done  from  non-repairs,  and  that 
Clarke's  bill  might  be  taxed,  &c. 

The  defendants  by  their  answers  admitted  that  the  premises  were 
out  of  repair,  l)ut  ascribed  it  to  the  conduct  of  the  plaintiff  and 
an  attorney  wdiom  he  had  lately  employed,  who,  as  they  alleged, 
liad  done  various  acts  to  stop  the  sale  of  the  property,  and  liad 
thereby  prevented  respectable  tenants  from  hiring  it.  The  charge 
in  the  bill  respecting  the  mortgage  made  to  the  Clarkes  was  ex- 
plained thus:  that  140/.  was  advanced  by  them  to  pay  off  Boot's 
mortgage;  12G/.  17s.  to  pay  the  Hawksleys  for  their  one-third  of 
the  Handley  premises;  and  78/.  IGs.  5d.  for  Thomas  Clarke's  bill 
of  costs.  The  defendant  Clarke  also  insisted  that  before  the  plain- 
tiff executed  the  mortgage  deeds  of  the  16th  and  17th  June,  1828. 
he  carefully  inspected  the  bill  of  costs,  and  made  no  objection  to 
any  item  therein;  but  the  defendant  did  not  recollect  whether  he 
liad  delivered  to  the  plaintiff  a  copy  of  his  bill  of  costs. 

The  cause  coming  on  for  hearing,  the  plaintiff  gave  evidence  of 
Ijad  husbandry  and  w^ant  of  repairs  on  the  premises  since  August, 
1830,  when  the  defendants  took  possession.  In  reference  to  the 
Handley  property,  one  witness  swore  that  a  field  of  about  three 
acres  and  a  half  was  fallowed  in  the  summer  of  1831,  and  laid  down 
on  such  fallow,  and  that  three  crops  following  the  fallow  had  since 
])een  sold  therefrom ;  and  that  the  fourth  crop  was  a  hay  crop, 
which  was  then  growing  thereon ;  and  that  the  greater  part  of  the 
remainder  of  the  farm  which  should  have  been  fallowed  had  not 
])een  so,  but  liad  been  hardly  cropped,  without  an  adequate  quantity 
of  manure  laid  yearly  thereon.  It  was  also  proved  that  the  barns 
and  out-buildings  on  the  freehold  premises  were  in  a  tenantable 


'^''•-  ^1  \\i;a(;<;   c.   dkniiam.  oi)'.i 

>talo  of  ivjiair  in  !S;50;  \m[  siiu-c  iliat  tiiiu'  llii'V  liiid  Ixtoiiic  very 
ruinous  for  want  of  luri'ssary  rcj)airs,  tin*  wet  In-in;;  allowed  to  get 
in.  In  the  judirtiK'nt  of  the  witii»'>;ses,  the  llandley  ])nti(erty  was 
in  Au^'u>t,  iS.Jd,  wnrth  Ki/.  per  annum,  hnl  now  imt  above  !•/. 
l>er  atmuin.     The  Woodhead  jjroperty  was  not  so  inueli  depreciated. 

Mr.  Spcncc  and  Mr.  Ifall.  for  the  phiinlilF,  suhinitte<l  that  speeial 
directions  ought  to  be  given  respeeting  the  deterioration  of  the 
property,  and  that  Chirke's  hill  of  costs  ought  to  Im-  taxed,  T.s/. 
heing  an  exorhitant  charge.  Resides,  it  did  not  appear  that  any 
hill  was  properly  delivered.  |ALnEi{sox.  li.  Xo  doubt  the  bill 
ought  to  be  looked  at  by  the  Master.  The  attorney  prepared  the 
mortgage  in  his  own  favour,  and  i)art  of  the  consideration  money 
is  paid  over  to  his  own  client.] 

Mr.  Tiriss  and  Mr.  Ilatjlcr,  for  the  defendants,  Deiihain  and 
Clarke. — No  tiKpiiry  as  to  specific  mismanagement  ought  to  i»e 
allowed.  If  specific  waste  had  been  committed  on  the  premises,  as, 
for  instance,  by  pulling  down  a  house  and  selling  the  materials, 
>uch  an  eiupiiry  would  have  been  es.sential,  but  that  does  not  apply 
to  mere  depreciation  arising  from  bad  husbandry.  [Alukuson,  B. 
In  Uuijhcs  V.  Williams,  13  Yes.  4i)5,  Lord  Eldon  says,  that  "  if  the 
mortgagee  can  be  shewn  to  be  guilty  of  such  gross  negligence  as 
(••»ines  up  to  the  description  of  wilful  default,  he  ought  to  be 
answerable  for  it."  The  question  is,  whether  there  has  not  been 
here  such  gross  negligence  as  to  occasion  de])rcciation ;  not  merely 
whether  there  has  been  mishusbandry.  What  is  alU'ged  by  the  wit- 
ness as  to  the  manner  of  cro])ping  the  land,  appears  to  be  gro-s 
misconduct  in  the  mortgagees.]  Tin-  (juestion  is  not  between 
landlord  and  tenant,  but  between  mortgagor  and  mortgagee.  The 
tenant  is  under  a  contract  with  his  landlord  for  the  jiroper  manage- 
ment of  his  farm,  but  the  morlgngee  is  in  no  such  situation,  if. 
failing  to  obtain  his  princij)al  and  interest,  he  gets  posses-^ion  t>f  th" 
premi.<es,  he  ought  not  to  be  responsible  for  anything  beyond 
fraud.  As  to  the  bill  of  costs,  it  is  clear,  that  unless  it  contains  a 
taxable  item,  it  ought  not  to  be  submitted  to  the  Master  for  taxation. 
I  .\Ll)i:its()N,  B.  It  is  in  the  nature  of  a  bill  of  costs  which  has  been 
paid;  and  I  think  the  Master  ought  to  look  at  it.]  If  it  is  submitted 
to  him  with  a  view  to  surcharge  and  falsification,  the  i)laintilT  ought 
to  point  out  the  particular  items  Mhich  he  objects  to. 

Mr.  Sjh'nc)'.  in  reply,  eontendeil  that  it  could  not  In-  eonsisteJit 
with  the  duty  of  a  mortgagee  in  possession,  so  to  nuinage  the  prop- 
erty, that  when  the  mortgagor  came  to  redci-m.  it  was  not  worth 
half  its  value,  lie  cited  Iiiissrll  v.  Sniithirs.  1  Anst.  OC.  as  shewing 
the  principle  on  which  cases  of  this  nature  rest,  although  there. 


510  EQUITY    RELATIONS.  [CHAP.  II. 

under  the  circumstances,  the  decision  was  in  favour  of  the  mort- 
gagee. 

Aldeeson^  B.  There  is  no  dispute  that  the  account  will  be 
taken,  generally,  in  the  ordinary  manner.  The  decree  will  direct 
the  Master  to  take  an  account  of  the  principal  money  and  interest 
due  to  the  mortgagees,  to  charge  them  with  the  rents  and  profits 
received  by  them  since  they  took  possession,  and  to  take  an  account 
of  the  crops  sold  by  them  since  that  period ;  and  upon  -making  all 
due  allowances,  the  Master  will  and  ought  to  deduct  from  the 
monies  found  to  have  been  received  from  the  sales  the  expenses 
of  the  sales,  and  all  necessary  expenses  which  the  mortgagees  in- 
curred to  obtain  a  transfer  from  the  purchasers  of  the  crops  of  the 
monies  due  upon  such  sales. 

The  next  question  is,  whether  I  ought  to  direct  the  Master  to 
enquire  into  the  amount  of  the  bill  which  formed  part  of  the  con- 
sideration for  the  mortgage  executed  by  Wragg  to  his  attorney.  I 
think  I  ought ;  because  it  appears  to  me  that,  Clarke  and  Wragg 
being  in  the  situation  of  attorney  and  client  at  the  time  these  trans- 
actions took  place,  Wragg's  assent  to  the  bill  of  costs  was  not 
such  an  assent  as  ought  to  preclude  him  from  an  enquiry  upon  the 
subject  before  the  Master.  At  the  same  time  it  would  be  unreason- 
able to  require  Clarke  now  to  enter  into  evidence  of  business  done 
for  his  client ;  and  the  only  question  will  be,  whether,  if  the  business 
were  done,  the  charges  are  fair  and  reasonable.  If  the  Master 
thinks  that  they  are  not  so,  he  must  make  a  deduction  in  that 
respect. 

Then  comes  the  important  question  whether  I  ought  to  charge 
the  defendants  with  the  deterioration  in  the  value  of  the  premises 
since  the  period  when  Clarke  took  possession.  It  is  clear  that  a 
mortgagee  ought  not  to  be  charged  with  deterioration  arising  in 
the  ordinary  way,  by  reason  of  houses  and  buildings  of  a  perishable 
nature  decaying  by  time,  which  was  the  case  in  Anstruther.^  There, 
the  mortgagee  was  in  possession  of  the  premises  for  forty  years ; 
and  during  so  long  a  time  the  decay  would  naturally  take  place, 
even  supposing  the  premises  to  be  repaired  in  the  mean  time  in 
the  ordinary  way.  I  think,  also,  that  a  mortgagee  ought  not  to  be 
charged  exactly  with  the  same  degree  of  care  as  a  man  is  supposed 
to  take  who  keeps  possession  of  liis  own  property.  But  if  there 
be  gross  negligence,  by  which  the  property  is  deteriorated  in  value, 
the  mortgagee  who  is  in  possession  is  trustee  for  the  mortgagor  to 
that  extent  tliat  ho  ought  to  bo  made  responsible  for  that  deteriora- 
tion during  the  time  of  his  possession.  It  is  not  necessary  to  go  the 
length  of  shewing  fraud  in  the  mortgagee;  gross  negligence  is  suffi- 

^Russell  V.  Smithies,  p.  50G,  supra. 


SKC.   v.]  SANDON'      V.     IIOOI'KU.  oil 

rU'Ul.  The  (lucstioii  tlii'ivfon-  is,  wliothcr  iho  fact  of  gross  ncgli- 
gcnci'  is  sullirii'iitly  cstaljlisiicd  in  this  caso  to  enahK'  iiic  to  direct  the 
ciKiuiry  asked  for  hy  the  phiiiitilf.  Vpoii  that  point  I  shouhl  like  to 
look  iiit»re  iiiiinitely  into  the  evidciiee,  hi-eanse  if  the  Master  he  di- 
rected to  make  that  enciuiry,  tlii-re  will  he  considerahle  ailditional 
expense.  If  u|)on  examination  of  the  evidence  I  should  come  to  the 
eoncln^ion  that  a  prima  facie  case  of  gross  negligence  is  made  out,  I 
must  direct  the  encpiiry.  If,  on  the  other  hand,  I  should  he  of 
opinion  that  there  is  not  sulhcient  I'videnet'  of  that  fact,  of  course 
the  principle  of  law  will  not  apply. 

On  the  following  day  liis  Lordship  said  that  he  had  looked 
through  the  evidence,  and  upon  the  whole  he  thought  he  ought  to 
direct  an  enquiry  as  to  whether  the  deterioration  in  the  value  of 
the  premises  had  arisen  from  the  gross  negligence  in  the  mort- 
gagees for  want  of  proper  repairs  and  proper  cultivation.  As  to 
the  other  ])oint,  respecting  the  hill  of  costs,  his  Lordshij)  thought 
that  the  Master  ouglit  to  look  at  the  hill  with  a  view  to  consider  the 
j)roj)riety  of  the  items,  upon  the  assumption  that  the  business  had 
been  actually  done. 

Decree  accordingly. 


SAXDOX  v.  IIOOPKR. 

High  Coikt  of  Cii.wckky — Rolls  Court,  1843. 

(6  Beav.  246.) 

'i'his  was  a  suit  for  redemption. 

In  1S30  the  ])IaintitT  mortgaged  some  property  to  the  defendant, 
a  solicitor,  for  ;?()()/..•  and  in  IS."}*;  he  executed  to  him  a  further 
charge,  for  a  sum  of  llt»/..  part  of  which  consisted  of  a  bill  of 
<"osts  due  from  the  plaintitV  to  the  defendant,  and  other  part  of 
arrears  of  interest  and  money  ])aid.  Default  having  been  made  in 
payment  of  interest  on  the  mortgage,  the  defendant,  in  1S3S,  by 
an  action  of  ejectment,  recovcrecl  pos.scssion  of  the  mortgaged  prop- 
erty. After  the  defendant  had  taken  possession,  he  pulled  down 
two  cottages  on  the  |)remises  ami  made  some  alterations.  By  his 
answer,  the  defendant  stated  that  he  had  laid  out  .100/.  in  sub- 
stantial repairs  and  lasting  improv(>mcnts  ;  l)ut  of  this  no  evidence 
was  given. 

.][r.  ('liaiullrs.-<.  for  the  plaintitT,  eontendccl,  first,  that  tliere  ought 
to  be  a  taxation  of  -^o  nuieh  of  the  defi'udant's  demand  as  eon- 


.512         -  EQUITY    RELATIONS.  [CIIAP.  ii. 

sisted  of  professional  costs  {Wragg  v.  Venluuii .  2  Y.  &  Coll.  Excli., 
117)  ;  secondly,  that  the  mortgagee  was  liable  for  the  damage  done 
by  pulling  down  the  cottages  {Wragy  v.  Dcnham);  and,  thirdly, 
that  the  defendant  onght  to  pay  the  costs  of  the  suit,  it  having  been 
occasioned  by  his  improper  conduct  in  refusing  to  render  accounts. 
{DctilUn  V.  Gale,  7  Yes.  583;  Taylor  v.  Balrr,  Daniell,  71;  Har- 
veii  V.  Tehhuit,  1  Jac.  &  W.  197;  and  see  }yihon  v.  Cluer,  4  Beav. 
214). 

Mr.  Kindersley  and  Mr.  Stevens,  for  the  defendant,  did  not  op- 
pose the  taxation,  but  contended  that  the  defendant  was  entitled  to 
an  inquiry  as  to  the  substantial  repairs  and  lasting  improvements, 
and  to  be  allowed  the  amount ;  and  that  the  defendant  was  entitled 
to  the  costs  of  suit,  and  of  the  ejectment. 

Mr.  Chandless,  in  reply. — There  is  no  proof  of  any  substantial 
repairs  or  lasting  improvements;  the  defendant,  therefore,  is  not 
entitled  to  any  inquiry. 

The  Master  of  the  Eolls  [Lord  Laxgdale].  It  is  objected 
on  behalf  of  tlie  plaintiff,  and  properly  objected,  that  so  far  as  the 
sum  of  140?.  consists  of  the  bill  of  costs,  which  is  payable  to  the  de- 
fendant, it  ought  only  to  stand  as  a  security  for  so  much  as  will  be 
properly  due  upon  taxation.  That  is  not  disputed  by  the  defend- 
ant ;  it  has  been  very  properly  conceded  to  the  plaintiff,  that  he  is  en- 
titled to  have  that  investigated. 

In  the  year  1838,  the  defendant  obtained  possession  by  an  action 
of  ejectment,  and  after  he  came  into  possession  he  pulled  down  two 
of  the  cottages  which  were  upon  the  premises,  and  he  says,  in  his 
answer,  that  he  laid  out  a  considerable  sum  of  money,  to  the  amount 
of  about  300?.,  for  repairs  and  substantial  improvements,  which  he 
alleges  were  done  with  the  privity  and  knowledge  of  the  plaintiff. 
First,  with  respect  to  the  dilapidations,  they  are  proved ;  and  there 
is  not  an  attempt  made  in  evidence  for  the  purpose  of  shewing  that 
it  was  proper.  I  am  therefore  of  opinion  that  the  plaintiff  is  enti- 
tled to  an  account  of  any  loss  occasioned  by  pulling  down  those 
houses. 

The  next  question  is,  whether  the  plaintiff  is  entitled  to  anything 
for  the  improvements  which  he  alleges  to  have  been  made.  With 
respect  to  what  a  mortgagee  in  possession  may  do  with  the  mort- 
gaged property,  several  cases  have  occurred  at  different  times,  shew- 
ing what  he  ought,  and  to  some  considerable  extent,  what  he  ought 
not  to  do.  Such  repairs  as  are  necessary  for  the  support  of  the 
property  he  will  be  allowed  for.  He  will  not  only  be  allowed  for 
repairs,  but  he  will  be  also  allowed  for  doing  that  which  is  essential 
for  the  protection  of  the  title  of  the  mortgagor.  Further,  if  he  has 
got  the  consent  of  the  mortgagor,  or  has  given  him  notice,  in  whieti 


SKC.   v.]  SANDON      C.      IIOOI'KK.  H 1 :'. 

he  ac(juie.sces,  tlifii  he  may  Itc  allowed  for  sums  of  iiumcy  wliicli  ar'- 
laid  out  in  increasing  the  value  of  the  property ;  hut  he  has  no  right 
to  hiy  out  money  in  what  he  eall.s  inereasing  the  value  of  the  prop- 
erty, whieh  may  he  done  in  such  a  way  as  to  make  it  utterly  impo'^- 
>ihle  for  the  mortgagor,  with  his  means,  ever  to  redeem;  this  i< 
what  has  heen  termed  improving  a  mortgagor  out  of  his  estate 
— an  expression  wiiieh  has  heen  used  botii  in  this  argunu-nt  and  on 
ft)rmer  occasions.  The  mortgagee  has  not  a  right  to  make  it  more 
expensive  for  the  mortgagor  to  redeem  than  nuiy  be  required  for 
the  purpose  of  keeping  the  property  in  a  proper  state  of  repair,  and 
for  protecting  the  title  to  the  pnjperty. 

Now,  in  this  case,  it  lias  also  to  be  considered,  whether  it  is  a 
matter  of  course  to  direct  an  incjuiry  whether  any  money  has  been 
laid  out  in  lasting  im|)rovements.  Many  such  incpiiries  have;  been 
directed  where  the  fact  of  any  money  having  been  laid  out  has  been 
proved  and  brought  to  the  attention  of  the  Court.  I  quite  agree 
with  the  argument  that  has  been  used  on  this  occasion,  that  it  was 
not  necessary  for  the  defendant  to  prove  the  items  of  sums  of  money 
laid  out  in  the  pernuinent  improvements  alk'geil  to  have  been  made; 
but,  in  this  case,  there  is,  as  to  that,  a  total  absence  of  all  evidence 
whatever.  There  is  evidence. on  the  part  of  the  plaintifT,to  .'^hew  that 
what  was  done  deteriorated  the  j)roperty,  and  tluTC  is  not  one  word 
in  evidence,  on  the  part  of  the  defendant,  in  support  of  his  allega- 
tion, that  he  has  laid  out  any  money  for  lasting  improvements,  or 
that  anything  he  did  was  done  with  the  privity,  consent,  or  knowl- 
edge of  the  j)laintifT.  In  the  absence  of  all  i)roof,  it  is  not  at  all 
within  my  authority  to  direct  an  incpiiry  to  enable  liim  to  sup|)!y 
that  in  the  Master's  office,  which  he  has  already  had  an  opjmrtunity 
of  doing.  See  Mtirtoii  v.  Whirhclo,  ("r.  &  IMi.  "ioT.  He  may  have, 
done  something  towards  the  improvement  of  the  estate;  and  if  he 
had  entered  into  any  general  proof  without  going  into  the  item-, 
it  is  very  prol)able  that  the  j)roof  might  have  been  such  as  woiiM 
have  induced  the  Court  to  direct  an  in(prny  upon  the  siibject ;  but 
there  is  no  siu-h  ])roof  brought  forward. 

Another  point  has  been  raised  in  this  case  as  to  the  refusal  of 
the  defendant  to  account.  To  excuse  his  refusal,  the  defendant  al- 
leges that  he  was  under  a  mistake  as  to  the  party  on  whose  Ix-half 
the  application  was  made;  but  1  think  the  eirciimstanci\s  sufficiently 
shew  there  was  no  mistake. 

Under  these  cin-umstauces  I  shall  direct  no  incpiiry  as  tt>  lastiii_' 
im|)rovements.  1  think  the  ])laintilT  is  entitli'd  to  an  intjuiry  as 
to  tile  loss  sustained  in  conse(|uence  of  pulling  down  tlu'  cottages; 
he  is  entitled  to  a  taxation  of  the  bill  of  costs,  which  formed  part  of 
the   consideration    for    the    further   i-barge;    and.   considering   tlu^ 


514  EQUITY    RELATIONS.  [CHAP.  II. 

course  the  defendant  has  taken,  I  think  he  is  liable  to  pay  some 
of  the  costs  of  this  suit.  I  cannot,  however,  take  it  for  granted 
that  this  suit  would  not  have  occurred  if  the  estate  had  not  been 
dealt  with  as  it  appears  to  have  been;  I  cannot  therefore  say,  that 
the  plaintiff  is  to  be  excused  from  the  whole  costs  of  the  suit  up 
to  the  hearing.  I  think  the  plaintiff  must  pay  the  costs,  except 
those  which  relate  to  the  claim  for  lasting  improvements,  those 
relating  to  the  plaintift"s  claim  for  compensation  for  the  dilapi- 
dations, and  those  which  have  arisen  from  the  evidence,  which  the 
plaintiff  has  been  obliged  to  enter  into  for  the  purpose  of  shewing 
the  refusal  to  account.  There  must  be  an  inquiry  taken  of  what 
is  due  to  the  defendant  for  principal  and  interest,  and  for  the  costs 
payable  by  the  plaintiff. 


SHEPARD  V.  JONES. 

Supreme  Court  of  Judicature — Court  of  Appeal,  1882. 

(21  Ch.  D.  469.) 

By  an  indenture  of  transfer  of  mortgage,  dated  the  31st  of 
January,  1874,  the  Victoria  Brewery  and  other  hereditaments  at 
Wrexham  were  conveyed  to  the  defendant,  Edward  Jones,  for 
securing  £2000,  subject  to  redemption  by  Thomas  Manby.  By  sub- 
sequent deeds  further  sums  of  money  were  charged  on  the  same 
premises.  On  the  10th  of  October,  1878,  Thomas  Manby  was  adju- 
dicated bankrupt,  and  the  plaintiffs,  H.  Shepard  and  H.  Davies, 
were  appointed  trustees  of  his  estate.  On  the  18th  of  February, 
1879,  the  defendant  offered  the  mortgaged  property  for  sale  by 
auction  under  the  power  of  sale  in  his  mortgage,  but  no  bidding 
was  made  for  it.  Several  persons  also  inspected  the  brewery  with 
a  view  of  purchasing  it  by  private  contract,  but  declined  to  do  so, 
alleging  as  their  objection  to  it  the  inadequate  supply  and  inferior 
quality  of  the  water  in  the  well  on  the  premises.  In  August,  1879, 
tbe  defendant  took  possession  of  the  brewery,  which  was  then 
vacant,  and  placed  a  person  in  it  to  take  care  of  it,  but  did  not  him- 
self occupy  it. 

In  the  early  part  of  the  year  1880  the  defendant  commenced 
boring  operations  to  deepen  the  well,  and  eventually  obtained  a 
good  supply  of  water.  Tlie  defendant  alleged  that  this  was  done 
with  the  knowledge  and  acquiescence  of  the  plaintiffs.  On  the  12th 
of  May,  1880,  the  defendant  again  put  up  the  mortgaged  premises 


t^Kc.  v.]  siii:i'\l;i)   r.   .ionics.  ."il'i 

for  sale  bv  iiiictiDn,  when  it  was  hoii^'ht  l>y  David  .Tolinson  for  toOOO. 
one  of  the  conditions  l»'in«;  that  the  salt'  should  he  complctiMl  on 
the  v"tth  of  S»'i)t('mht'r  follo\vin;,^  At  that  time  the  |irinci|)al  >uiii 
(if  tiddO  and  a  considcrahlc  arrcar  of  interest  were  due  to  the 
<lofendant.  The  defendant  let  tlie  purchaser  into  possession  of 
the  hrewerv  soon  after  the  sale  without  ref)uirin«r  any  rent  from 
him,  hut  the  purchase  was  not  eomph'ted  nor  the  purchase-money 
paid  on  the  2!>th  of  Sej)temher.  Tlie  purchaser  was  not  a  brewer 
but  a  manufacturer  of  zoedone,  and  used  the  premises  after  taking 
j)ossession  as  a  storeliouse  for  his  goods. 

The  defendant  ten(hTed  to  the  trustei^s  C.")0!)  18.v.  U.,  which  he 
considered  to  be  tlie  balance  due  to  them,  but  they  declined  to  ac- 
cept it.  They  claimed  in  addition  rent  for  use  and  occupation 
from  the  time  when  the  defendant  took  possession  till  the  SOth  of 
Scjitcmber,  ISSO,  and  they  also  refused  to  allow  the  expense  to 
which  the  defendant  had  been  put  to  in  deepening:  the  well,  amount- 
ini:  to  about  £83.  The  plaintilTs  then  brought  this  action  against 
the  defendant,  claiming  the  balance  of  the  purchase-money,  and  ask- 
ing for  accounts  against  the  defendant  as  mortgagee  in  possession. 
Tlie  defendant  i)aid  VAA  1T.«.\  2d.  into  Court.  At  the  trial  the 
above-mentioned  facts  were  proved,  but  there  was  a  conllict  of  evi- 
<leiice  whether  the  plaintilTs  had  notice  of  and  acquiesced  in  the 
deepening  of  the  well. 

The  action  was  heard  before  Mr.  Justice  Kay  on  the  20th  of  Feb- 
ruary. 1882. 

K.vv.  J.  (after  stating  the  circumstances  of  the  case,  and  refer- 
ring to  the  evidence)  : — 

I  have  listened  carefully  to  the  evidence,  and  have  myself  put 
some  (piestions  to  the  witnesses  in  order  to  ascertain  if  possible 
whether  it  was  the  fact  that  at  the  second  sale  the  price  was  in 
any  resj)ect  increased  or  influenced  by  the  fact  of  the  larger  supply 
of  water;  i>ut  there  is  no  evidence  whatever  that  the  price  was  so 
increased,  and  in  the  ab.sence  of  that  evidence,  and  as  the  brewery 
has  been  bought  liy  a  man  who  .seems  to  l)e  only  using  it  as  a  ware- 
hou.se,  I  cannot  come  to  the  conclusion  that  he  gave  more  for  it 
in  consequence  of  the  boring  operations. 

The  rule  of  law  is  (piite  settled,  and  has  never  been  alten>d  from 
what  was  laid  down  in  the  ca.se  of  Sandon  v.  Ifooprr.  (i  Heav.  2l<;, 
•M8.  There  Lord  Langdale  states  the  rule  thus:  "The  next  ques- 
tion is  whether  the  jilaintilf  is  entitled  to  anything  for  the  improve- 
ments which  he  alleg(^s  to  have  been  madr-.  With  respect  to  what  a 
mortgagee*  in  possession  may  do  with  the  mortgaged  property,  .sev- 
eral cast's  have  occurred  at  dilT«M-ent  tim(>s  shewing  what  he  ought 
and  to  some  considerable  extent  what  he  ought  not  to  di».     Such  re- 


OIG  EQUITY    RELATIONS.  [CIIAP.   U. 

23airs  as  are  necessary  for  the  supjiort  of  the  property  he  will  be  al- 
lowed for.  He  will  not  only  be  allowed  for  repairs,  but  he  will  be 
also  allowed  for  doing  that  which  is  essential  for  the  protection  of 
the  title  of  the  mortgagor.  Further,  if  he  has  got  the  consent  of  the 
mortgagor,  or  has  given  him  notice  in  which  he  acquiesces,  then 
he  may  be  allowed  for  sums  of  money  which  are  laid  out  in  in- 
creasing the  value  of  the  property,  but  he  has  no  right  to  lay 
out  money  in  what  he  calls  increasing  the  value  of  the  prop- 
erty, which  may  be  done  in  such  a  way  as  to  make  it 
utterly  impossible  for  the  mortgagor,  with  his  means,  ever  to  re- 
deem; this  is  what  has  been  termed  improving  the  mortgagor  out 
of  his  estate,  an  expression  which  has  been  used  both  in  this  argu- 
ment and  on  former  occasions.  The  mortgagee  has  not  a  right  to 
make  it  more  expensive  for  the  mortgagor  to  redeem  than  may  be 
required  for  the  purpose  of  keeping  the  property  in  a  proper  state 
of  repair,  and  for  protecting  the  title  to  the  property."  Now  it 
must  be  under  this  last  branch  of  Lord  Langdale's  judgment  that 
the  case  of  the  mortgagee  must  succeed  if  at  all.  Had  he  got  the 
consent  of  the  mortgagor,  or  given  him  notice  in  which  he  acqui- 
esced ?  I  cannot  find  that  either  has  been  done,  but  if  by  any  strain 
of  language  it  were  possible  to  assume  that  this  comes  within  the 
case  of  the  mortgagor  having  had  notice  in  which  he  acquiesces, 
then,  as  Lord  Langdale  says,  the  mortgagee  may  be  allowed  for  sums 
of  money  which  have  been  laid  out  in  increasing  the  value  of  the 
property;  but  then  the  onus  would  be  on  him  to  shew  that  the 
money  was  laid  out  in  increasing  the  value  of  the  property.  Now 
this  as  it  seems  to  me  he  has  failed  to  shew.  In  the  first  place  there 
is  no  consent  of  the  mortgagees  or  trustees  in  bankruptcy;  and  in 
the  second  place  no  notice  was  given  in  which  they  acquiesced;  and 
in  the  third  place  the  mortgagor  has  failed  to  shew  that  what  has 
been  done  has  increased  the  value  of  the  property.  Therefore  I 
am  not  able  to  direct  an  inquiry  as  to  any  improvements.  I  must 
say  that  if  I  had  been  satisfied  that  the  value  of  the  property  had 
been  increased  I  should  have  struggled  very  hard  to  prevent  .tlu^ 
mortgagor  getting  the  purchase-moneys  which  represented  the  valut- 
of  the  property  without  allowing  for  the  expenses  that  occasioned 
the  increase  of  value;  but,  as  I  have  said,  I  have  listened  attentivelv 
to  the  evidence,  and  I  am  not  able  to  see  that  the  mortgagee  has 
proved  that  there  was  that  increase,  or  that  there  was  any  notice 
by  which  the  mortgagor  can  be  fixed  as  acquiescing  in  these  im- 
provements. 

Upon  the  other  point  the  question  is  whether  the  mortgagee  ha.?- 
been  in  such  occupation  of  the  property  as  entitles  or  makes  it  just 
for  the  Court  to* treat  him  as  liable  to  an  occupation  rent.    Now,  ar- 


'''■<■  '^■1  >iii;i'Ai;i)   r.   .loNiis.  017 

<iiii|iii^'  ti)  a  null'  cm  llic  i-ii.-i'  ol'  J'ntlork'  v.  lioljri/,  1.")  Sim.  2G."», 
•JT(I,  it  was  thoii^'lil  "jidvisnhle  to  stati'  in  a  bill  to  redeem  a^'ainst  u 
iii(irt^'a<ij(H'  in  possession  that  tiie  defendant,  and  if  he  is  not  the  ori<;- 
inal  mortgagee,  those  under  whom  he  claims,  have  been  in  the  actual 
occu])ation  of  the  mortgaged  estate  as  owner  or  owners  thereof,  in 
addition  to  stating  that  they  have  been  in  possession  of  the  estate, 
and  in  iveeipt  of  the  rents  and  profits  of  it,  and  to  pray  that  tht; 
ilaster  may  set  an  occupation  rent  and  include  it  in  his  account  of 
rents  and  profits  received."  In  this  case  it  is  proved  that  the  mort- 
gagee liimself  was  not  in  aitual  occupation  or  using  the  premises, 
but  after  he  had  .-;old  the  |)remises  to  Johnson,  he  let  Johnson  take 
l>os.«<<'ssion  and  use  tlu-m,  by  storing  goods  there,  and  Johnson  has 
used  them  ever  since,  and  is  now  using  them  as  a  warehouse.  Tiien 
the  mortgagee  either  charged  Johnson  with  rent  or  did  not.  1 
understand  he  did  not,  but  if  he  allows  that  state  of  things  Johnson 
must  be  treated  as  in  possession  as  liis  agent,  because  if  Jf)hnson  hail 
no  right  to  possession  under  the  contract,  then  permission  to  take 
]»ossession  being  given  would  make  him  an  agent  of  the  mortgagee. 
If  Johnson  has  been  in  possession  and  using  tiiese  premises  for  iiis 
<»wn  purj)oses,  and  the  mortgagee  does  not  choose  to  charge  him 
rent  as  he  ought  to  do,  then  the  possession  by  Jolinson  is  the  posses- 
sion of  the  mortgagee,  and  if  the  mortgagee  himself  had  been  in 
possession  and  using  the  premises  as  a  warehouse,  I  could  not  have 
tlu'  least  doubt  that  he  would  under  the  rule  be  liable  to  pay  occu- 
pation rent.  Therefore  as  he  chose  to  let  Johnson  iuive  that  pos- 
session and  use,  I  must  charge  him  as  thougli  he  had  been  himself 
in  possession  from  the  time  when  Johnson  took  pos.session.  Ac- 
cordingly I  direct  the  usual  account  in  the  redemption  suit  as 
against  the  mortgagee  in  possession,  and  I  direct  the  usual  inquiry 
as  to  what  he  ought  to  be  charged  with  as  occupation  rent  from  the 
time  that  Johnson  took  possession  of  the  estate.  I  reserve  the  (pus- 
fion  of  costs. 

C.  M. 
From  this  judgment  the  defendant  appealed.     Tiie  appeal  was 
heard  on  the  2\A  of  July,  188:^. 

Cozens-IIardij,  Q.C.,  and  Swinfen  Kadij.  for  the  appellant : — 
We  aj)peal  from  the  judgment  on  two  grounds:  first,  the  defentl- 
ant  is  ciiarged  with  an  occupation  rent,  although  he  was  not  in 
actual  occuj)ation  of  the  brewery.  Xo  one  is  liable  for  an  occu- 
pation rent  unless  he  is  making  use  of,  or  deriving  profit  from,  the 
premises.  In  the  present  case  the  defendant  put  Johnson  into 
]»ossossion  of  the  brewery  before  the  day  namcMl  in  the  conditioTi-; 
<«f  sale  in  order  that  the  expense  of  a  caretaker  might  be  savi'd.  but 
he  received  no  rent  from  Johnson. 


518  EQUITY    RELATIONS.  [CHAP.  II. 

In  the  *cond  place  the  learned  Judge  refused  to  allow  the  de- 
fendant the  expense  of  deepening  the  well.  There  is  evidence 
that  this  was  done  with  the  knowledge  and  consent  of  the  plaintiffs. 
But  in  truth  notice  is  immaterial  if  the  outlay  was  for  the  benefit 
of  the  property.  In  the  present  case  it  is  clear  that  the  value  of 
the  property  was  increased.  It  could  not  be  sold  until  a  better 
supply  of  water  was  provided.  A  mortgagee  in  possession  is  always 
entitled  to  be  allowed  for  permanent  improvements  {Tipton  Green. 
Colliery  Company  v.  Tipton  Moat  Colliery  Company,  7  Ch.  D.  193; 
Sandon  v.  Hooper,  6  Beav.  346;  s.  c.  on  appeal,  14  L.  J.  Ch. 
120).  Mr.  Justice  Kay  had  only  before  him  the  report  of  the  case 
before  the  Master  of  the  Rolls.  The  report  on  appeal  materially 
modifies  the  law  as  tnere  laid  down.  Lord  Lyndhurst  says  that  if 
the  value  of  the  property  had  been  increased  he  would  have  given 
the  mortgagee  the  benefit  of  it. 

Rigby,  Q.C.,  and  T.  A.  Roberts,  for  the  plaintiffs: — 

With  respect  to  the  first  point,  the  occupation  of  Johnson  was 
the  occupation  of  the  defendant.  It  was  the  defendant's  duty  to 
require  Johnson  to  pay  rent  for  the  brewery  until  the  day  appointed 
by  the  conditions  of  sale  for  completion  of  the  purchase.  As  he  did 
not  do  so  Johnson  must  be  treated  as  his  agent  or  servant.  At  all 
events  the  plaintiffs  are  entitled  to  charge  the  defendant  with  wilful 
default  in  not  making  a  profit  by  the  occupation  of  the  premises, 
which  comes  to  the  same  thing  as  an  occupation  rent. 

The  deepening  of  the  well  did  not  really  raise  the  value  of  the 
brewery.  It  was  the  quality,  rather  than  the  quantity  of  the  water, 
that  was  deficient.  In  fact  Johnson  did  not  purchase  it  for  a 
brewery,  but  for  a  place  for  storing  his  zoedone.  Whether  the 
outlay  really  improved  the  property  is  a  question  of  fact  which 
the  Judge  decided  against  the  defendant,  and  the  Court  of  Appeal 
ought  not  to  interfere  with  his  conclusion. 

Jessel,  M.E.  My  present  opinion  is  that  the  appellant  is  enti- 
tled to  succeed  on  both  the  points  in  this  case.  I  have  always  under- 
stood that  occupation  rent  is  only  charged  against  a  mortgagee  who 
occupies.  If  one  wants  authority  for  that  proposition  he  will  find  it 
in  the  case  of  Truloclc  v.  Robey,  15  Sim.  265.  The  Vice-Chancellor 
there  says :  "A  man  may  have  been  in  possession  of  an  estate  without 
being  in  the  occupation  of  an  acre  of  it.  Anyone  is  in  possession 
of  an  estate  who  receives  rent  from  the  tenants  who  do  occupy  it. 
Why  did  not  the  plaintiff  amend  her  bill  by  stating  that  the  de- 
fendant had  been  in  the  occupation  of  part  of  the  tenements  ?  How 
can  the  Court  make  a  decree  on  a  fact  that  does  not  appear  on  the 
bill?"  Therefore  the  plaintiffs  have  to  shew  that  the  defendant, 
the  mortgagee,  was  in  occupation.     Of  course,  a  man  may  be  in 


SEC.   V.|  SMIJ'AIM)    r.    JONES.  •")!!♦ 

occupation  in  law  by  occupyin*;  the  liousc  himself  personally  m- 
hy  an  (ttcupation  through  his  servants.  In  that  sense  I  agree  with 
Mr.  Kij,'hy's  ar^annent  that  a  man  need  not  l)e  in  what  is  eallrd 
personal  oeeupation,  hut  occupation,  like  most  other  things  in  law, 
is  a  complex  term,  ami  it  is  impossible  for  a  man  to  be  in  occupa- 
tion if  somi'hody  else  is  in  occupation  ;  that  is,  excluding  the  case  of 
joint  tenants  or  tenants  in  common. 

Now  in  this  case  the  sale  by  auction  was  to  a  purchaser  of  the 
name  of  Johnson,  and  before  the  time  of  completion  arrived  .John- 
son asked  the  defendant,  the  vendor,  to  let  him  into  possession.  I 
am  not  going  into  the  (piestion  whether  h<>  ought  to  have  been  let 
into  possession  on  the  terms  \\\wn  which  he  was  let  in.  It  seems 
the  defendant  had  a  caretaker  for  him.  Therefore  he  was  in  occu- 
pation through  the  caretaker  in  that  sen.se  up  to  the  time  that  John- 
son was  let  into  possession.  Then  Johnson  was  let  into  pos.*ession 
on  the  terms  of  i)aying  a  part  of  the  outgoings,  as  I  understand. 
Whether  they  were  jjroper  terms  or  not  is  a  question  for  iufpiiry.  I 
have  heard  nothing  to  shew  that  they  were  not  proper  terms,  but 
upon  that  I  give  no  opinion,  because  there  is  the  usual  account  di- 
rected for  wilful  default,  and  if  it  turns  out  that  he  was  not  let  in  on 
proper  terms  or  on  reasonable  terms,  the  defendant  may  be  liable  for 
not  getting  all  he  might  have  got.  Hut  in  no  legal  sen.se  wa<  the 
vendor  in  occupation  after  he  let  the  purchaser  into  occupation. 
The  purchaser  was  not  his  servant  or  his  agent,  but  he  was  a 
purcha.ser  entering  in  his  own  right  and  oljtaining  not  only  legal 
possession  but  legal  occupation.  It  ajqiears  to  me.  therefore,  there 
is  no  case  whatever  for  charging  the  defendant  an  occupation  rent 
pimply  because  at  that  time  he  was  not  in  occupation.  That  1 
think  is  suiricient  to  dispose  of  that  part  of  the  ai)peal  which  relates 
to  the  occuj)ation  rent. 

With  regard  to  the  other  point,  it  is  one  of  more  general  interest. 
I  have  always  understood  the  practice  to  be  quite  settled.  If  upon 
the  hearing  of  a  rt-demption  suit  the  mortgagee,  having  charged 
in  his  pleadings  that  he  has  laid  out  money  in  lasting  improve- 
ments, produces  general  evidence  that  he  has  laid  out  money  in  last- 
ing improvements — that  is,  produces  evid«'nce  of  the  laying  out  of 
tlu>  money,  and  that  the  works  are  prima  fticic  improvements — that 
is  sulVicient  for  an  incpiiry.  If  he  ])roves  more,  that  is,  if  he  not 
only  proves  that  he  has  laid  out  money  in  permanent  works,  hut 
they  are  really  imp'-ovements  and  have  imj)rovi'd  the  proj)erty  to  the 
extent  of  the  money  laid  out,  he  will  then  get  not  only  an  incpiiry  but 
an  account  of  the  siims  laid  out  in  the  lasting  improvenu-nts.  Hut,  of 
course,  to  get  the  account  he  must  prove  a  good  deal  more  than  to 
i:et  an  incjuiry.     r|)on  that  point  1  will  quote  some  of  the  words  of 


520  EQUITY    RELATIONS.  [CHAP.  II. 

Lord  Lang'dalo  in  the  case  of  Saiidon  v.  Hooper,  G  Beav.  24G, 
although  Sandon  v.  Hooper  went  too  far  on  another  point,  and 
was  varied  on  appeal ;  but  on  this  point  there  has  been  no  appeal. 
Lord  Langdale  says  this :  "jSTow,  in  this  case  it  has  also  to  be 
considered  whether  it  is  a  matter  of  course  to  direct  an  inquiry 
whether  any  money  has  been  laid  out  in  lasting  improvements. 
Many  such  inquiries  have  been  directed  where  the  fact  of  any 
money  having  been  laid  out  has  been  proved  and  brought  to  the 
attention  of  the  Court.  I  quite  agree  with  the  argument  that  has 
been  used  on  this  occasion  that  it  was  not  necessary  for  the  de- 
fendant to  prove  the  items  of  sums  of  money  laid  out  in  the  per- 
manent improvements  alleged  to  have  been  made."  Then  he  goes 
on :  "He  may  have  done  something  towards  the  improvement  of 
the  estate,  and  if  he  had  entered  into  any  general  proof  without 
going  into  the  items,  it  is  very  probable  that  the  proof  might  have 
been  such  as  would  have  induced  the  Court  to  direct  an  inquiry 
upon  the  subject."  That  is,  you  want  general  proof  of  money 
laid  out,  and  you  want  general  prima  f.acie  proof  that  it  has  1  -en 
laid  out  in  lasting  improvements.  That  being  so,  we  have  only 
to  consider  whether  there  was  in  this  case  proof  of  both  those  facts. 
There  was  not  only  general  proof,  but,  as  I  understand,  there  was 
detailed  proof  as  to  the  money  laid  out.  There  is  no  dispute  about 
that.  The  money  laid  out  was  about  £100;  but  was  it  proved 
generally  and  prima  facie  to  be  laid  out  in  lasting  improve,  jnts? 
Now  it  stands  in  this  way ;  the  money  was  laid  out  in  bor'  .g  for 
water.  That  was  not  at  first  productive,  and  then  they  .aid  out 
more  money  which  was  productive,  and  the  quantity  of  w.iter  was 
largely  increased.  Whether  or  not  that  was  an  increa  e  which 
added  much  to  the  saleable  value  of  the  property  would  h-  a  matter 
for  inquiry,  but  they  did  satisfy  the  two  things  laid  dowj.  by  Lord 
Langdale,  namely,  that  they  laid  out  money,  and  that  „he  money 
Avas  prima  facie  a  lasting  or  permanent  improvement.  It  was  last- 
ing and  permanent,  and  it  was  prima  facie  an  improvement ;  be- 
cause it  very  much  increased  the  quantity  of  the  water  in  the 
well,  whether  we  look  on  it  as  a  brewery  property  or  even  as  a 
property  not  used  as  a  brewery,  because  it  appears  that  a  supply 
from  the  water  company  was  no  longer  required.  I  think  there  is 
suflicicnt  for  inquiry  even  if  there  were  no  special  c'  imstances  in 
this  ease  to  distinguish  it  from  the  ordinary  reder  ition  suit.  Of 
course,  a  mortgagee  takes  the  inquiry  at  his  own  isk,  as  to  what 
may  be  the  result  of  the  inquiry.  ^ 

But  there  are  very  special  circumstances  in  this  a  which  I  think 
distinguish  it  from  an  ordinary  redemption  suit, whi  'putstheright 
of  the  mortgagee  to  the  inquir}^  upon  higher  grounds.    This  is  not  a 


SKC.  v.]  Mli;i'\l;l»    c.    .loNKs.  Tj.'! 

irdcinption  s\iii  at  all.  ll  is  a  suit  bruiiglil  by  tlic  mortgaj^or  for  an 
Mount  fmiii  (he  iiiort^agee  who  has  exercised  his  power  of  sale 
"f  tile  apjjlication  of  tlic  jiroeeeds  of  that  sale  and  a  claim  for  tiie 
balance.  If  it  should  turn  out  that  the  n»ort<;agee  ha.s  done  some- 
thing to  the  property  at  his  own  expense  which  increased  its  sale- 
able value,  I  think  it  is  j)lain  on  ordinary  principles  of  justice,  that 
that  increase  should  not  go  into  the  pocket  of  the  mortgagor  without 
his  j)aying  the  sum  of  money  which  caused  the  increase.  It  dis- 
linguislu's  it    froni  the  ordinary  case  of  improvements.     The   in- 

<  n^ase  may  have  been  an  increase  which  did  not  come  under  that 
denomination,  but  which  increased  the  selling-price.  It  seems  to 
me  that  wherever  there  is  a  case  of  that  kind  where  the  mortgagee 

<  an  ])rove  that  the  selling-price  was  increased  by  reason  of  the  out- 
lay, then  to  the  extent  to  which  that  selling-price  has  l)een  so  in- 

<  reased  the  mortgagor  cannot  get  the  benefit  of  it  without  paying 
for  the  outlay.  Of  course  the  mortgagor  could  not  be  made  to 
))ay  more  than  the  increase;  but  to  that  extent  it  seems  to  me  in 
ordinary  justice  the  mortgagee  is  entitled  to  say,  '"You  shall  not 
iret'i'hat  increased  benetit  caused  by  my  outlay  without  paying  for 
that  outlay." 

In  this  case  it  seems  that  this  property  was  a  bn'wery.  It  seems 
also  from  the  evidence  that  the  supply  of  water  was  deficient  both 
in  quantity  and  cpiality,  that  there  was  an  abortive  sale,  which  was 
abor  "-'e  by  reason,  to  some  extent  at  all  events,  of  the  defective 
-upi)l;"  of  water,  and  that  thereupon  after  the  abortive  sale  the 
niortga,:ee  set  to  work  to  supply  the  deficiency.  There  is  a  dispute 
whether  he  did  supply  it  altogether.  It  is  said  that  although  he 
>u|)plied  it  as  regards  (puintity,  he  did  not  do  so  as  regards  quality. 
Then  ther,»  was  a  second  sale,  at  which  the  property  sold  for  a  go«id 
price,  hut  the  purchasiT  was  not  a  brewer,  and  it  is  suggested  that 
the  j)urchi:ser  would  have  given  the  same  money  for  the  proj)erty 
whether  tlvre  had  been  this  im-rease  in  the  supply  of  water  or  not. 
Wt>ll.  that  T'lay  be  so,  but  it  does  not  at  all  follow  that  the  .>jelling 
valuf^  was  not  increased.  It  was  a  sale  by  auction.  A  brewer  nuiy 
have  attended  the  sale,  or  several  brewers  nuiy  have  done  so.  and 
they  may  have  bid  up  to  the  last  bidding  befon^  thr.t  which  was  bid 
for  by  the  purchaser,  because  there  was  a  good  supply  of  water, 
and  it  was  su  '  ble  for  brewery  purposes.  If  that  was  so,  the  price 
would  be  incrc,  -c'^  '•.^'  i*«'i<>'^'i  '^^  •'"'  achlitional  supply  of  water, 
although  the  a(-..'al  final  purchaser  did  not  want  the  water  at  all. 
That  does  not  ] -ove  it.  .Ml  I  can  say  is.  that  there  being  in  my 
opinion  a  prima  fric  case  that  the  property  was  increased  in  value. 
i»  is  fair  that  ,,,?''re  shouhl  be  an  inquiry  to  ascertain  whether  it 
wa-;  -o  in(rea     1.     Of  course  that  incpiiry  will  Ix^  whether  anv  and 


522  EQUITY    RELATIONS.  [CHAP.  II. 

what  sum  ought  to  he  allowed  in  taking  the  accounts  of  the  de- 
fendant by  reason  of  lasting  improvements,  and  that  will  leave  the 
whole  case  open. 

There  is  another  observation  I  wish  to  make  on  the  supposed 
necessity  of  notice,  and  there  are  some  words  in  the  judgment  of 
Lord  Langdale  in  Sandon  v.  Hooper,  which  I  have  always  de- 
clined to  read  literally,  and  which  do  not  appear  to  me  to  be  war- 
ranted by  the  judgment  of  Lord  Lyndhurst.  That  is,  as  to  notice. 
I  am  by  no  means  prepared  to  say  that  Lord  Langdale  did  not  mean 
exactly  what  I  am  going  to  say :  I  rather  think  he  did ;  but  it  was 
imperfectly  expressed  either  by  himself  or  by  the  reporter.  As  I 
understand  it,  notice  is  not  necessary  if  the  improvement  is  a  rea- 
sonable one,  and  produces  a  benefit.  The  mortgagee  cannot  be 
deprived  of  that  benefit  because  he  did  not  tell  the  mortgagor  of 
it.  If  on  the  other  hand  it  is  an  unreasonable  one,  and  produces 
no  advantage,  I  do  not  see  why  the  mortgagor  should  be  charged 
w^th  it  because  the  mortgagee  gives  him  notice  of  it.  He  could  not 
prevent  it,  the  mortgagee  being  in  possession.  That  being  so  it 
seems  to  me  that  the  real  doctrine  as  to  notice  is,  that  where  the 
mortgagee  gives  the  mortgagor  notice  of  the  expenditure,  and  the 
mortgagor  agrees  to  it,  then  of  course  it  is  unnecessary  for  the 
mortgagee  to  shew  that  the  expenditure  was  reasonable.  It  is  a 
contract.  If  the  mortgagor  does  not  actually  agree  to  it,  but  does 
such  acts  as  in  the  view  of  a  court  of  law  amount  to  tacit  consent, 
or,  as  it  is  sometimes  called,  "acquiescence,"  that  will  also  put  the 
mortgagee  in  an  equally  advantageous  position.  But  if  the  mort- 
gagor simply  does  nothing,  it  appears  to  me  that  notice  cannot 
affect  the  rights  of  the  parties  either  way. 

I  think  that  is  the  true  explanation  of  what  was  intended  by  Lord 
Langdale  in  Sandon  v.  Hooper,  and  I  think  that  is  the  real  view 
of  the  law  on  the  subject. 

Under  these  circumstances  I  think  the  appeal  must  be  allowed. 
As  regards  the  costs  there  is  an  ample  fund,  and  you  can  add  the 
costs  to  the  mortgagee's  costs  of  this  suit.^ 


Dexter  v.  Arnold,  2  Sumner,  108.  (Circuit  Court  of  the  United 
States,  1834.)     Bill  in  equity  to  redeem  a  mortgaged  estate. 

Story,  J.,  delivered  the  opinion  of  the  court : — 

The  fourth  exception  is  on  account  of  the  Master's  having  made 
a  deduction  of  the  supposed  rent,  upon  the  ground  that  the  premises 
were  out  of  repair  and  partly  untenantable  while  in  possession  of 

'  The  concurring  opinions  of  Brett  and  Cotton,  L.  JJ.  are  omitted. 


f^'-^'-  ^1  i>i;\ii;i;  r.  ai.'noi.k.  oZi 

till'  mortgagee  aiitl  liis  representatives.  The  argument  seems  to  j)n»- 
eoed  upon  the  grouiul  that  the  mortgagee  was  hound  to  kcrp  the 
jtromises  in  good  repair,  and  therefore  «niglit  to  he  accountahh-  for 
sueli  rents  as  he  might  liavc  obtained  if  lie  had  (hme  his  duty  in 
regard  to  repairs.  We  know  of  no  universal  duty  of  a  mortgagee 
to  make  all  sorts  of  repairs  upon  the  mortgaged  premises  while  in 
his  possession.  Ilo  is  hound  to  make  rea.sonalile  ;inil  neeessary 
repairs.  But  what  are  reasonahle  and  neeessary  repairs  must  de- 
pend upon  the  jiartii'ular  eireiimstanees  of  the  ease.  If  a  house 
is  very  old  and  dilapitlate(l.  he  is  not  hound  to  go  to  extraordinary 
expenses  to  i)ut  it  into  full  repair,  if  those  expenses  will  he  greatly 
disproportionate  to  the  value  of  the  estate,  or  to  his  own  interest 
thenMn.  Certainly  it  eannot  he  jiretended  that  he  is  l)0und  to  make 
new  advances  on  the  estate.  In  (iiidfrcy  v.  Walsou,  W  Atk.  5 IS, 
Tionl  Ilardwicke  said  that  a  mortgagee  in  possession  is  not  obliged 
lo  lay  out  money  furth(>r  than  to  keep  the  estate  in  neeessary  rej)air. 
In  Ruxsell  V.  Sntilh.  1  .\n>t.,  K.,  DO,  it  was  decided  that  a  mort- 
gagee, after  long  possession,  was  not  hound  to  leave  the  })remi>es  in 
as  good  a  condition  as  he  found  them.  The  fac-t,  also,  that  there  has 
heeii  a  <liminution  of  tlie  value  of  the  rents  was  there  declared  not 
to  he  sutlicient  ))roof  o\'  a  want  of  proper  repairs.  It  is  quite  a 
diiTerent  (piestion  whether,  if  the  mortgagee  lays  out  money  in 
proi>er  pi'rmanent  rej)airs  for  the  hem-fit  of  the  estate,  he  may  not 
be  allowed  to  claim  an  allowance  therefor.  That  is  a  point  depend- 
ent upon  other  considerations.  But  where  a  mortgagee  is  guilty  of 
wilful  default  or  gross  neglect  as  to  repairs,  he  is  properly  responsi- 
ble for  the  loss  and  damages  occasioned  thereby.  That  was  the  doe- 
trine  asserted  in  IIiK/hes  v.  WilUdiiis,  1"2  Ves.  4!)').  And  there 
is  the  stronger  reason  for  this  doctrine,  because  it  is  also  the  default 
of  the  mortgagor  himself,  if  he  does  not  take  care  to  have  suitable 
repairs  made  to  preserve  his  own  property.  In  the  present  case, 
however,  tlu'  jioint  does  not  arise,  for  there  is  no  evidence  in  the 
Master's  report  which  establishes  any  fact  of  wilful  default  or  gm-s 
negligence  in  the  mortgagee. 

These  remarks  dispose  also  of  the  fifth  exception,  which  is 
founded  upon  the  supj)osed  dilapidations  of  the  buildings,  while  in 
possession  of  the  mortgagee.  There  is  no  j>roof  whatevt-r  that 
these  were  caused  by  his  wilful  ilefault  or  gross  negligence;  but 
thev  were  the  silent  efTccts  of  waste  and  decav  from  time. 


524  EQUITY    RELATIOXS.  [CHAP.  II. 

MOORE  V.  CABLE. 

Court  of  Chancery  of  New  York,  1815. 

(1  Johns.  Ch.,  385.) 

Bill  for  the  redemption  of  a  mortgage.  On  the  26th  of  February, 
1789,  William  Brown  being  seised  of  the  premises,  lot  No.  54  in 
►Smith  &  Graves's  patent,  conveyed  the  same  to  Joseph  Eoe,  who, 
for  securing  tlie  purchase  money,  reconveyed  them  to  Brown  by 
mortgage  dated  the  27th  of  February,  1789,  and  conditioned  for 
the  payment  of  £40,  with  interest,  on  the  1st  of  May,  1790.  On  the 
28th  of  October,  1794,  the  mortgage  was  assigned  to  the  defendant 
for  the  consideration  of  £30  by  the  brother  of  Brown,  as  his  attor- 
ney. The  heirs  of  Koc,  on  the  1st  of  August,  1807,  sold  and  con- 
veyed the  premises  to  the  plaintiff  with  cos^enants  and  warranty. 

It  appeared  that  the  defendant  entered  into  actual  possession  of 
tlie  premises,  by  his  tenants,  in  1800,  but  had,  previous  to  that  time, 
exercised  acts  of  ownership.  He  continued  in  possession  until 
1808,  when  he,  in  conjunction  with  one  Corbin,  took  a  lease  from 
the  heirs  of  Koe.  Corbin,  being  in  as  tenant  of  the  defendant,  con- 
sented to  let  in  the  plaintiff  with  him;  and  the  defendant  brought 
an  action  of  ejectment  and  recovered  judgment  in  1813,  and  has 
since  continued  in  possession  and  made  improvements  by  clearing 
part  of  the  land,  and  has  received  the  rents  and  profits.  The  plain- 
tiff did  not  know  until  the  trial  of  the  ejectment  in  1813,  that  the 
defendant  held  under  a  mortgage,  and  had  in  1807  offered  to  pur- 
chase his  interest. 

The  Chancellor  [Kent].  Two  questions  are  presented  in  this 
case : 

1.  Is  the  plaintiff  entitled  to  redeem  ?i 

2.  The  next  question  is,  whether  the  defendant,  standing  in  the 
place  of  the  mortgagee,  can  be  allowed  for  what  the  case  states  as 
improvements  in  clearing  part  of  the  land.  Such  an  allowance 
appears  to  me  to  be  unprecedented  in  the  books,  and  it  cannot  be 
admitted  consistently  with  established  principles.  The  defendant 
was,  in  this  case,  a  volunteer.  Instead  of  calling  upon  the  debtor, 
or  foreclosing  the  mortgage,  he  elected  to  enter  upon  uncultivated 
lands,  and  to  exercise  acts  of  ownership  by  clearing  a  part.  To 
make  the  allowance  would  ])e  compelling  the  owner  to  have  his  lands 
cleared,  and  to  pay  for  clearing  them,  whether  he  consented  to  it  or 
not.  The  precedent  would  be  liable  to  abuse,  and  would  l)e  increas- 
ing difficulties  in  the  way  of  the  right  of  redein])tion.     ]\rany  a 

'  Tlie  opinion  on  this  point  is  omitted,  tlio  ooint  holding  that  the  pos- 
session of  defendant  was  not  of  such  a  charaetov  nor  so  long  continued 
as  to  operate  as  a  bar. 


I 


!'••:<■•  ^1  MooKi:    /•.   cAiti.i:.  r)"2"» 

(Ichtor  niJiy  lie  iiMc  ti»  i'<'(l('ciii  l»y  rcl'iiinliii^f  tin'  ilcht  and  intcrc.-l, 
Itiit  miiilit  not  l)c  iililc  to  rcdcciii  iiiidrr  ihc  cliiirgc  of  pjiyin;^  for  tli<' 
lu'iii'licial  iini»rovciiiciits  wliicli  the  inort^'a^^cc  had  been  able  and 
williiij^  to  make.  Tin-  Kii;:lish  courts  have  al\vay<  looked  with 
jealousy  at  the  demands  of  tlie  iMortpi;,'ee,  beyond  the  payment  of 
his  debt.  In  Fremh  v.  liaroii,  'I  Atk.  1"iO,  the  Chanecdlor  would 
not  allow  the  mortgagee  anything  more  than  his  prineij)al  and  in- 
terest, though  there  was  a  i)rivate  agreejneni  bi-tween  the  mortgagor 
and  mortgagee  I'or  an  allowance  for  the  mortgagee's  trouble  in  re- 
ceiving the  rents  and  luofit-;  of  I  he  estate.  The  same  thing  was  re- 
peated in  the  ease  ol'  (nxlfrcij  v.  Walson,  3  .\tk.  517,  and  Lord 
Hardwieke  there  said  that  a  mortgagee  in  possession  was  not  ol)liged 
to  lay  out  money  any  further  tlnni  to  keep  the  estate  in  necessary 
repair;  but  if  the  mortgagee  had  expended  money  in  supporting 
the  title  of  the  mortgagor  when  it  had  I)  'en  impeached,  he  would 
allow  it.  The  same  doctrine  was  maintained  in  the  case  of  lioui- 
llioii  V.  iforl-hturc.  1  ^'ern.  31(),  in  wliich  it  was  declare*]  that  no 
allowance  was  to  be  made  to  a  mortgag<'e  or  trustee  for  their  care 
and  pains  in  managing  the  estate. 

I  shall,  accordingly,  direct  a  nia<ter  to  compute  the  ]»rin(ipal  and 
interest  due  on  the  mortgage  down  to  tlie  1st  of  January  last,  and 
that,  in  taking  the  account,  he  charge  the  defendant  with  the  nett 
amount  of  the  rents  and  profits  received,  except  such  as  shall  appear 
to  have  exclusively  arisen  from  his  own  expenditures  in  improve- 
ments; and  that  In'  allow  for  the  expense  of  necessary  reparations, 
if  any,  but  not  for  imjirovements  in  clearing  part  of  the  land:  and 
that  he  report  with  all  convenient  speed;  all  the  other  (picstions  are 
in  the  meantime  reserved. 

Di'cnc  III  rurdiiiifli/.^ 

'The  authorities  pcncially  are  accord.  Clark  v.  Sniith.  Saxt.  (X.  .1.), 
123  (1S:U)):  f/i7/i,s  v.  Mai  tin,  2  1)(  v.  K(|.  (X.  C.)  470  (l.S.'J.Jl:  McCarron 
V.  Cafisidi/,  18  Ark.  34  (lS."j()):  Saiidrrs  v.  ^^^il.•^nn,  34  Ver.  31S  (  ISCl  )  ; 
AdlcitLs  V.  hciri/i,  5  Orojr.  2!t2  (1S74)  :  Cool,-  v.  Oltatrn  I'nircrsily,  14  Kan-. 
f)4S   (1S7."))  ;   Eiiuitahlc  Trust  Co.  v.  Fi.shrr.  KKi  III.  1H!»   (1S83). 

In  Pennsylvania  Ihe  cost  of  pcrnianent  iinprovenients  "ne<'i'ssaiv  ami 
benelicia!  for  the  proper  use  of  the  pioperty"  will  he  al]t)wi'«l  in  an  action 
of  "equitaliie  ejectment"  hio\i;;lit  \>y  a  niortpifior  a<;ainst  a  niort;.'a;;ee  in 
possession.  }\'rll.i  v.  Van  Ih/kc,  1(1!»  Peiui.  St.  330  (ISS.->».  in  Massachu- 
setts, J>y  statnte  (I'ub.  Stat.  Cli.  ISl,  Sc:  23).  ".Ml  snnis  expemli'il  in 
reasonal»!i>  repairs  and  iniprcivenn-nts"  are  allo\ve<i.  Mtrriam  v.  (Sos.h,  l.'tO 
Mass.  77  (ISS.')).  .\nil  see  (Inrdiin  v.  l.rnis.  2  Siniin.  143.  14!>  (lS3.">i, 
wluTe  this  doctrine  is  lecoj^nized  hy  Stoiy,  .1. 

Unt  that  the  ri^ht  of  the  inort^'a^ree  to  an  allowance  even  for  necessary 
re])airs  is  not  ahsohite,  sec  Hank  nf  A  usirala.sia  v.  I'nUnl  Co..  4  .\pp.  ('as. 
3!H.  408  (187'.)».  and  Hontli  v.  Italtimnrc  Steam  Packet  Co..  (i3  Md.  3!) 
(1884).  In  Harthcll  v.  Siivrrsun.  54  Iowa.  ItlO  (1880),  such  ri^ht  seems 
lo  be  denied. 


526  EQUITY    RELATIONS.  [CIIAP.  II. 

MICKLES  V.  DILLAYE. 

Court  of  Appeals  of  Xew  York,  1858. 

(17  X.  Y.  80.) 

Appeal  from  the  Supremo  Court.  The  action  Avas  for  the  redemp- 
tion of  certain  premises  in  the  city  of  Sj'raciise,  mortgaged  to  Philo 
D.  Mickles.  The  trial  was  before  a  referee,  who  found  that  the 
mortgaged  premises  were,  in  1840,  eonve^yed  to  Philo  D.  Mickles 
by  one  Fitch.  There  was  then  outstanding  a  mortgage  upon  the 
premises,  executed  by  Fitch  to  David  Hall.  Philo  D.  Mickles  con- 
veyed to  the  plaintiff,  with  warranty,  March  8th,  1841,  for  the  price 
of  $4000,  to  secure  $2000  of  which  the  plaintiff  executed  a  mort- 
gage, which  in  this  suit  he  souglit  to  redeem.  This  mortgage  and 
the  bond  collateral  thereto  were,  in  April,  1841,  assigned  by  Philo 
D.  Mickles  to  John  Townsend.  Piiilo  D.  Mickles  purchased  the 
Fitch  mortgage  on  September  23d,  1843,  and  on  the  6th  of  No- 
vember, 1843,  assigned  it  to  John  Townsend,  without  the  knowl- 
edge or  consent  of  the  plaintiff,  so  far  as  the  evidence  showed. 
Townsend,  on  the  23d  of  September,  1846,  sold  the  premises  to 
Charles  A.  Whoaton  for  $1750,  upon  a  foreclosure  of  the  Fitch 
mortgage,  of  which  no  notice  was  served  on  the  plaintiff.  At  the 
time  of  this  sale,  Wheaton  was  the  owner,  by  assignment  from 
Townsend,  of  the  mortgage  for  $2000,  executed  by  the  plaintiff  to 
Philo  D.  Mickles.  Wheaton  took  possession  of  the  premises,  and 
conveyed  the  same,  with  warranty,  December  19,  1846,  to  John  A. 
Pobinson,  who  conveyed,  Xovember  19th,  1852,  to  Henry  A.  Dil- 
laye,  also  with  warranty.  The  only  question  in  dispute  in  this  suit 
was  as  to  the  allowance  to  be  made  to  Dillaye  for  improvements 
after  he  took  possession  under  the  deed  from  Robinson;  the  effect 
of  the  purchase  by  Philo  D.  Mickles  of  the  Fitch  mortgage  being 
the  subject  of  litigation  in  another  suit. 

P.  D.  Mickles  was  in  possession  of  the  premises  at  the  time  ho 
conveyed  them  to  the  plaintiff,  and  when  he  received  the  mortgage 
now  sought  to  be  redeemed.  From  that  time  until  the  sale  under 
tlio  attempted  foreclosure  he  continued  to  rent  them  in  his  own 
name  and  to  receive  the  rents,  without  disclosing  the  interest  of  the 
plaintiff.  They  were  assessed  to  him.  Whoaton,  the  purchaser, 
wont  into  possession  immediately  after  the  sale,  the  tenants  of 
P.  D.  Mickles  attorning  and  paying  the  rent  to  him.  P.  D. 
^Mickles,  who  was  examined  as  a  witness,  testified  that  when 
ho  heard  of  the  sale,  whicli  ho  supposed  was  by  virtue  of  the  mort- 
gage exocut(Hl  by  the  plaintiff,  he  told  Whoaton  ho  was  very  glad 
of  it.     llv  understood  that  the  premises  sold  for  enough  to  pay  the 


***■•'•  ^-l  Mi(  Ki.i>    r.    1)11.1. \^  i;.  527 

iiiurt^rjior,.,  ;,n(l  h,'  coii-idfird  tlu-  iiialti-r  settled,  iind  tliat  Wlwatoii 
had  ol)taiiU'<l  a  pcil'cct  title.  The  i)urc'ha.st'rs  ol"  the  preiiiis<'<  iiiwhT 
Wheafon  took  po.^se.^sinii  at  the  time  of  their  re.-^peclive  purehases. 
There  was  a  liriek  hiiiMin;;  on  the  lot,  which  was  erected  hv  V.  D. 
Mickles  ill  \Hl'i  or  1S|;!.  It  w-is  ahout  nineteen  feet  wide,  thirty- 
five  feet  lonir  and  two  sioijcs  hiirli.  After  Dillave  purehasod,  an<l 
in  is:»2.  it  was  found  thai  thr  old  Imildin^  was  in  a  dilapidated 
«ondition.  and  was  ready  to  fall  down.  The  walls  were  hadlv 
cracked,  particularly  the  one  in  the  rear,  it  could  have  heen  re- 
jiaired  at  an  exj)ense  <d'  ahout  $2oO,  hy  takin*,'  tlown  the  roar  and 
one  of  the  side  walls  and  rehuildiii;,^  them.  Dillaye  caused  it  to  ho 
rehuilt  and  eniar^M'd,  at  an  c.\i)en.-e  of  ahout  $.")(KK).  increasing:  it.> 
Icn^'th  to  .seventy  feet,  j)re.<ervin«r  one  of  the  walls  and  the  floors, 
and  making  use  of  the  old  materials  so  far  as  they  would  an-wer. 
IFe  covered  it  with  a  tin  roof,  and  i)ut  in  ;:as  ami  water  j)ipes.  He 
then  rented  it  in  its  improved  condition. 

The  referee  found  the  foregoim:  facts  in  suhstancc;  and  stated 
that  the  improvements  made  hy  Dillaye  were  permanent  and  val- 
iiahle  and  were  made  hy  him  in  the  full  helief  that  he  was  the 
ahsoluto  owner  of  the  jiremises.  He  added  that  it  appeared  from 
the  evidence  that  while  the  improvements  were  making',  the  plaintiff 
was  al).<ent  from  the  county  of  ()nonda<,M  and  that  there  was  n<» 
evidence  that  he  was  aware  of  the  fact  while  the  improvements  were 
j)ro;,'re.ssin<r.  In  matter  of  law  he  determined  that  the  plaintitr 
was  not  ohliged  to  allow  anythin/ir  on  account  of  the  rehuildin*,^ 
heyond  what  it  would  cost  to  rejiair  the  old  tenement.  He  pro- 
ceeded to  state  tlic  account,  cliar<,Mng  the  plaintitl"  with  tlu'  mort- 
pige  debt  and  interest,  the  rcjiairs  estimated  upon  the  principle 
above  stated,  premiums  of  insurance  and  taxes,  and  the  interest 
on  these  last  items,  and  creditintr  him  with  the  rents  received,  but 
without  inchidiiiir  the  increased  rent  on  account  of  the  rebuildini:, 
and  makinj:  due  from  the  plaintiff,  to  be  paid  on  the  redemption, 
.$lS.s:).!»:».  The  defendants  e.\cej)ted.  Judj^ment  was  rendered, 
allowing  a  redemption  upon  the  payment  of  that  sum  according 
to  the  report,  which  was  allirmed  at  a  general  term  in  the  fifth  dis- 
trict.    The  defendant'^  ap|)ealed. 

Dknio,  J.  The  right  of  a  mortgagor  who  has  made  default  in 
the  payment  of  the  mortgage  debt  according  to  his  contract,  and 
especially  where  tlu-  mortgagee  or  his  assigns  has  lawfully  ac<piire.l 
the  possession,  is  in  e(niity.  and  not  a  strict  legal  right.  It  would  be 
impossible  for  the  plainliff  to  obtain  possession  of  these  premises 
l»y  any  suit  or  procei-ding  known  to  the  law.  except  a  suit  in  tnjuity. 
When  the  mortgagor  comes  into  a  court  of  e<|uitv  in  such  ea.>;»Vs 
Jo  redeem,  lu'  must  do  e<iuity  to  the  mortgagee,  or  the  court  will  con- 


528  EQUITY    RELATIONS.  [CIIAP.  II. 

sider  the  estate  absolute  in  the  latter;  and  the  redemption,  when  al- 
lowed, will  be  decreed  either  absolutely  or  under  certain  conditions 
according  to  the  nature  and  justice  of  the  case.  (Powell  on  Mort- 
gages, 387,  388.)  In  conformity  with  this  idea  of  the  nature  of 
the  equity  of  redemption,  the  Court  of  Chancery  has  always  obliged 
the  mortgagor  to  submit  to  equitable  conditions.  It  was  formerly 
held,  for  example,  that  if  the  mortgagor,  after  giving  the  mortgage, 
had  borrowed  a  further  sum  of  the  mortgagee,  the  latter  was  not 
obliged  to  submit  to  a  redemption  until  both  debts  should  be  paid 
{id.,  391,  392).  The  tendency  of  modern  decisions  has  been  to 
limit  and  define  the  power  of  the  mortgagee  to  insist  upon  con- 
ditions to  the  redemption.  It  is  by  no  means  intended  to  state 
there  is  any  unlimited  discretion  in  courts  of  equity  to  compel  the 
owner  of  an  estate  bound  by  a  forfeited  mortgage  to  do  whatever 
may  in  a  popular  sense  and  without  regard  to  legal  precedents  be 
considered  equitable  in  the  particular  case.  It  is,  however,  useful 
to  bear  in  mind  the  origin  and  true  character  of  the  right  of  re- 
demption, when  called  upon  to  determine  a  case  not  falling  within 
any  settled  course  of  adjudication.  It  is  still  the  rule  that  the 
mortgagor  seeking  to  redeem  must  do  equity  to  the  mortgagee,  or 
those  who  have  succeeded  to  his  rights;  and  where  it  has  not  been 
settled  what  is  equity  under  the  circumstances  which  attend  a  given 
case,  the  court  must  determine  it  according  to  its  own  sense  of 
what  is  morally  just  and  right. 

Where  the  conventional  relation  of  mortgagor  and  mortgagee 
is  shown  and  acknowledged  between  the  parties,  there  is  no  reason 
why  the  latter  should  be  allowed  to  obstruct  the  right  -of  redemp- 
tion by  expending  money  upon  improvements.  He  can  at  any  timo 
call  upon  the  debtor,  by  suit  of  foreclosure,  to  elect  whether  ho 
will  pay  the  debt  or  incur  an  absolute  forfeiture;  and  if  he  is  found 
making  costly  improvements  there  is  good  reason  to  suspect  a  de- 
sign to  avail  himself  of  the  present  inability  of  the  debtor  to  dis- 
charge the  incumbrance  in  order  to  confirm  his  title  to  the  estate 
by  embarrassing  the  right  of  redemption.  The  general  rule  is 
therefore  understood  to  be  that  upon  taking  the  account  in  a  siTtt 
for  redemption  against  a  mortgagee  in  possession,  he  is  to  bo 
charged  with  the  rents  and  profits,  and  be  allowed  only  for  nec- 
essary reparations.  {Moore  v.  Cable,  1  John.  Ch.  E.  387;  Quin  v. 
BrUlain,  1  Hoffman's  Ch.  E.  353;  Story's  Eq.,  §  1016.) 

So  if  the  mortgagor,  having  in  fact  only  a  redeemable  estate, 
should,  even  in  good  faith,  deny  the  mortgagee's  equity,  this  ought 
not  to  prejudice  the  latter,  provided  he  had  done  nothing  to  mislead 
fhe  mortgagor,  and  had  not  unreasonably  slept  upon  his  riglits. 
In  ord(>r  to  apply  the  cases  in  which  permanent  improvements  have 


■"^Kr.  v.]  \ll«Kl.l>    r.    itll.l.Wi:.  .*.',".» 

lurii  allowed  \n  l)c  takfii  into  the  atcoimt,  it  is  iifco.-ary  to  iiavr  a 
clear  view  of  the  situation  of  these  jjartiert  at  tlio  time  the 
improvements  were  made.  'I'he  defeiKhint  Dillaye  wa.s  in  posses- 
sion as  owner  umh-r  a  deed  with  warranty  from  a  person  in  posses- 
sion holding  a  similar  evidence  of  title  from  one  wiio  had  pur- 
chased the  premises  at  a  sale  made  professedly  upon  the  fore- 
closure of  a  mortgage  executed  l)y  the  true  source  of  title,  and  who 
had  taken  possession  imdrr  that  fon-closure.  It  is  easy  to  see  thai 
an  examination,  such  as  a  very  cautious  man  would  have  made, 
would  have  shown  the  invalidity  of  the  foreclosure.  But  the  omis- 
sion to  make  an  examination  was  not  such  gross  negligence  as  to 
charge  the  defendant  with  had  faith.  He  cannot  claim  that  the 
estate  is  irredeemahle  hecause  he  supposed  it  to  he  so:  but  lie  i.-< 
not  deprived  by  his  omission  to  examine,  of  tlie  position  of  a  person 
acting  in  good  faith  without  actual  notice.  The  referee  has  found, 
what  could  not  he  doubted  upon  the  eviflence,  that  he  l)i'lieve<l  him- 
self to  be  the  absolute  owner  of  the  lot.  But  the  plaintitf  hat! 
very  materially  aided  liim  in  coming  to  this  conclusion,  or  rather, 
he  had  suffered  him  to  fall  into  that  error,  by  an  unjustifiable  breach 
of  his  own  obligation.  His  mortgage  was  executed  in  March,  1S4I. 
One-fourth  of  the  principal  and  one  year's  interest  were  payable 
in  about  one  year  thereafter,  and  the  whoh^  debt  was  j)ayab'e  on 
the  1st  day  of  June,  184.").  He  was  in  default  fnr  a  portion 
of  tlie  debt  for  eleven  years,  and  the  whole  amount  of  principal 
and  interest  had  been  in  arrears  more  than  seven  years  when  this 
suit  was  commenced.  lie  had  not  paid  the  smallest  amount,  and 
so  far  as  appears,  had  never  during  that  period  recognized  his  in- 
debtedness. Conceding,  as  we  must  do  upon  this  case,  that  the  sale 
by  P.  I).  Miekles  to  the  jdaintilT,  and  the  giving  l>ack  of  thi-  bond 
and  the  mortgage  sought  to  i»e  re<leemed  was  a  real  and  not  a  eol.ir- 
ablc  transaction,  the  plaintiff  was  in  possession,  up  to  the  sale  upon 
the  foreclosure,  by  P.  1).  Mickles  as  his  servant  or  agent  or  a^  his 
tenant.  This  pos.scssion  was  voluntarily  al)andoned  and  given  up 
to  W'heaton  upon  his  jmrchase  after  foreclosure  sale,  and  tin-  latter 
immediately  entered  \ipon  the  reception  of  the  rents  and  profits  a.-* 
owner,  and  he  and  those  who  sueeeedt'd  him  have  contimied  to  pos- 
•sess  the  premises  as  owners,  unchallenged  and  without  actual  knowl- 
edge of  this  right  of  redemption,  until  shortly  lu'fore  the  et)mmenee- 
ment  of  this  suit,  a  period  of  eight  years.  When  Dillaye  erected 
the  building,  he  and  those  who  had  preceded  him  in  the  titK-  \inder 
the  supposed  foreclosure  had  Int-ii  in  possession  as  owners  about  six 
years.  It  is  not  found  l)V  the  refi'ree  that  the  |)laintifT  was  ign.trant 
that  his  agent  or  tenant  had  been  put  out  of  |)ossession  upon 
jia'tenco  of  the  old  mortgage,  or  that   Wheaton  and   his  grantee- 


530  EQUITY    RELATIONS.  [CHAP.  II. 

were  in  possession,  claiming  as  owners  under  that  proceeding;  and 
considering  that  the  premises  lie  in  one  of  the  most  considerable 
interior  towns,  and  upon  the  great  thoroughfare  through  the  state, 
it  is  no  wise  probable  that  he  was  ignorant.  The  referee  finds 
indeed  that  he  was  not  aware  of  the  improvements  while  they  were 
going  on.  This  is  not  inconsistent  with  a  full  knowledge  that  his 
tenant  had  yielded  up  the  possession  to  a  party  claiming  the  ab- 
solute title,  and  that  the  occupants  were  in  possession,  believing 
themselves  to  be  the  owners.  The  fact  probably  is  that  both  par- 
ties acted  in  ignorance  of  their  rights.  The  old  mortgage  is 
claimed  to  have  been  extinguit^hed  by  the  operation  of  a  tech- 
nical rule  of  law.  Had  it  rem-xined  on  foot  the  right  to  redeem 
both  mortgages  would  not  have  been  of  much  if  any  value  until 
the  defendant  had  improved  the  premises  by  the  expensive  erec- 
tion which  he  put  upon  them.  7f  the  plaintiff  was  not  aware  of 
the  extinguishment  of  the  old  mortgage  he  would  naturally  have 
considered  his  interest  as  nominal ;  and  this,  I  am  persuaded,  is 
the  explanation  of  his  long  inaction.  The  case,  when  Dillaye 
erected  the  building,  was  this:  he  really  had  the  title  of  a  mort- 
gagee in  possession,  but  he  supposed  he  was  the  absolute  owner. 
The  plaintiff  had  in  fact  an  equity  of  redemption,  but  he  had 
abandoned  the  possession  to  the  defendants,  who  entered  as  owners; 
and  he  had  ceased  to  claim  any  interest  in  the  lot.  He  now  finds 
that  he  has  a  valuable  equity  of  redemption;  and  the  question  is 
whether  he  ought  to  pay  for  the  improvement  as  a  condition  to 
the  redemption.  It  was  necessary  that  Dillaye  should  make  ex- 
penditures to  a  considerable  amount  to  render  the  premises  tenant- 
able  at  all ;  but  he  laid  out  more  than  was  strictly  necessary,  though 
not  more  than  would  have  [been]  judicious  had  he  been,  as  he 
supposed  he  was,  the  owner.  In  Benedict  v.  Oilman,  4  Paige,  58, 
the  plaintiff  had  purchased  under  a  statute  foreclosure  which  did 
not  cut  off  the  rights  of  judgment  creditors  whose  lien  was  subse- 
quent to  the  mortgage,  and  had  taken  possession;  and  he  had 
made  permanent  improvements  in  ignorance  of  the  existence  of 
certain  judgments  in  the  hands  of  the  defendants.  He  filed  a  bill, 
claiming  a  strict  foreclosure  unless  the  defendants  would  pay  up 
the  mortgage  and  the  value  of  the  improvements,  and  this  was 
decreed.  The  chancellor  said  it  would  be  inequitable  and  unjust 
to  give  the  defendants  the  benefit  of  these  improvements  without 
compelling  them  to  pay  an  equivalent  therefor.  The  defendant's 
case  in  the  present  controversy  is  much  stronger  than  the  plain- 
tiff's in  Benedict  v.  Gilman,  inasmuch  as  the  judgment  creditors 
had  done  nothing  to  mislead  the  party  in  possession,  and  the  neg- 
ligence of  the  latter  in  omitting  to  search  for  subsequent,  incuro- 


^^' '•  ^-l  MicKi.F.s   r.    Kii.i.AVi;.  0:51 

Itiiiiurs  was  at  Ivast  as  great  a>  that  of  Dillaye  in  lliis  case.  Judgf 
Story  has  carried  the  ri<;hts  of  a  party  in  possession,  who  has  in 
<.'oi)(l  faith  made  improvements,  aitojfether  heyond  what  would  he 
necessary  to  protect  the  defenchmt  in  this  case.  He  says  generally 
that  courts  of  cipiity  have  extended  the  doctrine  to  cases  where 
the  party  making  the  repairs  and  improvements  has  acted  bonn  fxdr 
and  innocently  and  there  has  heen  a  suhstantial  Ijcnelit  conferred 
<»n  the  owner  (Treatise  o\\  Va\.,  ^  \'i',\'i);  and  he  has  carried  the 
l)rinciple  into  practice  in  a  case  decided  hy  him  in  the  Circuit 
Oourt  of  the  Tnited  States.  In  Britjht  y.  Boijil,  1  Story,  478,  lands 
had  heen  sold  hy  an  administrator,  hut  the  sale  was  void  hecauso 
he  had  not  given  security  according  to  the  statute.  The  heir  of 
the  intestate  had  sued  for  and  recovered  the  posi^ession  against  the 
])laintiir,  who  derived  his  title  under  the  administrator's  sale.  The 
latter  filed  a  hill  in  equity  in  the  Circuit  Court  of  the  United 
States  to  recover  of  the  lu'ir  the  value  of  certain  improvements 
which  he  had  in  good  faith  made  upon  the  land,  and  which  in- 
cluded the  bnilding  of  a  large  dwelling-house.  The  heir  was  an 
infant,  and  resided  in  another  state;  but  Judge  Story,  notwith- 
standing, referred  the  case  to  a  master  to  take  an  account  of  the 
eidianced  value  of  the  premi.ses,  dtilucting  the  rents  and  profits, 
with  a  i)retty  strong  intimation  that  the  phyntiir  was  entitled  to 
recover  them,  though  he  said  he  would  look  into  the  ca.'^e  again 
iijion  the  coming  in  of  the  report.  This  conclusion  could  not  j)rol)- 
ahly  be  sustained  e.\cei)t  upon  the  principle  that  one  who  fraudu- 
lently stands  hy  and  sees  another  expending  money  in  good  faith 
upon  his  land,  shall  not  reclaim  the  land  without  jiaying  for  the 
improvements.  Chancellor  Walworth,  I  think,  laid  down  the  true 
principle  in  Puhunn  v.  IHtchir,  (i  l*aige,  IV.H).  lie  decided  in  a  case 
very  similar  to  that  which  was  before  dudge  Story,  that  where  there 
was  no  fraud  or  ac(iuiescence  on  the  part  of  the  person  having 
the  legal  title,  lie  could  not  be  compelU'd,  even  in  favor  of  a  party 
in  possession  who  had  made  imj)rovements  bona  fide,  to  allow  for 
such  im])rovements  ;  but  he  said  that  such  allowances  were  con- 
stantly made  by  courts  of  eipiity  wheii'  the  legal  title  was  in 
the  j)erson  wiio  had  made  the  improvements  in  good  faith,  and 
where  the  equitable  title  was  in  another,  who  was  ol)liged  to  n'sort 
to  the  court  for  relief.  This,  as  we  have  seen,  is  precisely  the  case 
now  before  tlu'  court. 

In  Wclmoii'  V.  Huberts,  JO  How.  l*r.  K.  ."il,  the  question  we  are 
now  considering  was  examined  in  the  Supreme  Court«l)y  Mr.  .lus- 
tiiv  Hand,  with  his  accustoiued  industry.  It  was  a  suit  for  fon>clos- 
iire  bya  junior  mortgagee,  the  defemlant  having  purchased  the  prem- 
ises from  out'  who  had  bid  them  in  upon  a  foreclosure  of  the  elder 


533  EQUITY    KELATIOXS.  [CIIAI'.  II. 

mortgage,  in  which  proceeding  the  junior  incumbrancer  was  not 
made  a  party.  It  was  alleged  that  the  defendant  had  made  improve- 
ments in  good  faith,  of  the  value  of  $6000,  and  it  was  decided  that 
the  premises  should  be  sold,  and  that  the  value  of  the  permanent 
improvements  as  well  as  the  amount  due  on  the  elder  mortgag(> 
should  be  paid  out  of  the  proceeds;  after  which  the  plaintiff  was 
to  be  paid  the  amount  due  on  his  mortgage.  I  refer  to  the  author- 
ities relied  on  by  Judge  Hand,  and  also  to  Talbot  v.  Braddill.  1 
Yern.  184,  and  to  Coote  on  Mortgages,  pp.  392,  561. 

I  am  clearly  of  opinion  that  the  refusal  to  allow  for  the  erection 
of  the  building  was  erroneous.  The  judgment  of  the  Supreme 
Court  should  be  reversed,  as  respects  the  account  stated  by  the 
referee,  and  there  should  be  a  reference  in  that  court  to  take  an 
account  between  the  plaintiff  and  the  defendant  Dillaye,  in  whicli 
the  latter  should  be  allowed  for  the  enhanced  value  of  the  premises 
on  account  of  the  improvements  made  by  the  defendants.  In  other 
respects,  the  order  sliould  direct  the  usual  allowances  between  mort- 
gagor and  mortgagee  on  a  bill  for  redemption. 

Harris,  J.  The  plaintiff  acquired  his  title  to  the  premises,  such 
as  it  is,  in  March,  1841.  The  purchase  price  is  said  to  have  been 
$4000.  Of  this,  no  part  was  ever  paid.  The  plaintiff  executed  his 
bond  and  mortgage  for  $2000,  and,  as  Philo  D.  Mickles,  the  grantor, 
now  testifies,  it  was  agreed  that  the  remaining  $2000  should 
be  applied  upon  a  note  which  the  plaintiff  held  against  him.  There 
was  no  written  evidence  of  such  an  agreement,  and  the  indorsement 
was,  in  fact,  never  made.  At  the  time  of  the  conveyance  the  Fitch 
mortgage  was  an  outstanding  incumbrance  upon  the  premises,  and 
yet  no  provision  was  made  for  its  payment,  nor  did  the  plaintiff 
in  any  way  protect  himself  against  this  incumbrance,  except  by 
the  covenant  of  warranty  in  his  deed.  Indeed,  it  does  not  appear 
that  the  plaintiff  ever  so  much  as  inquired  whether  the  property 
was  incumbered  or  not. 

For  five  years,  and  more,  after  the  conveyance,  the  grantor  con- 
tinued to  possess  and  enjoy  the  premises,  as  he  had  before.  He 
received  rents  in  his  own  name;  paid  taxes  and  assessments;  made 
improvements;  and,  in  short,  held  himself  out  to  the  world  as  the 
absolute  owner.  There  is  no  evidence  that  the  plaintiff  ever  claimed 
to  be  the  owner,  or  that  Philo  D.  ]\Iicklcs  ever,  by  word  or  act. 
recognized  his  ownership. 

At  the  time  of  the  foreclosure  of  the  Fitch  mortgage,  in  1846, 
the  amount  due  upon  the  two  mortgages  was  at  least  equal  to  the 
value  of  the  premises.  Certainly,  it  exceeded  the  purchase  price 
mentioned  in  the  plaintiff's  deed.  Philo  D.  Mickles  was  then  in- 
solvent.    There  was  no  inducement,  therefore,  for  the  plaintiff  or 


''»:<'■  ^1  MicKi.Ks   c.   1)11, 1. \vi:.  5;{:{ 

IMiilo  1>.  Mickli's  1(1  jHvvciit  ii  I'orcclo^nn'  l)y  p.ayin;,'  ftfT  ilit'  mort- 
•ragps.  Upon  the  foreclosure,  the  (Icftndant  Wlicaton,  who  had 
then  heeoine  the  owner  of  the  sceond  inort;,M^'t'.  hecamc  the  pur- 
*  hascr,  and  thus,  liad  the  f()reeh)sure  heen  pcrlect,  Ixtth  mortgages 
uould  have  heen  satisfietl.  Wheaton  wouhl  have  hceoine  the  owner 
nf  the  premises,  hut  at  a  eost  prohahly  exceeding  their  value  at 
that  tiiiv.  After  the  sale  I'hilo  1 ).  Miekles  in<|uired  of  Wheaton 
whether  the  {jrcinises  had  hrought  enough,  and.  upon  heing  in- 
lonned  that  they  had  heen  sold  for  the  amount  of  the  mortgage,  he 
expressed  his  gratification  that  the  nuitter  was  settled. 

Wheaton,  as  jiurchaser,  went  into  possession,  and  soon  after  con- 
veyed the  premises  hy  deed,  with  warranty,  to  the  defendant  Roh- 
inson,  who  held  the  premises  ahout  four  years  and  then  sold  to 
the  defendant  Dillaye.  The  latter,  in  18");},"  ^'in  the  full  helief  that 
he  was  the  ahsolute  owner,"  as  the  referee  has  found  the  fact  to  he, 
proceeded  to  make  'Marge  and  permanent  and  valuahle  improve- 
ments upon  the  premises,  costing  sonu'  $r)()00,  more  or  less."  The 
j>roperty  heing  thus  douhled  in  value,  it  hecame  an  ohjeet  for  the 
jilaintiir  to  assert  his  right  of  redemption.  Acconlingly,  after  sleep- 
ing upon  his  rights,  such  as  they  were,  for  nearly  thirteen  years, 
lie  eonimenced  this  action  in  IS")!,  claiming  the  right  to  redeem; 
•iTul  the  (pu'stifui  presented  is  whetlu'r,  assuming  the  right,  any  cimi- 
jiensation  shall  he  made  to  Dilhiye  foi-  the  large  improvements  he 
lias  nK\de. 

All  will  agree.  T  think,  that  the  phiiiitilf  pi-e-ents  a  case  which 
entitles  him  to  no  greater  degree  of  favor  than  tlu'  estahlished  rules 
of  equity  applicahle  to  this  ca.se  entitle  him  to  demand.  '*!  should 
have  heen  glad."  says  Mr.  Justice  Allen,  in  pronouncing  the  judg- 
nu^nt  now  under  review,  "to  have  found  some  principle  upon  which 
the  defendants,  who  have,  in  perfect  honesty,  expended  their  money 
to  a  large  amount  in  the  permanent  inijirovement  of  the  property. 
l>y  which  its  value  and  productiveness  have  heen  and  are  greatly 
enhanced,  could  he  reimhur.sed,  at  least  to  the  amount  of  the  rents 
and  profits  which  they  had  received."  We  are  therefore  to  consider 
whether  the  |)lainti(T  stands  uj)on  any  legal  right  which  precludes 
the  court,  in  granting  the  relief  for  which  he  ajijdies,  from  doing 
-uhstantial  justice  hetween  the  partic^s. 

I  admit  the  general  rule  to  be  that,  where  the  simple  and  acknowl- 
edged ndation  of  mortgagor  and  mortgagee  in  possession  exists,  the 
latter  will  not,  upon  redempticui,  he  allowed  for  general  imj)rove- 
MUMits  nuide  without  the  acquiescence  or  consent  of  the  mortgagor, 
'•sp(>cially  if  the  improvements  tend  to  cripple  the  power  of  n-- 
demption.  Monro  v.  ('nliJi'.  1  John.  CU.  U.  38."),  was  such  a  cas<\ 
The  assignee  of  n  mortgage,  without   calling  upon  the  morfLragor 


534  EQUITY    RELATIONS.  [CHAP.  II.. 

or  attempting  to  foreclose  the  mortgage,  chose  to  take  possession 
of  the  mortgaged  premises,  which  consisted  of  wild  lands,  and  had 
a  part  of  the  land  cleared.  The  claim  of  the  mortgagee  to  be  al- 
lowed for  what  he  had  thus  expended,  was  rejected.  In  noticing 
this  case  in  his  Commentaries,  Chancellor  Kent  says :  "The  clear- 
ing of  uncultivated  land,  though  an  improvement,  was  not  allowed 
in  Moore  v.  Cable,  on  account  of  the  increasing  difficulties  it  would 
throw  in  the  way  of  the  debtor  to  redeem.  But,"  he  adds,  in  the 
same  connection,  "lasting  improvements  in  building  have  been 
allowed  in  England,  under  peculiar  circumstances,  and  they  have 
sometimes  been  allowed  in  this  country,  and  sometimes  disallowed." 
(4  Kent  Com.  167.)  In  a  note  at  the  same  place  it  is  further  added 
that  "all  the  cases  agree  that  the  mortgagee  is  to  be  allowed  the 
expense  of  necessary  repairs,  and  beyond  that  the  rule  is  not  inflex- 
ible, but  it  is  subject  to  the  discretion  of  the  court,  regulated  by 
the  justice  and  equity  arising  out  of  the  circumstances  of  each  par- 
ticular case."  Accordingly,  in  a  recent  English  treatise  (Coote 
on  Mort.  354)  it  is  said  to  be  the  duty  of  the  mortgagee  in  posses- 
sion to  keep  the  premises  in  repair,  and  he  will  be  allowed  the 
charge  of  permanent  improvements.  And  Hilliard,  in  his  Treatise 
on  the  Law  of  Mortgages,  after  noticing  the  general  rule  on  the 
subject,  says :  "The  rule  refusing  the  allowance  of  lasting  improve- 
ments has  been  subjected  to  some  exceptions  in  special  cases,  as 
where  the  mortgagee  makes  such  improvements  supposing  himself 
to  be  the  absolute  owner."  In  support  of  this  proposition  he  cites 
the  language  of  the  chancellor  of  Maryland  in  Neale  v.  Hagthrop, 
3  Bland  Ch.  R.  590,  where  it  is  said :  "If  the  mortgagee  has  been 
long  in  possession,  claiming  adversely,  and  suffered  to  treat  the  es- 
tate as  his  own,  and  the  mortgagor  stands  by  and  permits  lasting 
improvements  to  be  made,  he  shall  pay  for  them."  (Hilliard  on 
Mort.  297.) 

In  the  case  before  us,  the  premises  had  been  held,  under  the 
statute  foreclosure  of  1846,  for  more  than  six  years  before  Dillaye 
purchased.  The  possession  had  been  continued  and  undisturbed. 
The  silence  of  the  plaintiff  for  this  long  period  had  encouraged  the 
belief  that  those  who  had  the  property  in  possession  were  the  true 
owners.  Dillaye  purchased,  not  as  the  assignee  of  the  mortgagee, 
but  believing  that  he  was  acquiring  the  property  as  his  own.  He 
made  the  improvements  never  doubting  that  he  was  the  absolute 
owner.  The  referee  has  not  found  that  the  plaintiff  was  ignorant 
of  the  fact  that  the  premises  had  been  sold  upon  the  foreclosure, 
or  that  Wheaton  and  his  grantees  were  in  possession  under  that 
sale.  All  he  finds  on  this  subject  is  that  "during  the  erection  of 
the  improvements  the  plaintiff  was  absent  from  Onondaga,  and 


KKf.  V.)  MhKi.i-s   r.    Mii.i.wi:.  r):5.*> 

tluTc  was  no  ovidonro  thai  he  was  awan-  of  tlio  fart  whilo  the  iiii- 
jjrovcnicnts  were  j)r()^n's-;in<,'."'  'VUr  plaintilT  liaviii;:  so  Ion;:  a((|ni- 
csccd  ill  till'  adverse  j)oss('ssioii  of  tlic  prciniscs,  liimscif  coiitriljiitcil 
to  the  mistake  under  wliidi  the  defendants  acted.  Had  no  iin- 
])roveinents  lu'cn  made,  tlieri'  is  no  reason  to  helieve  that  lie  would 
ever  have  assi-rted  his  right  to  redeem.  Under  sneh  cireumstaiuM-s, 
lie  should  not  be  allowed,  in  a  courl  of  f(|uity,  to  enrieii  him.self 
at  the  expense  of  one  who  has  acted  innocently.  Tlw  inif)rovf- 
mcnts  are  a  substantial  benefit  to  the  projx-rty,  and,  if  In-  would 
n'deeni,  he  ou<:ht,  ex  aquo  et  bono,  to  pay  for  them  to  the  extent  of 
such  benefit. 

The  plaintiff  has  found  himself  under  the  necessity  of  resort- 
ing to  a  court  of  equity  to  enforce  his  right.  He  has  thus  placed 
himself  within  the  range  of  that  great  principle,  that  he  who  seeks 
equity  must  himself  do  e(iuity.  The  improvements  were  made  in 
the  full  belief  that  the  plaintiff  had  no  right  to  the  property.  That 
belief  has,  to  some  extent,  been  induced  by  the  apparent  acqui- 
escence of  the  plaintiff  in  the  adverse  possession  of  the  defendants. 
If  now  the  plaint itf,  after  so  great  delay,  will  assert  his  right  to  re- 
deem, and  invoke  the  aid  of  a  court  of  equity  to  imforce  that  right, 
he  should  be  required  to  make  ecjuitable  compensation  for  the  bene- 
fits he  will  receive  from  the  imj)rovements.  To  refuse  such  com- 
pensation, instead  of  doing  ('([uity,  would  produce  the  most  revolt- 
ing injustice.     {'I  Story's  Eq.  Jur.,  ^  7!)!1,  id..  ^  T^:?:.) 

CoMSTOCK  and  Puatt.  Js.,  did  not  sit  in  the  case;  all  the  other 
judges  concurring, 

Judgment  modified  and  ticroiinl  ordered  to  he  re-stated.^ 

'  "Whoii,  as  in  tlii^  fuse,  a  plaiiitilT  lias  pcriiiittod  liis  ri^'ht  to  satisfy 
a  niortffa^o  to  ipinain  doiinant  for  nearly  thirty  years,  during  which  other'* 
have  paid  the  assessments  and  taxes,  and  made  improvements  in  the  l)elief 
that  they  had  title  under  a  foreclosure  of  the  mortgage,  he  cannot  complain 
that,  as  a  condition  of  re;;ainin;;  possession,  he  is  compelled  to  account  for 
and  pay  such  taxes,  assessments  and  for  such  improvi'inents.  according  to 
the  just  anil  enli^htened  princi|)les  of  courts  of  equity." — Per  Orover,  .1., 
in  ^^illrr  v.  linkmuii.  ')(>  N.  V.  3.SS,  •^A'>    (iHT'i). 

The  do<-trine  of  the  leading  case  is  everywhere  acce|»te«l,  the  improve- 
ment heiiifj  reasonalih'  and  "judicious."  (liHi.s  v.  .Martin,  2  Dev.  Kq.  i  N.  (.'.) 
470  (lK3;n:  .MrCoiiiirl  V.  H„l,ihu.sh,  11  111.  (il  (1S4!>):  .\lrS„rlr,,  v.  l.nr- 
issn,  !()(»  Mass.  '270  (18(58);  lltirprr's  .Ipinitl.  e,A  Tenn.  St.  .115  (  IS70)  ; 
Amrricau  Buttonhole  T'o.  v.  Iturlinqton  Loan  .\itsn.,  (i8  lown,  32(5  (IS8(5). 
Hut  Hoe  .\lillrr  v.  Currif,  124  hid.  48  (18S!»),  in  which  it  is  curiously  lim- 
ited, and  eouipure  Burnett  v.  Stlsun,  54  Iowa,  41    (1880). 


-536  "  EQUITY    RELATIONS.  [CHAP.  11. 

McCUMBEE  V.  OILMAN. 

Supreme  Court  of  Illinois,  1854. 

(15  7/Z.  381.) 

Calvin  McCumber,  the  ancestor  of  the  complainants,  on  the 
fourth  day  of  August,  1842,  purchased  from  Joel  Walker,  lot  two 
in  block  seven,  in  Walker's  addition  to  Belvidere,  for  $100,  and  took 
a  bond  for  conveyance  of  the  lot,  on  payment  of  the  money  in 
one  and  two  years,  with  interest,  payable  annually,  for  which  Me- 
< 'umber  gave  his  notes.  McCumber  paid  the  first  of  these  notes 
nnd  a  part  of  the  other  before  his  death.  McCumber  borrowed  of 
Oilman  $600  in  Illinois  internal  improvement  script,  drawing  inter- 
est; to  secure  the  repayment  of  wdiich,  with  interest  at  three  per 
•cent,  per  annum  upon  the  $600,  he  gave  his  note  and  a  mortgage  on 
the  lot  in  question.  This  note  and  mortgage  were  made  after  the 
last  note  given  for  the  payment  of  the  lot  had  become  due. 

On  the  16th  of  August,  1845,  McCumber  died  intestate,  leaving 
a  widow ;  and  the  complainants,  his  heirs,  returned  to  probate  court 
$125,  which  was  set  off  to  widow.  The  estate  owed  debts,  as  proved, 
amounting  to  $220,  not  including  the  notes  to  Walker  and  Oilman. 
The  mortgage  to  Oilman  was  acknowledged  and  recorded  in  Sep- 
tember, 1844.  After  death  of  McC'umber,  Oilman  sued  out  scire 
facias  to  foreclose  his  mortgage,  and  took  judgment  in  April,  1846, 
for  $240.  The  premises  in  question  were  sold  on  this  judgment  for 
$393.07,  and  Oilman  became  the  purchaser;  the  redemption  expired, 
iind  Oilman  took  a  deed  from  the  sheriff.  Walker,  by  order  of  a  de- 
cree in  chancery,  conveyed  the  lots  in  question  to  Oilman.  In  the 
spring  of  1849,  Oilman  made  improvements  on  the  premises  by  re- 
moving a  wooden  building,  variously  estimated  from  $25  to  $100, 
and  erecting  a  new  building  in  its  phice ;  by  laying  new  floors,  put- 
ting on  blinds,  &c. 

The  decree  was  rendered  by  J.  0.  Wilson,  Judge,  at  April  term, 
1854,  of  the  Boone  Circuit  Court. 

Caton,  J.  The  case  of  McCumber  v.  Gil  man,  reported  in  13  111. 
r)43,  disposes  of  all  claim  which  the  defendant  could  assert  under 
tlie  judgment  of  foreclosure,  which  was  there  reversed,  and  leaves 
him  simply  in  the  position  of  a  mortgagee  in  possession  for  condi- 
tion broken,  and  leaves  nothing  to  be  decided  in  this  case  except  to 
determiue  how  much  he  shall  be  entitled  to  for  repairs  or  improve- 
ments which  he  has  put  upon  the  premises  during  his  possession. 
The  rule  on  this  subject  has  been  as  well  settled  by  this  court  as  its 
nature  will  admit.  It  is  not  only  the  right,  but  it  is  the  duty  of 
the  mortgagee  in  possession,  to  put  upon  the  premises  all  necessary- 


»*►-"'•  ^  J  M((iMiii:i;    r.   (in, man.  537 

ainl  i)r()j»('i-  rcjiiiirs  lo  |)rcvciit  tln-iii  rroiii  ^'oin;,'  to  waste,  and  <o 
iriiiilnirsc  liimscir  oiii  of  tlic  rriits  and  profits,  unli'ss,  indocd,  the 
condition  of  tlic  incniisfs  would  make  it  injudicious  to  make  such 
n'j)airs.  ('inuni.-lanii-s  niij,dil  c.xi.-t  where  it  would  he  hetter  for 
the  estate  to  aI)an(lon  the  ini|)rovenienls  alto^'ether.  tlian  to  repair 
them.  In  such  a  ca>c,  the  court  could  not  sanction  an  expenditure 
thus  injudiciously  made.  But  the  rule  does  not  admit  the  mort- 
gaj;^ee  in  po.ssession  to  make  new  improvements  at  the  e\pen.se  of 
the  estate;  although  circumstances  may  e\i<t  wliich  will  atithorize 
the  court,  in  stating  the  account,  to  allow  the  mortgagee  for  new 
improvements  which  he  was  in  strictness  not  authorizcil  to  make  at 
the  ex]>en.>ii'  of  the  mortgagor.  (McCoiincI  v.  Ilnlnhush,  11  111. 
<il.)  In  that  case  an  allowance  was  directed  to  he  made  for  new 
improvements,  provided  certain  facts  should  he  estahlished  upon  a 
J'urther  hearing.  The  facts  further  to  ho  estahlished  were  indi- 
cated in  the  opinion  of  the  court,  as  follows:  "Were  we  convinced 
that  the  improvement  was  made  in  good  faith,  the  defendants  hc- 
lieving  they  had  made  a  valid  purchase  of  the  premises,  and  that 
the  expenditure  was  a  judicious  one  for  the  henefit  of  the  estate, 
we  think  they  should  he  allowed  for  them."'  In  this  ca.se  there  is 
Jio  doid)t  that  the  imi)rovements  were  made  in  good  faith,  the  de- 
fendant helieving  that  he  had  made  a  valid  purcha.se  of  the  estate, 
and  that  he  wa.s  expending  his  momy  u]>on  his  own  absolute  prop- 
«  rty.  He  j)urehased  it  under  a  judgment  (»f  the  circuit  court  forc- 
<  losing  liiis  same  mortgage,  and  after  the  time  allowed  for  n'di'mp- 
tion  had  expired  he  took  a  sheriff's  deed,  and  we  have  no  reason 
to  doubt  that  he  su|)i)osed  his  title  good.  Under  this  supposition  he 
made  the  improvenu'uts,  and  with  himself  as  owner,  it  may  \io  very 
true  that  the  im|)rovements  were  quite  judicious  and  j)roper.  But 
It  by  no  means  follows  that,  counselling  the  estate  as  Ix'longing 
to  th(>  heirs  of  MeOumber,  the  new  improvements  were  judicious 
and  pro|>er.  Indeed  it  is  very  manifest  that  they  were  not,  espec- 
ially as  to  the  new  stone  house  which  the  defendant  erected  on  tl\" 
pninises.  The  propriety  of  the  expenditure  must  be  (h'termined 
with  reference  to  the  circumstances  of  the  heirs  of  the  mortgagor, 
for  it  was  upon  their  estate  that  the  improvement  was  made,  and  it 
is  against  them  that  the  expense  is  sought  to  be  charged. 
It  is  a  very  hard,  if  not  an  \injust  rule,  which  in  any  ease  makes 
one  a  debtor  against  his  will ;  and  it  is  very  clear  that  it  shi>uld 
never  be  done,  unless  it  is  manifestly  to  his  advantage,  as  well  as 
just  and  |)roper  as  to  the  other  party.  Were  we  to  consider  the  case 
of  (nlman  alone,  there  can  be  ik^  doubt  that  he  should  be  comp(^n- 
-atcd  to  th(>  exfcMit  of  the  enhanced  value  of  the  premi.ses  bv  reason 
<if  this  i'xp«'nditMrc :  but  when  we  consider  the  sitinition  and  circum- 


538  EQUITY    RELATIONS.  [CHAP.  ir. 

stances  of  the  complainants,  there  can  be  no  doubt  it  would  be  great 
injustice  to  them  to  impose  such  a  burden  upon  them.  It  would 
be  equivalent  to  denying  them  any  relief  whatever.  Their  father 
died,  leaving  no  estate  whatever  to  these  infant  children  except  this 
house  and  lot,  incumbered  with  this  mortgage  of  about  $165, 
and  leaving  other  debts  amouijting  to  about  $220.  The  value  of 
the  premises  was  about  $500,  and  were  then  worth  about  $G5  a 
year  in  rents,  but  were  fast  going  to  decay.  The  defendant  took 
possession,  and  not  only  put  the  house  which  was  on  the  premises 
in  thorough,  though  not  extravagant  repair,  but  he  put  a  new  fence 
upon  the  lot,  and  removed  a  wooden  kitchen  which  was  attached  to- 
the  back  part  of  the  brick  house,  and  worth  from  $25  to  $50,  and 
in  its  place  erected  a  new  stone  house,  at  an  expense  in  the  whole 
of  about  $1,200,  which  he  now  insists  the  defendants  shall  pay  him 
before  they  shall  be  allowed  to  redeem  the  premises  from  the  mort- 
gage which  their  ancestor  agreed  to  pay  him,  and  to  satisfy  which 
alone  he  had  a  right  to  take  the  possession.  The  ease  has  to  be  but 
stated  to  show,  that  to  allow  it  is  equivalent  to  depriving  the  heirs 
altogether  of  their  rights  and  interests  in  the  premises;  for  it  is 
perfectly  manifest,  that  it  is  utterly  out  of  their  power  to  redeem 
the  estate  from  the  mortgage  and  to  pay  for  these  improvements. 
No  court,  and  no  judicious  individual  having  charge  of  the  estate 
and  interest  of  these  infants,  could  have  sanctioned  such  an  ex- 
penditure at  the  time  it  was  made,  knowing  that  it  was  to  be 
charged  to  them  when  they  should  come  to  redeem,  and  knowing 
that  they  had  nothing  in  the  world  with  which  to  pay  it.  The  im- 
provements must  have  been  proper  and  desirable  as  to  them  and 
in  their  circumstances,  before  they  can  be  pronounced  judicious  and 
the  estate  charged  with  them.  And  at  least  as  to  the  new  house  or 
addition,  and  the  new  fence,  we  are  of  opinion  that  the  rules  of 
law  do  not  admit  of  their  allowance.  The  defendant's  claim  for 
improvements  is  not  a  matter  of  strict  right,  and  hence  to  deter- 
mine its  justness  we  must  consider  the  position  of  the  other  parties ; 
and  when  this  is  done,  we  see  at  once  that  to  enforce  a  claim 
against  them  for  benefits  which  have  been  volunteered  to  them, 
and  to  which  they  have  never  given  the  least  encouragement,  would, 
in  all  probability,  deprive  them  of  a  clear  right,  without  any  fault 
or  act  of  theirs.  We  are  of  opinion  that  the  court  erred  in  requir- 
ing the  complainants  to  pay  to  the  defendant  the  value  of  the  new 
improvements  which  he  placed  upon  the  premises  while  they  were 
in  his  possession.  There  is  serious  doubt  whether  even  the  repairs 
put  upon  the  brick  house  were  not  more  extensive  than  were  strictly 
necessary  to  preserve  the  estate  from  waste  and  make  it  tenantable, 
and  more  than  were  strictly  judicious,  when  we  consider  the  cir- 


I 


•'^'■•<-  ^1  M()i;(iA\    /•.    w  Ai.iti!iiH;i:.  o-J'-J 

( iimstancos  of  tlio  (■funplaiiiiinls ;  l»iit  ii|i(iii  llic  \v1k)I<'  wc  have 
tliduj^lit  it  pro|i(T  to  direct  that  tln-v  sliojild  Ix'  allowed  to  the  de- 
fendant in  takinj:  the  account.  I  have  h)()ked  throii;,'h  the  evident^! 
with  .some  care,  witli  the  hope  of  hein;:  al)le  to  make  up  a  satisfac- 
tory' account  hetwceu  the  ]>arties.  and  thus  save  the  expense  an<l 
trouhle  of  another  reference,  Init  liiul  that  I  am  unahh-  to  do  so. 
Hence  we  must  conline  ourselves  to  layin;;  down  the  jjrinciple  upon 
whii'h  the  account  should  he  stat<'d.  'I'he  suit  must  l>e  remande<l, 
with  directions  tliat  the  defendant  he  allowed  the  value  of  the  re- 
j)airs  placed  upon  the  brick  house  alone,  including  the  cellar  and 
well,  and  also  all  tax(»s  paid  hy  him  ujion  the  j)remises,  as  well 
as  the  amount  due  upon  the  mort<:a,i:e.  The  evidence  in  this  record 
does  not  show  that  he  has  ]taid  the  balance  due  froni  MeCumher 
for  the  purchase  of  the  li»t.  Should  he  establish  by  proof  that  he 
made  such  i)aymi'nt.  prior  to  the  time  when  he  obtained  the  title 
from  Walker,  lie  should  be  credited  with  the  amount  thns  paid  and 
interest  thereon  from  the  date  of  i)ayment.  If  he  has  k(>pt  the  prop- 
erty insured,  for  that  ho  should  be  credited  also.  He  shoukl  be 
charfTcd  with  the  value  of  the  rent  of  the  premises,  exclusive  of  the 
new  improvements  whiih  he  has  jiiit  upon  them  and  for  which  he 
gets  no  allowance  in  making  up  the  account.  The  value  of  the 
rent  is  to  ho  estimated  of  the  premises  with  the  repairs  for  which 
he  receives  a  credit.  The  rents  to  bo  applied  in  extinguishment 
of  the  taxes  paid,  repairs.  Sec,  first,  and,  should  any  balance  remain, 
then  towards  the  interest  due  upon  the  mortgage,  and  then  the  ))rin- 
cipal ;  annual  rests  being  made  in  computation.  Or,  if  the 
amount  ])aid  for  taxes,  repairs,  &c.,  should  exceed  the  value  of  the 
rents,  interest  may  be  allowed  upon  the  excess.  Xo  charge  to  be 
made  for  the  wooden  shed  or  kitchen  removed. 

The  decree  must  be  reversed,  and  the  suit  rtMuanded.  with  direc- 
tions to  the  Circuit  Court  to  proceed  conformaldy  to  the  principles 
of  this  opinion. 

Decree  reversed. 


MOIJC.W  V.  W.M.HIMDCK 
Sri'i!i:,\ii:  Coi  i;r  oi-  \'i:i;M(iNr.   ISS;5. 

(:.»;  VI.  lit:..) 

Bill  in  chancery  to  redeem  certain  mortgagt^l  premises  in  the 
jxtssession  of  the  mortgagee.  Heard  on  hill,  answer  and  the  report 
of  a  special  master.  March  Term,  1883,  Essex  County.    Ross,  Chan- 


O-iO  EQUITY    RELATTOXS.  [CIIAP.  II. 

cellor,  decreed  that  the  orator  could  redeem  by  paying  $329.81. 
The  chancellor  stated  that  in  his  judgment  this  case  was  exception 
to  the  general  rule  that  a  mortgagee  in  possession  could  not  improve 
the  mortgagor  out  of  his  estate. 

The  master  found,  that  the  balance  due  from  the  orator  on  the 
bank  notes^  money  paid  to  Ingalls,  etc.,  was  $229.81 ;  that  the  use  of 
the  premises  while  occupied  by  the  defendant  was  $200;  and  that 
the  value  of  the  land  was  enhanced  $300  by  reason  of  the  improve- 
ments. It  was  a  part  of  the  decree  below  that  the  defendant,  on 
payment  of  the  $329.81  by  the  orator,  should  deed  back  and  sur- 
render the  bank  notes  which  had  not  been  fully  paid.  The  other 
facts  are  stated  in  the  opinion. 

Bates  &  May  for  the  orator. — The  court  will  treat  the  deed  as  a 
mortgage.  (WrigJit  v.  Bates,  13  Vt.  341  ;  Hills  v.  Loomis,  42 
Yt.  562.)  The  note  which  H.  cl'  W.  signed  as  sureties  is  not  at 
l)resent  i^aid.  {Becd  v.  Gannon,  5  X.  Y.  348;  StrH'c  v.  McDon- 
ald, 3  Harr.  &  G.  191.)  The  improvements  are  not  of  such 
a  character  as  to  warrant  an  allowance  of  the  same.  The  mas- 
ter makes  no  finding  as  to  whether  any  of  tlie  improvements 
were  reasonably  necessary  and  proper;  if  not  so  found  the 
court  cannot  infer  that  they  were  so.  {Saunders  v.  Frost,  5  Pick. 
259;  2  Jones  Mort.  1129.)  The  charge  for  clearing  the  land  is  not 
allowable  {Moore  v.  Cable,  1  Jolm.  Cli.  385;  Morrison  v.  McLeod, 
2  Ired.  Eq.  108 ;  2  Kent  Com.  334  ;  Sanders  v.  Wilson,  34  Yt.  318;) 
nor  the  charge  for  building  the  barn.  {Russell  v.  Blair,  2  Pick.  505 ; 
L'eed  v.  Beed,  10  Pick.  398;  Bed-man  v.  ^Yihon,  10  Reporter,  554.) 

Nicliols  &  Dunnett,  for  the  defendants. — Defendant  concedes 
the  general  rule  that  a  mortgagee  cannot  improve  the  mort- 
gagor out  of  his  estate;  but  this  case  is  a  plain  and  well-recog- 
nized exception  to  the  rule.  A  mortgagee  in  possession  mak- 
ing improvements  upon  the  mortgaged  premises  in  the  belief 
that  his  title  is  perfect  is  entitled  to  remuneration  for  expense  so 
incurred  to  an  amount  equal  to  the  enhanced  value  of  the  premises. 
(Howard  v.  Harris,  2  Lead.  Cas.  Eq.,  p.  2011 ;  ^Vhitncij  v.  Richard- 
son, 31  Yt.  300;  2  Jones  Mort.  1128;  Green  v.  Biddle,  8  Wheat.  77 ; 
4  Wait  Act.  &  Def.  578 ;  2  Story  Eq.,  s.  1237,  n.  1 ;  2  Wash  R.  P.,  p. 
22^ ;  French  v.  Burns,  35  Conn.  359.) 

The  opinion  of  the  court  was  delivered  by 

Powers,  J.  This  is  a  bill  to  redeem  certain  mortgaged  premises 
now  in  the  possession  of  the  defendant  Walbridge  as  mortgagee,  and 
encumbered  by  a  mortgage  executed  by  Walbridge  to  defendant 
Chase.  The  right  of  redemption  as  against  Walbridge  is  conceded ; 
and  the  master  reports  that  Chase  took  his  mortgage  with  notice 
of  the  orator's  equity,  and  thus  the  right  of  redemption  exists  in 


•*<K'-^1  .Mol.'cw    r.    \VM.i!i;il»<ii:.  ''11 

favor  of  tho  orator  jifraiiist  liiiii.     The  (|U(stinn   in  linrnl   i-.  whiil 
shall  the  orator  pay  as  tin-  price  of  j-ctlcmption  I' 

Hill  (S:  Walhrififjc  were  sureties  for  the  orator  on  sundry  notes 
to  various  banks,  and  to  indemnify  his  sureties,  tin-  orator,  Au;;iist 
29,  187(1,  executed  to  them  a  ([uit-claim  dc-d  of  thf  premises  in 
question.  This  deed,  thou;:h  absolute  in  form,  was  in  faet  a  mnrt- 
fjage,  and  an  (-([uity  of  re<lemption  under  it  remained  in  the  orator, 
to  all  intents  and  jjurposes,  as  comi)lete  and  perfect  as  thou;,di  it 
had  been  in  form  a  mortgage.  Hill  &  Walbridge  failed,  and,  among 
other  conveyances  in  the  adjustment  of  their  affairs,  in  the  fall  of 
187(5,  conveyed  the  jiremises  in  (piestion  to  Ingalls,  in  tru>t  for  their 
creditors; — Ingalls,  however,  taking  such  conveyance  with  notict* 
of  the  orator's  equity.  In  the  spring  of  1878,  the  orator  was  noti- 
fied that  Ingalls  was  about  to  sell  said  premises,  and  that  the  ora- 
tor could  have  them  for  $100.  The  orator  declining  to  purchase, 
Walbridge,  his  co-surety  Hill  having  died,  procured  one  Tilt<»n 
to  take  a  conveyance  and  pay  $100,  Walbridge  furnishing  the 
money.  This  conveyance  was  on  .\i»ril  23,  1878.  This  money 
was  paid  out  for  the  orator's  benefit  on  his  notes  upon  whi<h  Wal- 
bridge was  surety,  and  for  ta.ves. 

Dec.  9,  1878,  Tilton  quit-claimed  the  premises  to  Walbridge, 
and  on  the  same  day  Walbridge  mortgaged  the  same  to  defendant 
Chase.  At  the  time  of  the  conveyance  to  Hill  it  Wall)ridge  by 
the  orator,  and  until  Walbridge  made  the  improvements  herein- 
after described,  the  land  was  of  comparatively  little  value  without 
a  considerable  expenditure  of  labor  and  money.  The  wood  and 
large  timber  had  been  taken  off,  and  it  had  run  uj)  to  sprouts  and 
bushes,  so  as  to  make  it  a  difficult  and  expensive  piece  of  land  to 
clear.  From  the  master's  report  it  is  a|)parent  that  the  land  was 
in  no  condition  to  yield  any  income,  and  could  only  be  made  val- 
uable by  being  burned  over,  grubbed  and  fitted  for  cultivation. 

Walbridge,  after  the  orator  declined  to  take  a  convt\vance  fn»ui 
Ingalls  and  pay  $100  (which  the  master  finds  was  the  value  of 
the  premises  at  the  time),  supposetl,  when  Ingalls  sold  to  Tilton, 
and  Tilton  to  him,  that  he  had  secured  a  good  title  to  the  land,  and 
tho  orator's  equity  of  redemption  was  extinguished.  Thereupon, 
in  the  l)elief  that  he  had  a  good  title,  he  went  on  and  made  jM^rma- 
nent  and  valuable  improvements  upon  tlu'  land,  in  the  years  187".'. 
1880.  18S1.  and  1SS2.  He  cleared  up  the  land,  smoothed  the  sur- 
face, built  fences,  and  erected  a  small  barn.  All  his  improvements 
were  in  kind  and  character,  such  as  good  husbandry  required,  such 
as  alone  made  it  valuable,  and  such  as  a  prudent  owner  would  have 
)nad(>.  The  orator  knew  of  the  improvements  a<  they  were  from 
time  (o  time  going  on,  and  made  no  objection  thereto,  and  asserted 


542  EQUITY    RliLATIONS.  [C'lIAP.  II. 

no  right  or  wish  to  redeem  until  the  summer  of  1881,  when,  through 
0.  F.  Harvey,  he  communicated  to  Walbridge  his  desire  to  redeem. 
In  March,  i882,  the  orator  offered  to  pay  Walbridge  $125,  and 
called  on  him  for  a  deed.  At  this  time,  and  when  Harvey  inter- 
viewed Walbridge  in  1881,  the  improvements  had  been  substantially 
all  made,  costing  Walbridge  about  $375,  and  enhancing  the  value  of 
the  premises,  as  the  master  reports,  $300. 

Are  these  improvements  chargeable  to  the  orator  on  redemption  ? 

The  general  rule  is  conceded,  that  a  mortgagee  in  possession  with- 
out foreclosure  cannot  improve  the  mortgagor  out  of  his  estate. 
The  mortgagee  is  not  in  possession  as  owner,  but  as  a  quasi  trustee, 
to  keep  the  premises  in  proper  repair,  carry  them  on  according  to 
the  rules  of  good  husbandry,  and  apply  the  rents  and  profits  to  the 
extinguishment  of  his  mortgage  debt.  As  a  general  proposition, 
lasting  improvements  cannot  be  made  at  the  expense  of  the  mort- 
gagor, if  he  elects  to  redeem.  But  it  is  a  rule  of  general  applica- 
tion in  courts  of  equity  that  he  who  seels  equity  must  do  equity. 
It  is  obvious  that  the  orator  had  no  interest  to  redeem  the  premises 
before  the  improvements  were  made ;  and,  upon  foreclosure  brought, 
he  would,  doubtless,  have  declined  to  redeem.  He  had  declined  to 
take  the  title  at  the  actual  value  of  the  land.  It  was  only  after 
the  improvements  had  made  the  land  of  productive  value  that  he 
discovered  a  wish  to  redeem.  He  was  not  improved  out  of  an 
estate,  but  was  improved  into  one.  He  stood  by  in  silence,  and  saw 
the  improvements  going  on,  and  now,  when  the  land  has  been  made 
of  practical  value,  seeks  to  reap  the  benefit  of  such  improvements 
by  paying  its  original  value  with  interest.  This  proposition  is  too 
unrighteous  to  meet  the  approval  of  a  court  of  equity.  The  case 
is  not  that  of  a  farm  already  in  a  condition  to  be  carried  on,  like 
Sanders  v.  Wilson,  34  Yt.  318;  nor  that  of  wild  land,  like  Moore  v. 
Cable,  1  Johns.  Ch.  385 ;  but  it  is  the  case  of  land  partially  sub- 
dued, requiring  further  expenditure  to  bring  it  to  productive  value. 
The  rule  forbidding  an  allowance  for  permanent  improvements 
is  not  an  infiexible  one,  but  is  suspended  in  exceptional  cases,  if 
justice  and  the  equity  of  the  case  require  it.  (4  Kent  Com.  167 
and  note.)  Such  allowance  has  been  made  where  the  mortgagee  has 
acted  in  good  faith  and  under  the  mistaken  notion  that  the  right 
of  redemi)tion  has  been  barred  {Benedict  v.  Oilman.  4  Paige,  58)  ; 
and  where  the  mortgagor  has  been  slow  to  act  and  has  thus  led  to 
a  false  impression  by  his  silence  {Michles  v.  Dillaye,  17  N.  Y.  80)  ; 
and  where  the  mortgagee  makes  the  improvements  supposing  ho 
is  the  absolute  owner  (Hill,  Mort.  297)  :  and  where  the  mortgagei; 
lias  been  long  in  possession  and  suffered  to  treat  the  estate  as  his 


'^'••''-  ^J  iir<;iii:s    /.    w  i  i.i.i.v.MS.  i')\:\ 

own.  aiul  the  niort^'Ji^'or  stiuuls  liy  aiul  in  silence  jxTinils  tin-  iin- 
j»n»venients  ((»  he  made  {Xcal  r.  Ilntjlhroit.  .'5  HIand  Cli.  o90). 

When  the  nii>rt<:a^'ee  has  heen  luUed  into  the  helief  that  th(3 
ri^jht  of  redemption  has  heen  harred  or  al>andoned,  and  the  niort- 
j;a;Z<»r.  knowing',  or  having;  reason  to  helieve,  that  tlie  mortgagee 
supiMtses  that  he  is  the  al)solute  owner,  stands  hv  and  sees  the  mort- 
gagee make  histing  im|)n)vements  u|)on  the  hind,  in  kind  and  eliar- 
iicter  sueh  as  the  land  in  its  condition  and  wants  clearly  re(|uircs, 
and  which  are  ohvionsly  sanctioned  Ijy  the  usages  of  good  liushandry 
and  faithful  stewardship,  then  the  right  to  redeem  will  he  hurdened 
with  the  expense  of  such  improveyieiits. 

This  rule  is  wi-ll  fortified  hy  authority,  and  is  securely  grounded 
in  reason  and  justice;  and  this  case  is  one  proper  for  its  application. 

Decree  nffirmrd} 


(h)    Rrnfs  and  Profit.'^ — Aninuil  Hcsls. 

ANONYMOUS. 

IIiGii  Court  of  Chancery,  1682. 

(1  Vern.  {:>.) 

.\  mortgagee  shall  not  account  according  to  the  value  of  the  land, 
viz.  He  shall  not  he  hound  hy  any  j)r()of  that  the  land  was  worth 
Ko  much,  unless  you  can  likewise  prove  that  he  did  actually  make 
so  much  of  it,  or  might  have  done  so  had  it  not  heen  for  his  wilful 
default:  as  if  he  turned  out  a  sufhcient  tenant,  that  held  it  at  so 
much  rent,  or  refused  to  accept  a  sutVicient  tenant  that  would  have 
1,'ivcii  so  m\ich  for  it. 


HITOHES  V.  WILLIAMS. 

IIkiii  CofKT  ok  ('han(|;i!V.  ISOCi. 

(!'.'  Vrs.  lit:?.) 

i']\ce|)tions  were  taken  hy  the  <lef«'ndant,  a  mortgagor,  to  the  ^^as- 
ter's  report:  first,  that  tlie  Master  had  charged  the  plaintifT.  a  mort- 

'  Valiinhlo  ntul  Instinp  im|)invcnn'nts  allount  out  of  thr  rents  and  profit* 
if  ma«>o  with  the  knowlodjro  of  iiKut^ujidr  nnd  williout  olijpction  from  hiin; 
M>intqi>i,i,iM   V.    Chmluirh.  7    Iowa    114    (  1  S.'tS ) . 


54 i  EQUITY    RELATIONS.  [CllAr.  II. 

gagee  in  possession  personally,  and  by  a  receiver  under  his  appoint- 
ment, with  the  rents  actually  received :  whereas  he  ought  to  have 
been  charged,  according  to  the  circumstances  in  evidence,  with  the 
improved  rents,  at  which  the  estates  had  been  since  let  by  the  re- 
ceiver appointed  by  the  Court,  and  which  ought  to  have  been 
obtained  Isy  the  plaintiff,  or  his  receiver,  but  for  their  wilful  neg- 
lect or  default.  Another  exception  was,  that  the  Master  had  allowed 
the  plaintiff  the  sum  of  681.  for  the  expense  of  opening  a  slate 
quarry:  the  defendant  contending  that  it  was  an  illegal  and  im- 
proper act ;  and  the  only  benefit  accruing  to  the  estate  thereby  being 
the  sum  of  21.  charged  to  the  plaintiff's  account,  as  the  produce  of 
the  slates.  The  defendant  was  out  of  possession  long  before  the 
plaintiff  entered,  prior  mortgages  having  been  in  possession,  whom 
he  paid,  to  prevent  foreclosure. 

The  Lokd  Chancellor  [Lord  Erskine].  I  do  not  mean  to  sa\ 
that  to  charge  a  mortgagee  in  possession  actual  fraud  is  necessary. 
It  is  sutfieient  if  there  is  plain,  obvious  and  gross  negligence,  by  not 
making  use  of  facts  within  his  knowledge,  so  as  to  give  the  mort- 
gagor the  full  benefit  that  the  mortgagee  in  possession  of  the  estate 
of  the  mortgagor  ought  to  give  him.  If,  for  instance,  the  mortgagee 
turns  out  a  sufficient  tenant,  and,  having  notice  that  the  estate  was 
under-let,  takes  a  new  tenant,  another  person  offering  more;  an 
offer,  however,  not  to  be  accepted  rashly.  But  this  case  does  not 
furnish  even  that  ground ;  for  with  the  exception  of  a  proposition  to 
give  71.  a  year  for  one  tenement,  instead  of  51.  a  year,  the  rent  then 
paid,  there  is  no  proof  of  any  proposal  for  an  increase.  A  reason  also 
is  assigned  for  not  accepting  the  proposal  in  that  instance;  that  the 
tenant  was  in  arrear,  and  the  plaintiff  was  apprehensive  of  losing 
that  arrear;  and  there  is  more  difficulty  where  the  estate  consists  of 
a  number  of  distinct  tenements. 

Another  circumstance  that  weighs  with  me  is  that  the  mort- 
gagor, if  he  knows  the  estate  is  under-let,  ought  to  give  notice  to 
the  mortgagee,  and  to  afford  his  advice  and  aid  for  the  purpose 
of  making  the  estate  as  productive  as  possible.  If  he  communi- 
cated to  the  mortgagee  plans  of  improvement  in  his  contemplation, 
which  were  disappointed  by  the  embarrassment  of  his  affairs,  the 
Court  might  take  a  stricter  view  of  the  mortgagee's  conduct.  In 
this  instance  not  only  such  notice  was  not  given,  but  during  this 
whole  period  of  16  years,  while  the  mortgagor  was  out  of  possession, 
he  never  stated  that  the  estate  was  not  managed  as  it  might  be.' 
Can  the  mortgagor  lie  by,  not  giving  notice  that  a  greater  rent  may 
be  made,  and  come  afterwards,  by  way  of  penal  inquir}'',  to  charge 
the  mortgagee  with  the  effect  of  his  own  negligence?     I  agree  to 

>  Cktmpare  Moshier  v.  Norton,  100  111.  03,  72   (1881). 


HKC.  v.]  I'HLCIl     /•.     FKLCII.  ')l"> 

the  priiuii)K'  that  has  been  stated  hy  the  Solicitor-deiieral,  that  it 
would  ho  (hmgerous  to  say  the  mortgagee  is  not  answi-rahlc  except 
for  fraud,  ami  would  cout ra<liet  nuiny  deerei'S.  If  such  gross  neg- 
ligence ean  he  shewn  as  coines  up  to  the  description  of  wilful  de- 
fault, he  ought  to  be  answerable  for  it. 

But  I  determine  this  exception  upon  the  j)rinciple  that  a  mort- 
gagee, taking  possession,  is  to  take  the  fair  rents  and  profits,  and  is 
not  lH)und  to  engage  in  adventures  and  speculations  for  the  btMiefit 
of  the  mortgagor,  hut  is  liable  only  for  wilful  default,  of  which 
in  this  instance  there  is  no  pretence,  this  mortgagor  not  having  even 
communicated  that  he  had  any  contemplation  of  improvement  or 
proposed  tenants.  It  would  be  most  dangerous  to  entangle  mort- 
gagees in  a  minute  incpiiry,  whether  some  person  would  have  given 
more,  which  was  never  communicated. 

Upon  the  same  principle  on  which  I  determine  the  first  exception 
in  favour  of  the  mortgagee,  I  must  determine  tlie  other  exception 
against  iiim.  The  j)rinciple  is  the  safety  of  mortgagees.  The  line 
cannot  be  drawn.  How  can  it  be  ascertained  that  the  mortgagor 
will  want  a  slate  (piarry?  The  amount  is  in  this  instance  incon- 
siderable, but  the  principle  would  reach  the  case  of  a  mine.  The 
mortgagee,  therefore,  having  engaged  in  this  speculation,  must  spec- 
ulate at  his  own  hazard. 

The  first  exception  was  overruled,  and  the  other  allowed. 


FELCII  V.  FELCII. 

Court  of  Chancery  of  Vek.mont.  1845. 

(0  I.,i,r  Rep.  217.) 

This  wa.^;  a  bill  of  foreelosure  against  the  mortgagor  and  other-. 
sul)se(|uent  ineuml»raneers.  The  l)ill  was  taken  as  confessed,  under 
a  rule  that  the  defendant  should  have  the  same  right  to  call  the 
plaintiff  to  account  before  the  msuster  for  all  rents  antl  profits  of 
the  mortgaged  premises,  for  which  he  wa.s  liable,  as  if  the  defend- 
ants had  filed  a  cross  bill;  and  that  the  plaintifT  in  his  turn  should 
have  the  same  rights  in  accounting  a.-<  if  he  had  madt>  answer  to  the 
cross  bill.  It  was  accordingly  refern'd  to  one  of  the  masters  of 
the  court  to  state  the  sum  due  in  equity.  The  only  questions  raisi-d 
upon  the  master's  report  were  in  regard  to  the  liability  of  the  plain- 
tifT for  rents  and  profits  while  he  had  been  in  possession  of  the 
premises  during  the  last  year.      In  regard   to  this  the  master  v\-- 


o4()  EQUITY    RELATIONS.  [CIIAP.  II. 

jjorted  the  following  facts:  The  plaintiff,  hefore  he  took  possession 
of  the  premises,  which  consisted  of  a  farm  and  small  tenement, 
brought  ejectment  against  the  mortgagor,  and  recovered  judgment 
for  the  seisin  and  possession  of  the  premises,  which  the  mortgagor 
having  abandoned,  the  plaintiff  took  possession,  and  personally 
occupied  the  land  and  cultivated  it  in  such  manner  as  he  best  could, 
living  at  some  distance  from  it,  and  having  no  opportunity  to  rent 
the  house.  The  master  reported  that  in  consequence  of  the  plain- 
tiff's living  at  some  distance  from  the  premises  and  conducting  his 
agricultural  operations  at  some  disadvantage  on  that  account,  and 
not  occupying  the  house,  he  did  not  derive  as  much  benefit  from 
the  use  as  what  would  be  considered  a  reasonable  rent  for  the  prem- 
ises for  one  who  resided  thereon,  and  referred  it  to  the  court  to 
determine  for  which  of  two  sums  so  fixed  the  plaintiff  was  liable  in 
equity. 

After  argument  by  Paddock  for  the  plaintiff  and  Underwood  for 
the  defendants 

The  Chancellor,  Redfield,  delivered  the  following  opinion: 

The  importance  of  this  question,  rather  than  the  amount  here  in- 
volved, and  the  consideration  that  bills  of  foreclosure  are  not  ordi- 
narily appealable  from  this  to  the  Suprem.  Court,  has  induced  me 
to  examine  this  case  with  more  care  than  I  should  otherwise  have 
done.  T  think  it  obvious  that  the  mortgagee,  under  the  circum- 
stances of  this  case,  cannot  be  made  liable  for  anything  more  than 
the  actual  profits.  And  this,  I  think,  may  l)e  shown  by  the  oath  of 
the  plaintiff  in  support  of  his  account  of  disbursements  and  re- 
ceipts. For  in  regard  to  the  rents  and  profits  of  the  mortgaged 
premises,  while  he  occupied  them  he  is  strictly  a  defendant,  and  the 
accounting  party.  The  regular  course  in  such  case  would  be  for 
-the  defendants  to  file  a  cross  bill,  calling  upon  the  plaintiff  to  state 
the  amount  of  rents  and  profits,  which  strictly  he  should  do  in  his 
answer  to  such  cross  bill ;  but  the  same  result  was  here  attained 
by  the  rule  under  which  the  bill  was  taken  as  confessed. 

But  the  defendants  objected  not  only  to  the  mode  of  trial  before 
tlu"  master,  but  also  that  the  plaintiff  should,  while  personally  occu- 
])ying  the  premises,  be  made  liable  for  a  reasonable  rent,  without 
reference  to  his  actual  receipts.  This  latter  objection  deserves  a 
more  extended  consideration,  perhaps,  in  consequence  of  its  general 
importance. 

1.  Upon  principle  it  is  difficult  to  perceive  why  the  mortgagee, 
who  takes  possession  of  the  premises  while  vacant,  and  long 
after  his  debt  becomes  due,  should  be  held  to  any  stricter  accounta- 
bility than  other  trustees.  It  is  the  fault  of  the  mortgagor,  in  the 
first  instance,  that  the  debt  is  not  paid,  and  that  in  consequence 


^K*'.  v.]  Fi:r.rn    r.    rr.i.i  ir.  .'>  i: 

till'  luurtpi^ec  is  CDiiipclli'il  to  take  possrssioii.  2.  It  is  contrary  to 
the  contract  of  the  parties,  and  to  the  ordinary  expectation  in  such 
.  ases,  that  the  niortjra^ee  shouM  be  e<tni|>flled  to  resort  to  the  hind 
■or  the  jjaynient  eithfr  of  his  <h'l)t  or  inten-st.  .'5.  If  thm'  are  sul)- 
-i'(|uent  iniiunl)ran(i'rs,  wlio  are  ultimately  and  principally  inter- 
ested in  the  avails  of  the  security,  it  would  seem  more  their  duty 
than  that  of  the  lirst  mort<,'a^'ee  either  to  remove  the  first  incum- 
hraiue,  and  thus  take  the  control  of  the  j)remises,  or  else  to  find  a 
ii'uant  who  will  render  a  reasonahle  n-nt.  Under  such  circum- 
-tances,  to  rcMpiire  of  the  jjlaintiir  more  than  ordinary  diligence 
would  seem  manifestly  unreasoiudile  and  unjust.  In  ordinary  trusts 
lie  trustee  is  held  only  to  common  dilimMicf,  or  such  as  men  ordi- 
narily exercise  in  their  own  ail'airs,  and  to  account  in  that  way  for 
the  j)roiits  actually  receiv(>d  from  the  trust  estate,  or  which  might 
have  been  received  hut  for  the  neglect  of  such  common  diligence. 

In  looking  into  the  hooks  I  think  no  doubt  can  be  entertained 
that  such  has  been  the  general  rub'  in  regard  to  mortgagees  in  pos- 
-ission  ever  since  the  time  of  the  case  in  1  Vernon,  45  (  KiS'i),  which 
.!s  it  is  very  brief,  and  seems  to  form  the  basis  of  the  suljsequent 
lecisions  upon  the  subject,  may  be  here  excused.  ''A  mortgage:' 
-!iall  not  account  according  to  the  value  of  the  land,  viz.:  He  sliall 
not  be  bound  by  any  ])roof  that  the  land  was  worth  so  much,  unli's-; 
you  can  likewise  prove  that  he  did  actually  make  so  much  of  it,  or 
might  have  done  so  had  it  not  been  for  his  wilful  default ;  as  if  he 
turned  out  a  sulVicient  tenant,  that  held  it  at  so  much  rent,  or  re- 
fused to  accept  a  sullicient  tenant,  that  would  have  given  so  much 
for  it."  There  is  in  the  j)resent  ca.>^e  no  pretence  that  the  plaint itT 
iiinied  out  or  rejected  a  tenant,  or  that  one  could  have  been  found, 
or  that,  under  the  circumstanct's  under  which  he  came  on  the 
premises,  he  co\dd  have  realized  more  than  lu*  did.  lie  must,  then. 
I  coni'lude,  according  to  the  case  from  Vernon,  1k»  liable  only  f<»r 
what  profits  he  actun  hj  did  receive.  This  case  is  followed  almost 
in  terms  by  Ch.  J.  Swift,  2  Dig.  193,  2  Powell  on  Mort.  272;  by 
<'hancellor  Kent,  1  f'omm.  lOfi,  and  in  Ifiitjlies  v.  Williams.  12 
Vesey,  l!);?,  and  in  Mr.  Perkins's  note  to  this  last  case,  where  all 
the  modern  authorities  are  collected  and  digested.  That  this  is  the 
general  rule  of  the  liability  of  trustees  cannot  be  denied.  The  v\- 
leption.s  to  this  rule,  where  trustees  have  been  nuide  liable  for  rents 
md  profits  which  they  tiiiijlit  have  received  but  for  their  own  wilful 
.iefault,  will  not  afTcct  the  present  ca.se.  {I.oftiis  v.  Sirift.  2  Scholes 
A  Ix'f.  (;.")(■>;  Piikr  nf  linrkiiKjhnw  v.  Oayer,  I  Vernon,  2"»S;  Chnp- 
iixin  v.  Titniier,  Id.  2'»T ;  CoppritKj  v.  Cooke.  Id.  270;  Williani^  v. 
I'ii,;\  1  Simons  &  Stuart,  ."iSl.) 

The  cases  which  have  i)een  cited  to  show  that  a  niortgag«'e  wh<» 


548  EQUITY    RELATIOXS.  [CIIAP.  it. 

personaUij  occupies  tlie  premises,  is  liable  for  a  reasonable  rent  are 
not  like  the  present.  Where  the  premises  consist  of  a  tenement  and 
out  buildings  which  are  occupied  by  the  mortgagee,  or  where  the 
mortgagee  refuses  a  tenant  who  will  pay  a  reasonable  rent,  no  other 
rule  could  be  adopted  but  to  make  Mm  accountable  for  a  reasonable 
rent;  so  also  he  should  be  accountable  for  a  reasonable  rent  when 
he  manages  the  premises  unskilfully  by  reason  of  which  they  become 
unprofitable  to  him.  (Van  Burcn  v.  Olmstead,  5  Paige,  9;  Bain- 
hridge  v.  Owen,  2  J.  J.  Marshall,  4G5).  And  in  some  cases,  when 
the  premises  had  suffered  deterioration  while  in  the  possession  of  the 
mortgagee  by  his  default,  such  damage  has  been  ordered  to  be  do- 
ducted  from  the  mortgage  debt.  {Kennedy  v.  Baylor,  1  Washington, 
163).  But  none  of  these  exceptions  affect  the  present  case.  The 
orator  is  entitled  to  a  decree  for  the  amount  of  his  mortgage  debt, 
deducting  the  amount  of  profits  actually  received  by  him.^ 


SHAEFFER  v.  CHAMBEES. 

Court  of  Chancery  of  New  Jersey,  1847. 

(2  Halst.  548.) 

The  Chancellor  [Halsted].  On  reading  the  testimony,  I 
do  not  see  any  good  reason  why  the  report  of  the  Master  should  not 
be  confirmed.  A  mortgagee,  by  taking  possession,  assumes  the  duty 
of  treating  the  property  as  a  provident  owner  would  treat  it,  and 
of  using  the  same  diligence  to  make  it  productive  that  a  provident 
owner  would  use.  If  it  be  a  farm,  he  is  not  at  liberty  to  let  it  lio 
unfilled  because  the  house  on  it,  or  the  house  and  farm  together, 
were  not  rented.  I  see  no  reason  why  the  farm  should  not  be  hus- 
banded, though  the  buildings  on  it  were  not  rented.  Again,  a  mort- 
gagee in  possession  is  not  at  liberty  to  permit  the  property  to  go  to 
waste,  but  is  bound  to  keep  it  in  good  ordinary  repair ;  and  if  it  be 
a  farm  he  is  lx)und  to  good  ordinary  husbandry. 

It  appears  by  the  testimony  that,  for  several  years  of  the  time 
during  which  the  defendant  has  been  in  possession,  the  property 
was  not  rented,  and  the  whole  of  it,  farm  and  all,  was  permitted 
to  lie  uncultivated.     The  Master  reports  that  it  was  not  made 

^  The  authorities  generally  are  accord:  Robertson  v.  Campbell,  2  Call 
(Va.)  421  (1800)  ;  Hof/an  v.  Intone.  1  Ala.  49G  (1840)  ;  Gerrish  v.  Blacl', 
104  Mass.  400  (1870)  :  Moshier  v.  Norton,  83  111.  519  (1876)  ;  Moshier  v. 
Norton,  100  111.  03    (1881). 


'■''•^■1  sii.\i:ii-i:u    r.    <iiAMiu:its.  fitO 

>.ilisl'}iftoriIy  to  appear  to  him  tliat  tlic  property  was  thus  unoecu- 
jiietl  without  tlie  default  of  the  defendant.  The  ground  liere  taken 
Ity  the  Master  raises  this  (juestion:  a  farm  of  .So  acres,  2.5  of 
it    in  wood  hind,  under  mortgage,  is  taken   possession  of  by   the 

Mortgagee  and  rented.     Tie  remain-^  thus  in  possession  a  number 

1'  years.  Oeeasionally  (hiring  this  period  thi'  premises  are  vacant 
lud  tlie  farm  untiUed.  Is  it  sulTicient  for  the  mortgagee,  thus  in 
jios.^ession,  in  order  to  relieve  himself  from  any  eharge  for  rents  and 
prolits  for  the  years  during  whieh  the  premises  were  thus  vacant, 
-  nij)ly  to  say  that  lie  could  not  rent  them;  or  should  he  be  held  to 

iiuw  ])ropcr  diligence  to  procure  a  tenant?  Is  the  mortgagor  to 
prove  that  he  might  have  rented  it  but  for  his  wilful  default,  as 
that  he  turned  out  a  sutficient  tenant,  or  refu.sed  t(»  receive  a  suffi- 

ient  tenant,  as  would  seem  to  be  held  in  1  Vern.  45;  or  does  the 
fact  of  tile  premises  being  left  vacant  throw  upon  the  mortgagee 
the  burden  of  proving  reasonable  diligence  to  procure  a  tenant,  as 
>.ems  to  be  held  in  Metcalf  v.  Campion.  1  Moll.  238. 

It  seems  to  me  that  i:  will  not  do  for  the  mortgagee,  liaving  thus 
taken  possession,  to  fold  his  arms  and  use  no  means  to  procure 
a  tenant;  and  I  am  disposed  to  think  he  ought  to  be  held  to  show 
reasonable  diligence  to  procure  a  tenant.     But,  at  all  events,  if  the 

arm  and  building.s  are  not  rented  he  ought  to  cause  the  farm  to  be 
;illed,  and  that  in  a  husbandlike  manner. 

From  tlie  testimony  I  think  the  defendant  has  been  negligent, 
r«»  say  the  least,  in  the  manner  in  which  he  has  treated  the  premises. 
Vo  provident  owner  would  have  treated  them  as  he  has.     They 

lave  been  permitted  to  go  greatly  out  of  repair,  and  the  lands  have 
been  so  badly  husbanded  that  for  several  of  the  last  years  the  whole 
premise.^,  rented  at  first  by  tlie  mortgagee  for  $11)0,  have  rented 
'or  only  $(10,  and  he  has  bi'cn  charged  hut  that  sum.  The  de- 
fendant, during  sevi-ral  years,  cut  wood  and  timber  from  the  prem- 
ises and  sold  it.  The  Master,  in  stating  the  account,  made  annual 
n'sts  when  he  found  that  the  wood  and  timber  and  the  rents  and 
profits  e.xceeded  the  interest  and  e.xpi'n.ses,  and  applied  tlie  ine«ime, 
tirst,  to  the  interest  and  expense  account,  and  then  to  the  reduction 
"f  the  jirincipal.  This  was  objected  to  on  the  part  of  the  di'fendant. 
It  seems  to  me  the  Master  was  right. 

I  am  satisfied  with  the  general  result  reached  by  the  Master. 

I'Jxcepttons  diKnlloirril. • 

'  T'nn  liurrti  v.  Olni.ttcai!.  .'i  Piuro    (  N.   V.)    9    (1834),  accord.     C'ompnro 

Dexter  v.    Arunlit,   2    Siimn.    lOS.    \'2»    (1H34):    MHUr  v.    Lincoln,   fl   (Jrtiy 

Mass.)    fi'M    (1S.")(>);    Richardson   v.    U'<i//i.»,  fi   Allen    (Mas.^.)    78    (18»)J): 

'indcra  v.   Ui7,von,  34  Vt.  318    (18(11),  and  Harnett  v.  \tUon,  54   Iowa,  41 

1880). 


550  EQUITY    RELATIONS.  [CHAP.  ir. 

PARKINSON  V.  HANBURY. 

House  of  Lords,  1867. 

{L.R.2H.L.1.) 

The  Lord  Chancellor  [Lord  Chelmsford]  : — [His  Lordship 
stated  the  facts  and  history  of  the  case  and  the  decree  therein, 
and  then  proceeded  as  follows:] 

The  appellant  is  the  administratrix  of  her  father,  John  Farrell 
Parkinson,  who  died  on  the  6th  of  Octoher,  183L  He  was  the 
lessee  of  the  Royal  Oak  public  house,  under  a  lease  for  a  term  of 
fifty-three  years  from  the  29th  of  September,  1819.  On  the  36th 
of  May,  1823,  he  mortgaged  the  Royal  Oak  and  the  eight  houses  in 
Radnor  Street  to  a  person  of  the  name  of  Thomas  Chambers  for 
a  sum  of  £2000,  and  that  mortgage  deed  contained  a  power  of  sale, 
which  was  to  be  exercised  by  Chambers,  on  giving  three  months' 
notice  to  the  mortgagor,  his  executors,  or  administrators.  On  the 
10th  of  January,  1828,  the  Royal  Oak  was  assigned  by  Parkinson 
to  Thomas  Butts  Aveling  for  the  defendants,  Truman,  Hanbury 
&  Co.  as  the  security  for  a  sum  of  £735,  and  interest  due  to  them. 
That  deed  contained  a  proviso  for  redemption,  and  was  clearly  a 
second  mortgage  of  this  property.  There  was  a  trust  conferred 
upon  Aveling  to  sell  or  to  let  the  premises,  and  out  of  the  proceeds 
of  the  sale  to  pay  the  mortgage  to  Chambers  of  £2000,  to  pay  a  sum 
of  £735  and  interest  to  the  defendants,  and  to  pay  the  surplus,  if 
any,  to  the  estate  of  Parkinson. 

In  the  month  of  May,  1828,  Parkinson  was  embarrassed  and  in 
difficulties,  and  unable  to  carry  on  the  Royal  Oak  public  house ;  and 
he  agreed,  on  receiving  a  sum  of  £50,  to  give  possession  of  the  house 
and  other  properties  which  he  possessed  to  the  defendants,  who  were 
to  act  as  his  agents,  to  collect  the  rents  and  to  let  the  properties. 

Parkinson  died  intestate  in  October,  1831.  On  the  7th  of  June, 
1834,  Hanbury  &  Co.  delivered  up  the  possession  of  the  premises, 
which  up  to  that  time  they  had  held  under  these  documents,  and 
rendered  accounts  of  the  income  and  outgoings.  The  appellant 
made  some  objections  to  some  of  these  accounts ;  answers  were  sent 
to  her  objections,  and  she  made  no  observation  in  reply.  What 
occurred  between  the  date  of  June,  1834,  and  the  9th  of  October 
following  did  not  clearly  appear  in  evidence.  On  the  9th  of  Octo- 
ber, 1834,  the  executors  of  Chambers,  under  the  power  of  sale  con- 
tained in  the  mortgage  to  him,  sold  the  property  to  Hanbury  &  Co. 
for  the  sum  of  £1300,  a  sale  which  was  afterwards  declared  to  be 


SE<"- V.J  pai;ki\s(»n    r.    iiAMUitv.  r»5l 

invalid,  Ix'fausi'  it  was  clTi'ctcd  witlioiit  the  tlircc  inontlKs'  noticr  re- 
quired by  the  power  of  sale  contained  in  tln'  mortgage. 

After  the  e.xeeution  of  the  deed  of  sale,  Hanhiiry  &  Co.  receiveil  on 
the  2!)th  of  Novenil)er,  IHiU,  the  half-year's  rent  due  at  Midsum- 
mer, and  on  the  U>th  of  Fi'hruary,  iS-So,  the  rent  due  at  Michaelmas. 
1834,  but  in  what  character  did  not  distinctly  appear.  At  thi-; 
period,  and  for  some  time  afterwards,  there  was  no  legal  pcr.-sonal 
representative  of  Parkinson.  In  February,  184'),  the  appellant 
took  out  U'tters  of  administration  to  her  father,  and  in  1848  she 
fded  her  bill,  alleging  (but  without  specifying  items)  that  the  ac- 
counts rendered  were  erroneous,  that  the  respondents  had  not  ren- 
dered accounts  of  the  goodwill  and  profits  of  the  business  of  the 
Koyal  Oak,  and  ]>raying  that  the  respondents  (whom  she  treated  as 
mortgagees  in  possession)  should  render  in  that  character  accounts 
of  what  they  had  received,  or  what,  but  for  their  wilful  default, 
they  might  have  received.  In  1852  she  filed  a  similar  bill,  and  in 
1854,  on  her  own  aj)])lication,  the  bill  of  1848,  which  the  responil- 
ents  had  duly  answered,  was  dismissed.  The  bill  filed  in  185'i 
(amended  in  August,  1858,  and  re-amended  in  December,  1858) 
prayed  for  an  account  of  what  was  due  to  the  respondents  on  their 
security  of  January,  1828.  or  otherwise  charged  npon  the  mort- 
gaged j)remises  in  the  bill  mentioned,  that  they  might  be  decreed  to 
account  for  the  profits  of  the  Koyal  Oak,  and  of  the  goodwill  of 
the  business  thereof,  received  by  them  or  their  agents,  or  whiih, 
without  their  wilful  neglect  or  default,  might  have  been  received  by 
them  from  June,  1828,  up  to  the  filing  of  the  bill;  and  that  they 
might  account  for  the  rents  and  profits  of  the  houses  in  l{adni>r 
Street  and  Waterloo  Street  up  to  the  time  when  the  same  were 
taken  posse.>;sion  of  by  Chambers,  or  to  such  farther  time  as  the 
Court  might  deem  fit ;  also  of  the  timber  yard  and  tenements  ad- 
joining, and  of  the  houses  in  (Jalway  Street  and  the  ground  in  Cop- 
pice Row.  And  that  it  might  be  declared  that,  notwithstanding 
the  conveyance  and  assignment  of  the  Royal  Oak  by  Cliambers  to  the 
respondents,  they  were  trustees  or  mortgagees  thereof — and  that 
the  appellant  was  entitled  to  redeem  the  same,  and  all  the  oth.T 
premises  then  in  the  possession  of  the  respondents — ami  for  the 
usual  orders  thereon,  and  for  farther  relief. 

The  respondents  put  in  their  answers,  aflirming  the  cornvtness 
of  the  accounts  delivered,  alleging  that  they  had  collected  the  rent>; 
in  the  character  of  agents,  and  denying  that  they  ever  had  n'ceived. 
or  been  entitled  to  receive,  anything  for  the  goodwill  and  |)rofits  of 
the  business.  The  cause  came  to  issue,  evidencv  was  taken,  and  it 
was  heard  before  Vice-Chancellor  Kinderslev,  who  on  the  7th  of 


552  EQUITY    RELATIONS,  [CHAP.  II. 

June,  1860,  made  his  decree,  by  which  the  bill  was  ordered  to  be 
dismissed  with  costs,  as  to  the  relief  sought  to  be  obtained  thereby 
in  respect  of  all  property  in  the  pleadings  mentioned,  except  the 
Eoyal  Oak,  as  to  which  it  was  ordered  that  an  account  should  be 
taken  of  what  was  due  in  respect  of  the  security  of  January',  1828, 
or  otherwise  charged  upon  the  mortgaged  premises,  and  for  the 
costs  of  the  suit;  and  that  an  account  be  taken  of  rents  and  profits 
received  by  the  respondents  from  the  1st  of  June,  1828,  to  the  pres- 
ent time;  and  that,  upon  the  appellant  paying  to  the  respondents 
the  principal,  interest,  and  costs,  after  such  deductions,  and  giving 
credit  to  them  for  £1300  and  interest  from  the  9th  of  October,  1834, 
they  should  re-convey,  &c.  But  in  default  of  her  making  such  pay- 
ment the  bill  was  to  be  dismissed  with  costs. 

On  appeal  to  the  Lords  Justices,  they  on  the  15th  of  January, 
1865,  affirmed  this  decree  with  costs. 

This  appeal  was  then  brought. 

It  is  against  this  decree  that  the  present  appeal  has  been  brought, 
and  the  reasons  given  for  the  appeal  are:  First.  "Because  by  the 
amended  bill  of  complaint  the  appellant  set  out  specific  charges  as 
being  erroneous,  and  is,  therefore,  entitled  to  open  such  account, 
even  if  it  was  ever  closed  or  settled,  and  thus  obtain  an  account  of 
the  rents  received  for  and  in  respect  of  the  premises  in  the  first 
portion  of  the  decree  mentioned;"  and.  Second.  "Because  the  re- 
spondents are  mortgagees  in  possession  of  the  said  Royal  Oak  public 
house,  and  liable  to  account  as  such,  and  not,  as  in  the  decree  men- 
tioned, to  the  appellant  as  administratrix  of  the  said  John  Par- 
rel 1  Parkinson,  deceased,  for  the  rents  and  profits  of  the  same,  and 
are,  whether  in  possession  as  mortgagees,  trustees,  or  agents,  liable 
to  account  for  the  profits  and  proceeds  of  the  business  of  the  said 
public  house." 

I  will  take  the  second  reason  of  the  appeal  first.  It  is  very  clear 
that  in  the  peculiar  case  of  a  mortgagee  who  chooses  to  assert  his 
rights  by  taking  possession  of  the  mortgaged  estate,  and  who  is 
not  bound  to  render  any  account  to  the  mortgagor  if  the  mort- 
gagor sues  for  a  redemption  of  the  property,  the  mortgagee  who 
lias  so  taken  possession  is  bound  to  account,  not  only  for  the  rents 
and  profits  which  he  has  received,  but  also  for  everything  which  he 
might  have  received  but  for  his  own  wilful  default.  That,  I  be- 
lieve, is  the  only  instance  in  which  a  person  in  possession  of  an 
estate  who  is  called  upon  to  account  is  made  answerable  for  that 
which  he  might  have  received  but  for  his  wilful  default.  There- 
fore it  was  necessary,  in  order  to  lay  the  foundation  for  this  appeal, 
to  shew  that  the  defendants  were  actually  in  possession,  and  in 
receipt  of  the  rents  and  profits  as  mortgagees.     Now  it  appears 


■^K«'-  ^J  I'AIIKIN.SON     r.     11ANHLUY.  553 

lo  me  that   the  ajUK-llant   lias  ontircly   failfd   in  establishing  this 

Tndcr  the  incmorimdiiin  of  the  10th  of  May,  1828,  the  defend- 
. lilts  were  in  receipt  of  the  rents  and  jirolits,  as  the  agents  of  Parkin- 
son, and  they  continued  in  possession  in  that  character  down  to 
the  7th  of  .lun.',  \HM.  On  the  Hth  of  October,  1834,  they  came 
into  possession  uiulcr  a  ditrereiit  character,  as  vend<*C8,  upon 
the  sale  by  the  executors  of  Chambers.  They  received  the 
n-nts  down  to  the  7th  of  June,  1834;  but,  in  addition  to  this,  it 
appears  by  the  accounts  that  they  received  the  Midsummer  rent 
for  1834,  and  tlie  Michaelmas  rent  for  1834,  being  the  rents  for 
a  {K>riod  between  tlieir  delivering  up  possession,  which  they  held 
as  the  agents  of  Parkinson,  and  the  time  of  their  becoming  vendees 
under  the  purchase  from  Chambers'  executors,  on  the  9th  of  Octo- 
Iter,  1834.  Xow,  that  sale  having  btvn  held  to  be  invalid,  it  is  con- 
tended on  the  part  of  the  aj^K'Hant  that  these  rents,  having  been 
received  without  any  right  under  the  memorandum  of  agency,  or 
any  right  under  the  purchase  from  Chambers,  that  therefore  the 
only  title  which  the  defendants  can  pretend  to  for  the  receipt  of 
these  rents  must  be  in  their  character  of  mortgagees.  But,  in 
the  first  place,  these  rents  were  received,  not  during  the  interval 
between  June,  1834,  and  October,  1834,  but  the  Midsummer  rent 
was  received  on  the  29th  of  NovemlxT,  1834;  that  is  after  the  pur- 
chase from  Chambers'  executors,  and  the  Michaelmas  rent  was  re- 
ecMved  on  tlu'  10th  of  February,  1835.  How  is  it  possible  to  say 
that,  under  these  circumstances,  the  defendants  ought  to  be  charged 
in  respect  of  the  receipt  of  these  rents  as  mortgagees,  and  that  in 
that  character  the  appellant  is  entitled  to  have  a  decree  against  them 
for  an  account  ? 

It  may  be,  my  Lords,  that  they  were  not  entitled  to  receive 
those  rents  at  all :  that  is  putting  it  in  the  most  unfavourable  way 
for  the  defendants.  It  may  be  that  they  were  entitled,  under  the 
fontract  of  sale  with  Chambers'  exwutors,  to  those  ivnts,  although 
the  purchase  deed  was  not  executed  until  after  those  rents  became 
due.  It  may  be  that  they  considered  that  they  were  entitled  to 
those  rents  under  the  purchase  deed  as  back  rents.  But  it  is  per- 
fectly clear  that  they  never  assumed  to  receive  those  rents  as  mort- 
^,^lg(M»s,  and,  therefore,  if  it  is  only  where  a  mortgagee  asserts  his 
strong  right  by  entering  into  possession  and  receiving  the  rents  and 
profits,  that,  when  he  is  called  on  to  account,  he  has  to  account 
not  only  for  what  he  has  received,  but  also  for  that  which  he  might 
have  rec«>ived  but  for  his  own  wilful  ilefault  ;  that  |)rinciple  cannot 
'  ertainly  apply  to  this  cii.>i«'. 

My   Lords,  it  apears  to  me  to  be  impossible  to  jnit  the  case  in 


554.  EQUITY    RELATIONS.  [fllAP.  ii. 

the  way  in  which  it  was  ingeniously  put  by  Mr.  Darby,  that  the- 
sale  by  Chambers'  executors  having  been  decreed  to  be  invalid,  there 
was  no  other  title  on  which  the  defendants  could  possibly  be  in 
possession  except  that  of  being  mortgagees,  and  that,  therefore^ 
retrospectively,  it  must  be  considered  that  their  possession  must  be 
applied  to  that  title  as  mortgagees,  and  to  no  other.  I  apprehend 
that  it  is  perfectly  clear  that  that  cannot  be  maintained.     .     .     . 

Lord  Cranworth.  My  Lords,  I  think,  with  my  noble  and 
learned  friend,  that  the  appellant  has  completely  failed  in  estab- 
lishing either  of  the  propositions  for  which  she  contends.  She  says 
that  the  Yice-Chancellor  first  of  all,  and  subsequently  the  Lords 
Justices,  were  wrong  in  dismissing  the  bill,  so  far  as  it  ^generally 
sought  a  decree  to  account  against  the  respondents  as  persons  who 
have  received  money  as  agents  for  her,  or  for  her  late  father,  whom 
she  represents;  and,  secondly,  upon  the  ground  that  they  ought  to 
have  been  charged  as  mortgagees  for  wilful  default,  whereas  they 
were  not  so  charged. 

Then  comes  the  other  point,  whether  or  not  the  accounts  which 
were  directed  in  respect  of  the  occupation  of  the  Royal  Oak  public 
house  ought  to  have  been  directed,  charging  the  defendants  both 
with  the  receipts  and  with  that  which,  without  wilful  default,  they 
might  have  received.  It  is  meant  to  charge  the  respondents 
with  being  in  receipt  as  mortgagees  upon  two  grounds.  That 
which  was  insisted  upon  mainly  was  this :  that  their  title,  which 
they  acquired  under  Chambers  on  the  9th  of  October,  1834,. 
although  supposed  by  them  to  give  them  a  title  as  purchasers,, 
really  was  a  title  which  only  put  them  in  the  j^lace  of  Chambers,. 
and  Chambers  was  merely  a  mortgagee. 

I  think  that  it  is  perfectly  clear  law  that  when  a  person  l)e- 
comes  possessed  of  a  property,  though  erroneously  supposing  that 
he  is  a  purchaser,  if  it  afterwards  turns  out  that  he  is  not  to  be 
treated  as  a  purchaser,  but  only  as  a  person  who  has  a  sort  of  lien 
upon  the  property,  that  does  not  make  him  a  mortgagee  in  pos- 
session within  the  meaning  of  that  rule  which  charges  him  with 
wilful  default.  What  was  the  origin  of  that  rule  I  do  not  know, 
and  it  is  not  very  clear,  or  very  distinctly  laid  down  in  the  cases;, 
but  it  seems  to  me  to  depend  upon  this,  that  the  party  taking 
possession  must  have  known  that  he  was  in  possession  as  mort- 
gagee. That  seems  to  me  to  be  essential  to  the  rule.  Whether 
it  would  be  correct  to  say  that,  under  those  circumstances,  a  person 
who  entered  into  possession  not  as  mortgagee  may  not  afterwards 
become  mortgagee  in  possession  with  all  the  liabilities  of  a  mort- 
gagee in  possession,  is  a  proposition  which  ne(>d  not  be  laid  down 
now.     It  is  possible  that,  by  distinct  circumstances,   it   may  b(*- 


^f:«'.  ^J  I'\i;kins(i\    r.    iiwiiii.'V.  ."».">.'» 

>lu'\vn  llial  lliric  \Vii>  an  iiitciition  to  alter  the  cliaiMctcr  from  tin' 
one  to  the  otlicr.  Hut  iiotliiiij,'  of  the  sort  npiicars  licic,  and  it  is 
|tiTf(-otly  floar  that  altliou<,fli  tlicse  respondents  were  pfoperly 
treated  as  parties  who  liad  not  a  valid  tith'  as  pnrehasers,  heeau-e 
thi're  was  nohody  who  eoiild  ;five  a  eonsi-nl  to  the  sale  on  hehalf 
of  the  representatives  of  I'arkinson.  yet  they  treated  thein-elve>  a> 
|turehasers  having  a  valid  title  and  sn|)|)ose(l  that  they  were  in 
jtosst'ssion  as  |)urehasers,  and  were  therefore  liahle  to  aeeoimi  only 
in  the  ordinary  way  for  the  rents. 

Then  a  jmint  was  raised  to  shew  that  they  were  niort^M^ices  u\)(>\\ 
this  ground:  It  seems  that  they  gave  up  possession  as  agents  on 
the  Ttli  of  June,  183-4,  and  they  did  not  aequire  th(Mr  title  as  pur- 
chasers till  the  0th  of  Octohcr,  IH'M.  After  they  had  ac(|uired 
their  possession  as  purchasers,  or  suj)j)os(>d  jiurehasers,  on  "the  I'tli 
of  October,  IS'M,  they  received  two  portions  of  rent,  namely,  that 
which  accrued  at  Midsummer,  1834,  and  that  which  aeeruid  ai 
Michaelmas,  183-1.  Now,  it  is  said  that,  as  purchasers  in  October. 
1S34,  they  could  not  have  been  entitled  to  those  rents,  becauM- 
they  would  only  have  been  entitled  to  the  rent  which  accrued 
after  they  became  purchasers.  How  came  they  to  receive  tho.-;e 
rents?  It  is  said  that,  because  they  wi-re  mortgagees  under  the 
mortgage  of  January.  18'^S.  it  must  be  presumed  that  they  received 
those  rents  under  their  title  of  mortgagees,  and  not  umler  the  ])ur- 
chase  from  tlu'  executors  of  Chambers. 

It  appears  to  me  that  that  would  be  ])usliing  the  doctrine  to  a 
most  extravagant  length.  Mortgagees  in  actual  possession  they 
certainly  were  not,  for  they  only  received  rents  (which  is  the  same 
thing,  however,  in  ])oint  of  law),  but  they  did  not  receive  them 
during  the  time  they  were  agents,  or  during  the  interval  between 
iheir  ceasing  to  1k>  agents  and  becoming  purchasers;  but  thev 
received  them  afterwards,  aiul  I  take  it  that  they  had  then  n  > 
right  to  ri'ceive  them  as  mortgagees.  It  is  ci-rtainly  too  much  t  > 
force  upon  persons  the  character  of  mortgagees  in  possession,  when 
they  never  were  in  actual  possession  as  such,  and  never  received  any 
rents,  except  when  they  had  by  sul).se(|uent  arrangement  become 
entitled,  as  th(>y  believed,  as  purchasers,  to  the  actual  possession,  or 
to  the  actual  receij)t  of  rents  and  profits  thence  accruing. 

It  secm.s  to  me.  therefore,  my  Lords,  that  tlu*  case  entirely  fails. 
It  is  only  very  much  to  be  de])lored  that  this  lady  should  have 
involved  herself  in  this  course  of  protracted  and  useless  litigation. 
I  apre«\  therefore,  with  my  noble  and  learned  friend  in  thinkini: 
that  we  ought  to  follow  the  \'ice-('hancellor  aiul  the  Lords  Justices 
by  dismissing  the  appeal,  with  costs. 

Loud  Wkstiuuy.     My  I>ords.  I  have  felt  scunc  anxietv  in  this 


05G  EQUITY    RELATIONS.  [CHAP.  ii. 

case,  by  reason  of  the  form  of  the  decree  to  account  for  the  rents  and 
jDrofits,  and  certain!}^  that  is  a  point  which  deserves  some  attention 
on  the  part  of  the  House.  I  take  the  law  to  be  this.  It  is  undoubt- 
edly settled  in  the  courts  of  equity  that  if  a  mortgagee,  in  that  char- 
acter, enters  into  receipt  of  the  rents  and  profits,  he  will  he  bound  to 
account  not  only  for  what  he  has  received,  but  for  what,  without 
wilful  default,  he  might  have  received.  It  is  difficult,  perhaps,  to 
ascertain  the  origin  of  the  rule,  but  I  take  it  to  be  this — that 
when  a  mortgagee,  by  virtue  of  his  mortgage,  claims  to  receive 
the  rents  and  profits,  he  is  regarded  in  a  court  of  equity  as  the 
bailiff  of  the  mortgagor.  Now  an  account  against  a  bailiff  was, 
both  at  common  law  and  in  equity,  given  with  wilful  default.  That 
is  almost  the  only  case,  save  in  cases  of  fraud  or  breach  of  trust, 
where  wilful  default  is  infused  into  the  form  of  the  account.  And 
if  the  mortgagee  is  regarded  as  in  the  nature  of  a  bailiff  to  the 
mortgagor,  then  it  would  be  proper  to  give  the  decree  against  him, 
as  it  is  always  done  against  a  bailiff  with  wilful  default. 

But  if  that  ground  is  referred  to  as  the  foundation  of  the  practice, 
it  must  of  necessity  follow  that  the  party  receiving  receives  in  the 
character  to  which  that  relation  of  bailiff  and  principal  may  be 
properly  imputed;  and  consequently  it  would  follow  that  if  the 
mortgagee  takes  in  another  character,  more  especially  if  he  re- 
ceives in  a  character  adverse  to  the  right  of  the  mortgagor,  then 
it  would* be  impossible  to  ascribe  to  him,  by  any  inference  of  law, 
the  conclusion  that  he  intended  to  take  possession,  or  to  receive  the 
rents,  as  the  bailiff  of  the  mortgagor,  or  that  that  relation  could 
properly  be  imputed  to  him.  Supposing  that  to  be  the  origin  of  the 
rule,  it  will,  therefore,  not  be  applicable  to  any  case  where  the  con- 
clusion of  the  defendant  being  in  receipt  of  rent  as  mortgagee  is  a 
conclusion  consequential  only  on  your  having  reduced  and  set  aside 
some  other  pretended  or  alleged  title,  in  respect  or  by  virtue  of 
which  he  had  actually  received  the  rents  and  profits. 

The  case  here  is  clearly  this :  The  present  respondents  claimed 
the  Eoyal  Oak,  not  in  the  character  of  mortgagees,  but  in  the  char- 
acter of  purchasers  of  the  property  from  Thomas  Chambers,  by 
virtue  of  his  power  of  sale.  In  that  capacity  they  entered  and  en- 
joyed, and  you  have  to  remove  that  title  by  decree  before  you  can 
fasten  on  them  anything  like  that  state  of  circumstances  which 
would  bring  them  within  the  character  of  mortgagees  in  possession. 

But  then  it  was  said  on  the  part  of  the  appellant,  with  much 
ingenuity,  that  it  appeared  that  they  had  actually  received  some 
rent  which  accrued  due  at  a  time  anterior  to  the  date  of  the  contract 
of  purchase,  and  that  it  was  impossible  to  ascribe  that  receipt  to  any 


fl 


f^E<^-  V]  I'AliKINSOS     l\     llAMMltY.  Oo^ 

other  title  than  a  titU'  which  they  had  as  si-coiitl  mortgagees.  Buf 
I  do  not  think  that  that  is  a  just  or  hv  any  means  a  necessary 
( onsiMjucnfr.  The  fact  a|)p(Mrs  to  l)e,  that  anteri<tr  to  the  contract 
of  i)urchase  they  had  hcen  in  the  receipt  of  the  rents  of  the  I?oy;il 
Oak,  by  virtue  of  an  authority  which  they  received  from  (.'hambiTs. 
Chambers,  in  fact,  had  claimed  to  receive  the  rents  and  to  have  the 
henetit  of  the  projierty ;  and  he  had  »'xercised  that  l>y  means  of  an 
authority  piven  to  the  respoiuh'uts.  Sup]>osing  that  that  authority 
luid  terminated  in  the  month  of  .lune,  ls;?4,  anterior  to  tho  date 
of  the  purchase  deed,  yet  it  hy  no  mi-ans  follows  that  Chanilxjrs  had 
then  given  up  his  right  or  claim  to  the  receipt  of  the  rents.  It  is 
impossible,  therefore,  to  ascribe,  with  any  accuracy  in  point  of  fact, 
the  receipt  of  the  two  sums  which  actually  came  into  the  hands  of 
the  respondents  in  the  months  of  November,  1H;}4,  and  January, 
1835,  both  of  them  after  the  date  of  the  purchase  deed,  to  the  title 
which  they  might  have  asserted  as  second  mortgagees,  supposing 
Chambers  had  aljandoned  the  receipt. 

I  collect,  therefore,  from  the  facts  that  the  inference  rather 
would  be  that  these  two  sums  of  money,  if  they  were  not  received 
by  the  respondents  by  virtue  of  their  purchase  contract,  were 
received  by  them  still  on  behalf  of  Chambers,  and  not  on  behalf  of 
themselves,  in  the  character  of  second  mortgagees.  There  is  no 
room,  therefore,  for  the  argument,  ingenious  as  it  was,  and  which 
might  have  had  some  cffi^ct,  that  anterior  to  their  purcha.se  they 
were  dc  facto  in  receipt  of  the  rents  in  the  character  of  mortgagees, 
by  virtue  of  their  second  mortgage. 

Then  we  come  to  the  question  whether  the  case  is  atTccted  by  the 
decision  in  the  case  which  has  been  very  properly  cited  by  the  appel- 
lant herself  this  morning,  namely,  Xrcsoni  v.  Clurksnn,  2  Hare. 
KI3.  That  is  a  case  which  is  very  material,  and  which  needs  some 
explanation,  in  order  to  shew  that  it  has  not  a  governing  efTeet  upon 
the  ca.se  before  your  Lordships.  The  case  arose  under  the>c 
peculiar  circumstances.  A  man  had  contracted  to  purcha.se  a  fee 
simj)le.  lie  dicMl  before  he  had  paid  the  money.  lie  niaile  his 
widow  his  universal  legatee  and  devisee.  'JMie  e(|uilable  estatt'. 
therefore,  which  he  acquireil  by  virtue  of  that  contract,  pas-cil. 
under  his  will,  to  his  widow.  His  widow  married  again;  and  her 
second  husi)and,  supposing  himself  to  bi-  entitled,  jiaid  the  pur- 
chase-money under  that  contract.  He  then  mortgaged  the  estate, 
the  estate  being  one  to  which  he  was  entitled  oidy  jiirr  tixoris.  save 
in  respect  of  tlie  lien  he  had  nu  it  l)y  having  jiaid  the  purchase- 
money.  He  mortgaged  it,  and  then  convey«'d  it  absolut»'ly  to  a 
purcha.ser,   in  whose  purchase  deed,  however,  tiiere  were   n'citals 


558  EQUITY    RELATIOXS.  [CIIAP.  II. 

Stating  clearly  and  distinctl}'  in  what  character  the  vendor,  that  is 
to  say,  the  second  husband,  had  acquired  an  interest  in  the  estate. 
The  widow  died,  and  the  second  husband  died;  and  on  the  death 
of  the  widow,  there  being  no  child  of  her  marriage  with  her  second 
husband,  the  estate,  of  course,  descended  to  her  heir-at-law.     The 
heir-at-law  filed  a  bill  for  the  redemption  of  the  property,  and  it 
was  held  by  the  Viee-Chancellor  (unquestionably  a  strong  decision) 
that  the  recitals  in  the  purchase  deed  gave  distinct  notice  to  the 
purchaser  from  the  second  husband,  that  all  his  interest  in  the 
estate  ceased  upon  the  death  of  the  wife,  and  that  all  that  he  could 
become  entitled  to  was  a  claim  in  respect  of  the  money  which  his 
vendor  had  paid  on  the  original  purchase.     The  purchaser  from 
the  second  husband  claimed  to  continue  in  possession.     It  was  held 
that  he  had  no  title  to  the  possession,  save  in  respect  of  his  lien  for 
the  purchase-money;  and  then,  certainly  by  a  very  strong  stretch 
of  the  authority  of  the  Court,  and  of  the  principle,  it  was  held,  th'^^ 
as  his  purchase  deed  gave  him  a  most  distinct  notice  of  the  c 
termination  of  the  title  of  his  vendor,  and  that  he  himself  had  n. 
other  claim  than  in  respect  of  that  sum  of  money  which  had  b'' 
paid,  his  subsequent  receipts  must  be  referred  to  the  only  in' 
he  had ;  and  accordingly  he  was  charged  with  an  account  dir  -  ^ 
with  wilful  default. 

That  approaches  very  nearly  to  the  present  case  in  favour  o    the 
appellant,  but  certainly  stops  somewhat  short  of  it,  and  is  ^ 
guishable  from  it  (though,  if  not  distinguishable,  I  confess  I 
not  have  been  disposed  to  recommend  your  Lordships  ent 
follow  that  authority),  because  in  the  case  then  before  t^ 
Chancellor  there  was  nothing  to  set  aside;  and  it  was  ^     u  .lu. 
the  conveyance,  upon  the  very  face  of  it,  was  pregnant  w        infor- 
mation to  the  party  that  he  had  no  title  whatever,  save        respect 
of  his  lien  for  the  purchase-money.     In  the  present  case         "^^  was 
a  question  to  be  determined  at  the  hearing.     The  qu   -aon  was 
this,  whether  the  power  of  sale  given  to  Chambers,  y^  lich  in  its 
terms  required  notice  to  be  given  to  the  personal  repre     itatives  of 
Parkinson,   could   nevertheless  be  operative,  there   he,   g  no  such 
personal  representative.     It  was  held  that  it  could  not.  and  that  the 
power  did  not  arise,  and  that  the  conveyance  therefor    must  be  set 
aside.     Although  that  was  very  right,  yet  I  think       would  have 
been  very  wrong  if  the  old  rule  of  the  Court,  foun-""^   on  the  prin- 
ciple of  a  mortgagee  receiving  rents,  becoming  in         c  respect  the 
bailiff  of  the  mortgagor,  had  been  applied  to       case  where  the 
parties  clearly  had  taken  the  property,  under  a       isonable  conclu- 
sion that  the  purchase  deed,  by  virtue  of  which        y  had  acquired 
possession,  was  a  valid  transaction,  and  gave  thei        bona  fide  title. 


^'••<"-  ^1  MDltiMs    r.    ItlDI.ovi;.  a*)I» 

I  iiiii  llicn-rorc,  my  Lord-,  of  oitiiiion  in  llmt  respect  with  your 
lionlsliips,  lliat  the  decree  was  ri<;htly  framed  in  the  form  in  which 
we  find  it,  and  that  the  present  a|ipellant  had  no  tith'  to  have  tlu; 
account  directed  with  wilful  default.     .     .     . 

Decree  and  order  iijijiealed  from  (iffirmed,  uiul  appeal  dismissed 
iril/t  costs. 


MoHius  V.  BrDLOXG,  78  X.  Y.  54.3,  555  (Court  of  Appeals,  1879). 
This  action  was  ori{,'inally  l)rou<jht  l)y  Mary  Morris  for  an  account- 
ijig  Ix'tween  her  and  defendant  Hudlonjr,  and  for  repayment  of 
moneys  alli'<red  to  have  heen  paid  to  him  in  excess  of  what  he  wa:? 
entitled  to;  and  to  have  two  mortga^'cs,  one  executed  hy  plaintiff 
to  one  Ferguson,  and  the  other  hy  Ferguson  to  Budlong,  canceled 
and  discharged  of  record.  The  facts  of  the  case  were  suhstantially 
•IS  follows : 

Plaintiir  heing  greatly  einbarras.sed  and  her  farm  about  to  be 
sold  in  foreclosure,  defendant  agreed  to  bid  it  in  for  the  benefit  of 

daintifT,  to  purchase  various  outstanding  claims  against  her  and 

^lold  the  farm  "to  secure  him  for  such  moneys  as  he  should  pay 

i^  in  carrying  into  efYect  this  agreement,  and  give  her  one  year 

.1  which  to  redeem  by  repaying  liim  the  moneys  he  should  pay  out 

■i.,  jCarrj-ing  into  effect  the  agreement,  and  that  Mrs.  Morris  should 

•  .  o,   pay    him    all    expenses,    and    for    his    time    and    trouble    in 

'.^ection   therewith."     I^udlong  thereafter  jjuri-liased   tlu'  claim 

]  referred  to,  took  a  iU-vA  of  tlu'  Morris  farm  from  the  sheritT, 

,)n  the  23d  day  of  March,   ISOO,  purchased  the  premises  in 

,  ^  ji  on  the  foreclosuri'  sale,  |)aying  therefor  in  money  and  by 
his  1;  d  and  mortgage  $11,2I>0.87.  To  raise  the  money  for  tiie.se 
purpOj,  s  Budlong  was  obliged  to  go  to  Wisconsin  to  get  in  sonu^ 
inve*'  .nts  which  he  had  there,  thus  incurring  expenses,  and  an 
absence  from  home  of  three  or  four  weeks.  That  he  should  do 
so  was  vf'reed  Uj)on  at  the  time  the  above  arrangement  was  made. 
Immedi  dy  after  the  mortgage  sale  Budlong  entered  into  pos- 
session (  the  farm,  cultivated  it,  and  received  the  j)ro(its  thereof, 
except  suicli  portion  as  was  received  by  the  Morris  family,  until 
about  y,ar 'l^  31,  lH(!(i.  During  the  first  three  years  that  family 
occuj)ied  t'  whole  of  the  farm  house,  and  during  the  remaindtT 
it  was  occjipied  by  them  and  the  family  <if  Budlong.  The  time 
for  paynu'  ,  l)y  Mrs.  Morris  under  the  above  agreement  exjiired 
and  was  (\\  ded  one  year.  The  money  was  not  paid,  but  no 
further  e\;cr  ii  was  given.  It  was  claimed  in  behalf  of  j>laintiff, 
that  defendy  held  the  farm  as  mortgage*  in  possession  and  was 
•chargeable  i.       )nly  with  the  rents  and  profits  actually  received  by 


5G0  EQUITY    RELATION y.  [CIIAP.  II. 

him,  but  with  the  full  rental  value  of  the  farm,  wliieh,  it  was 
alleged,  had  not  been  worked  to  its  fullest  eapaeity. 

Danforth,  J.  An  account  rendered  upon  an  application  to  re- 
deem would  properly  charge  the  estate  with  the  money  advanced 
by  Budlong  and  interest,  with  the  expenses  and  compensation  pro- 
vided for  by  the  agreement,  and  would  credit  the  estate  with  what- 
ever had  been  received  from  it  by  sales  or  rents  and  profits,  as  in- 
cident to  the  right  of  redemption,  and  as  an  equitable  offset  against 
the  amount  due  on  mortgage,  after  deducting  taxes,  repairs  and 
other  necessary  expenses  incurred  on  account  of  the  estate.  (EucJi-- 
maii  v.  Astor,  9  Paige,  517.)  It  would  include,  therefore,  the  pro- 
ceeds of  timber  sold  and  rents  and  profits  actually  received.  That 
the  farm  was  not  worked  to  its  fullest  capacity  furnishes  no  ground, 
under  the  circumstances  of  this  case,  for  an  enlarged  liability.  A 
provident  owner  might  not  do  that,  and  there  is  no  fact  stated  from 
which  the  wilful  default  of  Budlong  in  this  respect  could  be  found. 
Nor  has  it  been.  He  is  in  no  sense  a  wrongdoer.  He  went  into 
possession  under  the  legal  title,  taken  with  the  knowledge  of  Mrs. 
Morris  and  continued  under  circumstances  which  might  well  have 
induced  a  belief  that  he  was  in  fact  the  owner  of  the  estate,  sub- 
ject only  to  an  agreement  to  sell.  He  was  not  technically  at  any 
time  a  mortgagee  in  possession.  There  was  no  mortgage.  The 
character  is  cast  upon  him  by  the  application  of  equitable  rules  to 
an  oral  agreement  easily  susceptible  of  two  constructions,  of  which 
the  one  chosen  is  in  direct  contradiction  of  the  written  instruments 
which  display  his  title,  and  he  is  therefore  chargeable  only  with 
what  he  has  received  and  not  with  what  he  might  have  received.  "I 
thinJc,"  says  Lord  Cranworth,  in  Parkinson  v.  Ilanhiiry,  3  L.  R. 
Eng.  and  Irish  App.  1,  "that  it  is  perfectly  clear  law  that  where 
a  person  becomes  possessed  of  a  property,  though  erroneously  sup- 
posing that  he  is  a  purchaser,  if  it  afterwards  turns  out  that  he  is 
not  to  be  treated  as  a  purchaser,  but  only  as  a  person  who  has  a  sort 
of  lien  upon  the  property,  that  does  not  make  him  a  mortgagee  in 
possession  within  the  meaning  of  that  rule  which  charges  him  witli 
wilful  default."  In  1  Story  Eq.  Jur.,  s.  514  a.  (10th  ed.)  it  is  said  : 
"Where  the  estate  is  thrown  upon  one  in  the  necessary  enforcement 
of  his  legal  rights,  or  comes  to  his  possession  as  trustee,  he  should 
only  be  required  to  act  in  good  faith  and  to  account  for  what  he  in 
fact  realizes;"  and  so  in  Moore  v.  Cable,  1  J.  Chy.  384,  Chancellor 
Kent  directed  the  defendant  to  be  charged  only  with  rents  and 
l)rofits  received.  In  Harper's  Appeal,  14  P.  F.  Smith,  315,  it  is 
declared  that  "whatever  the  rule  on  accounting  might  be,  where 
the  party  charged  was  a  mortgagee  under  an  ordinary  formal  mort- 


I 


^'^*- ^'l  VAN  \i;(».\Ki:i!   r.   kastman.  r,t',\ 

i^iii^i',  it  <)U<,'lit  not  to  lu"  the  saiiii',  when,  liy  the  cxpri'ss  agrecniiiit 
of  the  i)arty  sfckinj,'  o<iuital)I('  ivliof,  he  took  and  hold  possession 
as  absoluti'  owner."  In  the  case  In'fore  us  there  was  not  only  a  title 
taken  hy  the  defendant,  hy  the  phiintilf's  wish,  hut  there  is  aliened 
against  it  only  an  oral  i)roniise  to  eonvey  at  a  eortain  time,  upon 
payment  of  certain  moneys,  and  no  agreement  to  aeeount  in  tin- 
meantime.  There  is  nothing  to  show  any  want  of  good  faith  nn 
the  part  of  the  defendant  in  his  management  of  the  |)rop»  rtv,  nor 
that  he  did  not  act  prudently  and  according  to  his  hest  judgment 
in  the  matter.  The  omissicui  of  Mrs.  Morris  to  redeem  at  the  end 
of  the  time  limited,  the  year,  or  at  the  end  of  the  second  year, 
her  omission  to  arrange  for  further  time  to  do  so,  the  continued 
occuj)ation  of  the  i)remises  hy  ^fr.  Rudloiig,  a|)parently  as  owner» 
with  no  demand  for  an  account  of  rents  ami  jtrofits — all  hear  upon 
this  question,  and,  with  the  considerations  before  adverted  to,  show 
that  the  referee  erred  in  measuring  the  profits  for  which  Mr.  Bud- 
long  was  liable  hy  the  rental  value  of  a  farm  worked  to  its  full 
capacity  rather  than  by  wjiat  he  actuallv  received.' 


Van  Vroxker  v.  East.max,  7  :Met.  (Mn.^s.)  loT,  103  (l!^4o). 
Shaw,  C.  J.  The  account  must  be  reformed  by  making  annual 
rest^.  1.  State  the  gross  rents  received  by  the  defendant  t<»  the 
end  of  the  first  year.  2.  State  the  sums  paid  by  him  for  repairs, 
taxes,  and  a  commission  for  collecting  the  rents,-  and  deduct  tin- 
same  from  the  gross  rents,  and  the  l)alance  will  show  the  net  rents 
to  the  end  of  the  year.  ;{.  Compute  the  interest  on  the  note  for 
one  year  and  add  it  to  the  princijtal,  aiul  the  aggregate  will  ,«^ho\v 
the  amount  due  thereon  at  the  end  of  the  year.  4.  If  the  net  an- 
nual rent  exceeds  the  year's  interest  on  the  note,  di-duc-t  that  r.rit 
from  the  amount  due,  and  the  balaiu-e  will  show  the  amount  renuiin- 
ing  due  at  the  end  of  the  year.  5.  \[  the  end  of  the  second  v^'ar 
go  through  the  same  process,  taking  the  amount  due  at  the  l>'gin- 

^  Rarnnrd  v.  Jriniison.  27  Midi.  _':?<)  (lS7:n;  //«///  v.  Wrslmtt.  17  U  I. 
504    (  ISni).  tirront. 

*  Sufti  coTimiissions  arc  alimvcd  in  Ma-^-^arliiisptls :  (liltson  v.  Crrhon.  ."> 
Pick.  140.  l(;i  (IH27);  dnrish  v.  HIikI:,  104  .Muss.  400  (1870);  uiid  iri 
Connecticut:  \Viilfniiati  v.  Ciirtifi,  2('i  I'onn.  241  (18r)7).  Hut  this  is  ox- 
ccptional,  conunissions  licin;j  generally  rofiisotl  even  wlipic  stipulated  fur: 
Rnnithnn  v.  Ilorkmorr,  1  Vorn.  31H  (HIS."));  Frrnrh  v.  linruu,  2  .\tk.  12i> 
(1740):  Gndfrrif  v.  Watson,  .3  Atk.  r)17  (1747):  Clnrk  v.  Smith.  Savt. 
(N.  .1.)  121,  l.-i?  (18.30):  llarprr  v.  A/-/.  70  III.  T.Sl  (1878);  niiinl  \. 
%»!.<».  40  Hun.  (N.  Y.)  500  (1880).  But  sec  Green  v.  Lamb.  24  linn.  S7 
(1881). 


502  EQUITY    RELATION'S.  [CHAP.  II. 

ning  of  the  year  as  the  new  capital  to  compute  the  year's  interest 
upon.     So  to  the  time  of  judgment.^ 


MosHiEE  V.  NoETOx,  100  111.  63,  73  (1881) .  Mr.  Justice  Shel- 
don. Complainant  takes  exception  to  the  mode  of  stating  the  ac- 
count in  making  annual  rests.  The  Master  reported  that  on  Jan- 
uary 1,  1870,  the  principal  sum  due  from  Norton  to  complainant 
was  $8782.50;  that  the  accrued  interest  thereon  to  that  time  was 
$8240.93;  that  the  net  rents  up  to  that  time  were  $8617.47.  As 
the  amount  of  rents  at  that  time  exceeded  all  interest  due,  said 
amount  of  the  rents  to  that  time  was  deducted  from  the  whole 
amount  of  principal  and  interest  at  that  time,  leaving  a  balance  due 
complainant  of  his  principal  sum,  $8105.96,  on  January  1,  1870. 
Then  to  this  sum  was  added  the  interest  for  one  year,  the  taxes  paid 
in  1870,  and  interest  thereon  to- January  1,"  1871,  which  made  the 
sum  of  $9190.48,  from  which  was  deducted  the  rent  of  1870  as 
found,  $1711.50,  leaving  a  balance  due  complainant  of  $7778.98  at 
that  date.  Then  follow  similar  annual  statements  of  balances  on 
the  first  day  of  January  in  each  year,  up  to  and  including  January 
1,  1880,  the  rents  as  found  for  each  year  exceeding  the  interest  and 
taxes  for  the  year. 

Complainant  concedes  the  mode  adopted  by  the  Master  in  making 
annual  rests  was  the  proper  one  when  no  arrears  of  interest  are  due 
at  the  time  the  mortgagee  enters  into  possession,  but  [claims]  that, 
where  the  interest  of  the  mortgagee  is  in  arrears,  as  in  the  present 
case,  when  the  mortgagee  takes  possession,  the  court  will  not  re- 
quire annual  rests  to  be  made,  even  although  the  rents  and  profits 

i"The  two  essential  points  are:  First,  that  when  there  is  a  surplus  of 
receipts  in  any  year  above  the  interest  then  due,  a  rest  shall  be  made,  and 
the  Ijalance  remaining  after  discharging  the  interest  shall  be  applied  to 
reduce  the  principal,  so  that  the  mortgage  shall  not  continue  to  draw 
interest  for  the  face  of  it,  when  in  fact  the  mortgagee  has  in  his  hands 
money  that  should  be  applied  to  reduce  the  principal,  and  thereby  make 
the  interest  less  for  the  following  year.  Secondly,  although  the  amount 
received  in  any  year  be  insufficient  to  pay  the  interest  accrued,  the 
surplus  of  interest  must  not  be  added  to  the  principal  to  swell  the  amount 
on  which  interest  shall  be  paid  for  the  following  year;  for  that  would 
result  in  the  charging  of  interest  upon  interest,  which  is  not  allowed ;  but 
the  interest  continues  on  the  former  principal  until  the  receipts  exceed 
the  interest  due." — Jones,  Mortgages,  §  1130. 

The  cases  are  numerous  and  generally  accord.  Connecticut  v.  Jackson, 
1  Johns.  Ch.  (N.  Y.)  13  (1814);  Reed  v.  Reed,  10  Pick.  (Mass.)  398 
(1830)  ;  Green  v.  Wescott,  13  Wis.  006  (1801)  ;  Oladding  v.  Warner,  36 
Vt.  .54  (1803)  :  Mahone  v.  Williams,  39  Ala.  202  (1803)  ;  Adams  v.  Sayre, 
70  Ala.  509  (1884)  ;  Bennett  v.  Cook,  2  Hun  (N.  Y.)  520  (1874). 


•*«r:r.  v.]  II  \i;i'i:i:   r.   I'.LY.  '>C>'^> 

may  exceed  llie  aimual  interest.  iu»r  until  tlie  principal  of  the  inort- 
gaj^e  debt  is  entirely  paid  ntT.  'i'liere  is  auth(»rity  for  this  position 
and  distinction.  It  appears  to  he  supported  hy  .hid<,'e  Story  in  his 
\a[.  .lur.,  vol.  '2,  sec.  loiC,  (I,  iind  the  l'ji;:lish  cases  cited  hy  liini. 
iiut  there  are  American  decisions  which  lay  down  a  dilTerent  rule, 
as  we  re^rard,  and  a;,'reein^f  with  the  one  which  was  adopted  in  this 
ease.  1'^///  ]'ri)nk('r  v.  Knsliihiii.  7  Mete.  l.")7;  (Irffit  v.  WesroU, 
\:\  Wis.  (;(><; ;  •.>  Jones  on  Mort.,  sees.  WMK  1110.     .     .     . 

Xo  satisfaet(»ry  reason  appears  to  our  minds  why,  when  there  is 
a  suri)lus  of  receipts  in  any  year  ahove  all  the  Interest  then  due  and 
<lishur.senu'nts,  the  balance  reniainin«;  after  discharrrinj;  the  interest 
should  not  be  applied  to  reduce  the  principal ;  and  this,  irrespective 
of  the  fact  whether  there  was  or  was  not  interest  in  arrear  at  the 
time  the  morliragce  took  j)os.session.  We  view  the  mofle  adopted  by 
the  Master  in  making  annual  n-sts  just  and  reasonable,  and  find  no 
«^-rror  therein.' 


(c)   Supcnor  Fachs. 

GoDFKKY  V.  Watsox,  3  Atk.  ."in  (17  IT).  L()i;i)  Ciianc  f.i.i.ok 
(  Haudwicke]  said  that  a  mortgagee  in  pos.session  is  not  obliged 
to  lay  out  money  any  further  than  to  keej)  the  estate  in  necessary 
rejiair;  but  if  a  mortgagee  has  e.xpended  any  sum  of  money  in  suj)- 
|Hirting  the  right  of  the  mortgagor  to  the  estate,  where  his  title  has 
been  impeached,  the  niortgagi't-  may  certaiidy  add  this  to  the 
principal  of  his  debt,  and  it  shall  carry  interest. 


Haki'KK  v.  Ki.y.  7i>  11!.  '>S\.  .'.SI   (1S7;?).     Mi;,  .li  stick  Cuam;. 
It    is   claimed    by   appellants    that    the   i-ourt    erreil    in   allowing 

'"Now,  ttiinkin^,  as  I  do.  Hint,  Ixitii  upon  |>i  iiiciplt'  aiul  autlmrity.  tlu' 
iiipie  fact  of  an  aiioar  of  iiiteri'st  lu'iiif;  or  in)t  Ih-Iiij:  dm-  to  tlio  inortpi<;iv 
when  the  inortf:a<ree  takes  possession,  is  not  ileci>ive  upon  tlie  qiu-stion  of 
rests,  hut  tliat  every  circuinstanee  must  he  ie;,'aiile«l.  looking;  at  all  the 
n<'(onipanyin^  ciicunistances.  Iookin<;  at  the  ^'eiieial  ri;;ht  of  a  niort<ra>;e«' 
not  to  l>e  paid  piecemeal,  lookin;,'  at  tlie  po>iition  to  whieh  Mi-«.  IViestly 
I  the  mortfjaj/ee  in  possession  I  has  Immmi  driven  hy  the  wronjrful  nets  of  the 
]iaities  opposed  to  lier,  I  think  that  she  ou;;ht  not  to  Im*  e<)mpell«Ml  to  have 
iier  nei'ount  taken  with  rests." — I'lr  Kni;,'lit  Hnue.  \".  C.  in  llnrUuk  v. 
Smith,  1   Coll.  Ch.  2S7.  207    (1S44). 

Compiiro   Finch   v.   Unnm.  .'I    Meav.   70    (  l.S4(M  :    lli/xon    v.   Clucr,  id.    l.'lrt 

•  1S40)  ;   I'litch  v.   Wild,  3U  Hoav.  SHI    (18U1),  and  Htiunlt  v.  Cook.  2   Hun. 

'  N.  V.)    520    (1874). 


564:  EQUITY    RELATIONS.  [CIIAr.  II. 

the  Thompson  and  McQiiestion  debt.  This  debt  was  secured  by  a 
jDrior  trust  deed  on  the  premises,  and  Ely,  in  order  to  protect  his 
interest  under  the  mortgage,  under  which  he  claimed,  was  com- 
pelled to  discharge  this  lien. 

We  apprehend  there  can  be  no  doubt  but  a  mortgagee  is  entitled 
to  be  repaid  all  sums  he  may  advance  for  the  purpose  of  removing 
a  prior  incumbrance  from  the  mortgaged  property.  The  fact  that 
Ely  paid  off  or  purchased  this  debt,  which  was  a  prior  lien  on  the 
land,  could  Avork  no  hardship  on  the  complainant.  It  was  a  sub- 
sisting debt,  and  a  lien  upon  the  mortgaged  premises,  and  had  to 
be  paid,  and  whether  complainants  are  required  to  pay  it  to  Ely,  or 
the  original  holder,  can  not,  in  anywise,  prejudice  their  rights. 
But  this  debt  was  also  secured  by  the  Haddock  mortgage,  as  well 
as  a  prior  deed  of  trust,  and  may  be  regarded  as  a  part  and  parcel 
of  the  mortgage  debt  from  which  complainants  are  seeking  to  re- 
deem. In  either  event,  however,  we  regard  the  decision  of  the 
Circuit  Court  on  this  point  correct;  but  it  is  said  ten  per  cent. 
interest  ought  not  to  be  allowed  Ely  on  this  claim,  after  it  came 
into  his  hands.  The  claim  drew  ten  per  cent,  interest  in  the 
hands  of  the  original  holder,  and  when  Ely  bought  or  paid  it,  in 
equity  he  was  subrogated  to  the  rights  of  the  original  holder  of  the 
claim;  and  when  the  original  creditor,  by  the  terms  of  the  eon- 
tract,  was  entitled  to  ten  per  cent,  interest,  we  fail  to  see  upon 
what  principle  Ely  Avould  not  be  entitled  to  the  same.^ 


SIDENBEEG  v.  ELY. 

Court  of  Appeals  of  Neav  York,  1882. 

(90  N.  Y.  257.) 

Appeal  from  judgment  of  the  General  Term  of  the  Court  of 
Common  Pleas,  in  and  for  the  city  and  county  of  Xew  York, 
entered  upon  an  order  made  May  11,  1880,  which  affirmed  a  judg- 
ment in  favor  of  plaintiff,  entered  on  a  decision  of  the  court  on  trial 
at  Special  Term. 

The  nature  of  the  action  and  the  material  facts  arc  stated  in  i\v^ 
opinion. 

^Silver  Lake  Bank  v.  North,  4  Johns.  Ch.  .370  (1S20)  ;  Pafje  v.  Fo.sfrr,  7 
N.  H.  392  (1835)  ;  Arnold  v.  Foot,  7  B.  Mon.  (Ky.)  GG  (184G)  :  McCormick 
V.  Knox,  105  U.  S.  122   (1881),  and  the  authorities  generally  accord. 


'">:<•  \]  SIOKN'nKRfi    V.    Rl.Y.  5(;."» 

Mii,i,i;i{,  J.  This  action  was  l>nmglit  for  tin-  foifclosurc  of  a 
iuortf.'ago  made  by  one  William  (J.  Ely,  dcecaHod,  in  1825,  to  the 
.Htim  Iiisuraiioo  Company,  to  scoiiro  tlio  sum  of  $3000.  It  con- 
taint'd  no  clause  in  reference  to  taxes  and  as<sessments.  In  1H72, 
the  -Etna  insurance  Ctuiipany  assi«^ne(l  the  mortga*(e,  to<!;other 
with  the  hond  accompanyin<f  the  same,  to  the  Excelsior  Life  In- 
i-urancc  Company.  This  company  |)aid,  while  it  hold  the  mort- 
jrage  as  assijfuee,  certain  taxes,  assi'ssmeiits  and  water  rates  upon 
the  mort»,Mi;ed  i)remises,  ami  to  n-deem  the  same  from  tax  sales, 
which  to<;ether  amounted  to  the  sum  of  $1()4(),  or  thereabouts.  In 
the  ye-df  187"),  the  Excelsior  Life  Insurance  Company  a.ssigned  the 
bond  and  mortgage,  with  the  whole  amount  due  by  reason  of  the 
payment  for  taxes,  etc.,  to  the  plaintilT,  who  purchased  at  the  re- 
*juest  of  the  mortgagor,  and  under  an  agreement  to  extend  the  pay- 
ment of  the  principal  until  September,  1S78,  previous  to  which 
tinu'  this  action  was  commenced.  Sub.sequcnt  to  his  purchase,  the 
plaintilT  paid  certain  taxes  and  assessments,  amounting  to  the  sum 
of  $!>'3r).  At  the  time  of  the  assignment  to  the  plaintifT.  the  sum 
of  .$!t:M.7N  was  due  for  interest.  The  defendant  Catharine  Ely  is 
tlie  widow  and  executrix  of  the  mortgagor,  who  died  leaving  a 
will,  by  which  he  devised  her  the  estate  for  life  with  remainder 
over  in  fee  to  the  children  of  his  brother  James,  who  are  de- 
fendants in  this  action.  Upon  the  trial,  the  court  allowed  for  the 
la.xi>s,  assessments  ami  water  rates  paid  by  adding  them  to  the 
mortgage,  which,  with  the  principal  and  interest  found  due  to  the 
plaintiff,  amounted  to  the  sum  of  $73(5"). 70. 

The  most  material  (question  upon  this  appeal  ari.ses  in  regard  to 
the  rights  of  the  plaintiff  to  the  amount  of  taxes  i.nd  assessments 
paid  by  him  and  his  a.ssignor,  and  to  collect  the  same  out  of  the 
mortgaged  property.  The  rule  seems  to  be  established  by  jd)un- 
ilant  a\ithority  that  wlien  the  owner  of  mortgaged  property  refuses 
or  neglects  to  pay  taxi's  and  assessments,  or  liens  of  a  like  nature, 
which  are  imposed  upon  the  mt)rtgaged  premises,  the  mortgagiv 
has  the  right  to  i)ay  the  sanu'  in  order  to  protect  his  security,  and 
the  amount  so  paid  may  be  adde<l  to  and  Ix'come  a  part  of  the  mort- 
gage debt,  which  may  be  enforced  upon  a  foreclosure  of  the  mort- 
gage. 

Willanl,  in  liis  work  on  Etiuity  .lurispnulenco,  at  page  4  tCi.  lays 
down  the  rule  that  taxes  paid  may  be  added  to  the  mortgage  del)t. 
and  he  adds,  "  so  money  jtaiil  by  the  njortgagee  to  redeem  the  prem- 
ises from  a  tax  sale  becomes  part  of  the  mortgage  <lebt  in  ei|uity;"' 
1;«'  further  says  at  page  448,  "  with  regard  to  the  amount  to  be  paid 
on  redeeming,  it  may  be  said,  that  as  taxes  are  a  legal  charge  upon 
the  estate,  they  nuiy,  if  necessarily  paid  by  the  mortgagiH:',  be  added 


56()  EQUITY    RELATIONS.  [CIIAP.  H. 

to  the  mortgage  debt.""  The  same  riUe  is  upheld  iu  Thomas  on 
Mortgages,  at  pages  Sd  and  27(5,  and  in  Jones  on  ^Eortgages,  at  sec- 
tions 77  and  1134.  In  the  last  authority  it  is  laid  down  that  this  is 
so,  although  there  be  ''  no  tax  clause  in  the  mortgage." 

Numerous  cases  in  the  reports  sustain  this  doctrine.  (Eagle 
Fire  Ins.  Co.  v.  Pell  2  Edw.  Ch.  631;  Burr  v.  Veeder,  3  Wend. 
412;  Brevoort  v.  PiCindolph,  7  How.  Pr.  398;  Faure  v.  Winans, 
Hopk.  Ch.  283;  Marshall  v.  Davies,  78  N.  Y.  414;  RoUnson  v. 
Ryan,  25  id.  320;  Williams  v.  Townsend,  31  id.  414.)  These  cases 
are  criticised  by  the  counsel  for  the  appellant,  and  it  is  claimed  they 
do  not  sustain  the  doctrine  contended  for.  While  all  of  them  do' 
not  entirely  cover,  yet  they  tend  to  the  support  of  the  principle  that 
a  mortgagee,  who  to  save  his  mortgage  and  protect  his  security  is 
under  the  necessity  of  paying  the  taxes  and  assessments  to  prevent 
the  property  from  being  sold,  should  be  allowed  for  the  same  as  a 
part  of  his  mortgage  debt  upon  the  foreclosure  of  his  mortgage. 
Whether  the  doctrine  of  tacking,  as  claimed  by  the  counsel  for  the 
appellants,  has  any  application,  is  not  important  to  consider,  if  the 
principle  we  have  stated  can  be  invoked  to  save  the  mortgagee  from 
the  sacrifice  of  the  property  by  reason  of  unpaid  taxes  or  assess- 
ments. In  accordance  with  the  authorities  already  cited,  it  is  not 
necessary  that  the  premises  should  be  sold  prior  to  the  payment  of 
the  taxes  or  assessments  before  the  mortgagee  is  authorized  to  pay 
the  same,  and  add  the  amount  paid  by  him  to  his  mortgage.  (Sec 
Eagle  Fire  Ins.  Co.  v.  Pell,  and  ^Yilliams  v.  Townsend,  supra.) 

The  doctrine  that  neither  the  plaintiff  nor  his  assignor  could 
have  any  benefit  from  the  doctrine  of  subrogation,  because  they 
voluntarily  paid  the  taxes  and  were  conspirators,  cannot  be  upheld. 
There  is  no  finding  in  the  ease  that  either  of  them  purchased  the 
mortgage  with  the  intent  of  paying  the  taxes  and  assessments  so  as 
to  relieve  the  life  estate  and  cast  the  burden  upon  the  remainder- 
men ;  they  were  paid  evidently  in  self-defense,  and  for  the  purpose 
of  saving  their  liens  as  mortgagees.  It  cannot,  therefore,  be  said 
that  they  were  volunteers,  or  that  they  acted  in  bad  faith  as  tO' 
others,  or  to  any  one  who  was  under  a  legal  necessity  to  make  the 
payment,  even  if  it  may  be  urged  that  if  the  taxes  had  remained 
a  lien,  the  life-tenant  would  have  been  obliged  to  pay  them  to  pre- 
vent a  sale  of  the  property  by  the  State  or  a  return  thereof,  as  that 
furnishes  no  reason  why  the  plaintiff  had  not  a  perfect  and  com- 
plete right  to  protect  his  security  from  sale  for  the  taxes.  There 
is  no  rule  by  which  the  holders  of  the  mortgage  were  obliged  to 
delay  the  payment  so  as  to  compel  the  remaindermen  to  take  action 
in  regard  to  the  same  and  relieve  the  property.  They  should  have 
been  vigilant  in  looking  after  their  rights,  and  if  thev  had  done 


«Kf.  v.]  .sii)i:Mti:u(i   c.   i;i.v.  o(>7 

their  duty  the  taxi-s  would  not  liavc  acciiiiiulatt'd.  Having'  failfd 
to  pcrlorin  a  plain  duty,  if  they  dt'sin-d  to  protect  the  proiierty 
against  tlic  taxes,  after  they  have  permitted  the  niort;,'agee  to  pay 
the  taxes,  they  arc  in  no  position  to  ohjeet  that  it  o|)erates  as  a 
liardship  upon  tiieni.  Tliey  would  have  had  an  undouhted  ri^rht 
to  make  applieation  for  the  ajtpointment  of  a  receiver  to  collect 
the  rents  and  ajiply  them  to  the  payment  of  the  taxes.  {Cairns 
V.  Chabcrt,  S  Edw.  "Ch.  313;  1  Washhurn  on  Real  Prop.  97.) 

In  the  case  we  are  considerin<;,  the  taxes  remained  unpaid  from 
the  year  1805  to  the  year  Wt^,  and  then  a^'ain  from  1872  to 
18T4,  all  inclusive.  For  eight  years  tiiey  were  allowed  to  accumu- 
late in  the  first  instance,  and  afterward  for  three  years,  and  during 
that  period  no  effort  was  made  to  pay  them,  nor  any  attempt  to  com- 
pel the  owner  of  the  life  estate  to  pay  them,  or  the  apj)ropriation 
of  the  rents  for  tliat  purpose.  Here  wa^?  a  gross  neglect  which 
would  have  resulted  in  the  sale  of  the  property,  and  perhaps  the 
destruction  of  the  estate,  hut  for  the  intervention  of  the  owner  of 
the  mortgage. 

Again,  if  the  mortgagee  or  his  assignee  had  the  right  to  pay 
within  the  autliorities  to  which  we  have  referred,  to  protect  his 
mortgage  lien,  any  equity  which  might  have  existed  between  the 
life-tenant  and  the  remaindermen  cannot  destroy  or  take  away  that 
right.  The  remainderman's  rights  and  his  interests  are  subject 
to  the  right  of  the  mortgagee,  which  was  a  j)rior  and  superior  right 
given  by  the  mortgagor.  If  the  mortgagor  had  survived,  and  the 
mortgagee  had  paid  the  taxes,  the  amount  i)aid  would  clearly  have 
been  a  claim  against  the  mortgagor  and  the  mortgaged  premises. 
The  devisees  of  the  mortgagor  cannot  have  any  greater  or  better 
right  than  the  mortgagor,  and  they  stand  in  his  placi\  There  was 
no  evidence  of  any  fraud  or  any  conspiracy,  to  impose  upon  the 
remaindermen  an  obligation  which  belonged  to  the  life-tenant  to 
j)erform.  The  mortgage  was  i)urchase<l  by  the  jilaintilT  in  good 
faith,  as  found  l>y  the  trial  court,  which  also  refu.>;ed  to  fmd  to 
the  contrary.  The  effect  of  the  jjayment  was,  although  it  increa.-ed 
the  amount  of  the  mortgage,  to  cancel  and  di.scharge  the  lien  of  the 
taxes  for  the  same  amount.  The  estate  of  the  apjudlants  was 
bound  to  pay  the  taxes,  and  the  payment  by  the  mortgagee,  or  his 
a.'Jsigni'e,  did  not  add  or  increase  the  burden  imposml  thereby,  but 
in  fact  it  operated  to  reduce  the  rate  of  interest  on  the  amount  of 
t^uch  taxes.  Ecpiity  could  not  grant  n-lief  to  the  remaindermen, 
for  the  reason  alone  that  the  lien  had  Ihmmi  changed  from  a  tax  lion 
to  that  of  a  mortgage  lien,  and  we  are  luiable  to  see  why  the  life- 
tenant  could  not  as  well  have  been  charged  with  the  burden  of  thf 
taxes  after  payment   by   the   mortgagee,   as   i>e  coidd   before   <\\rh 


oG8  EQUITY    RELATION'S.  [CHAP.  II. 

payment,  and  in  this  case  no  reason  existed  why  the  interest  of 
tlie  life-tenant  in  the  fund  after  payment  of  the  mortgage  by  a  sale 
should  not  have  been  burdened  with  this  charge. 

The  defendants  claim  they  are  entitled  to  pay  up  the  mortgage 
and  to  be  subrogated  as  mortgagees,  leaving  the  plaintiff  to  his 
remedy,  or  if  the  property  be  ordered  to  be  sold,  that  the  value  be 
computed,  and  only  that  value,  less  the  present  value  of  taxes 
iuid  interest  during  the  life  in  expectancy,  be  applied  to  the  accre- 
tions, and  that  after  applying  the  present  value  of  such  taxes  and 
interest  only,  the  remainder  of  the  principal  sum  be  paid  out  of  the 
sale  of  the  inheritance. 

It  does  not  appear  that  the  defendants  have  applied  to  be  sub- 
rogated as  mortgagees,  or  placed  themselves  in  a  position  which 
entitled  them  to  an  assignment  of  the  mortgage;  nor  was  the  ques- 
tion raised  upon  the  trial  as  to  the  application  of  the  interest  and 
taxes.  The  plaintiff  is  entitled  to  the  payment  of  the  mortgage 
out  of  the  real  estate  upon  a  sale  thereof,  and  the  question  as  to  the 
disposition  of  the  surplus,  if  any  there  be,  does  not  arise  upon  this 
appeal.  1 

The  other  points  urged  by  the  appellants'  counsel  have  been  care- 
fully examined  and  considered,  but  none  of  them  present  dny  suffi- 
cient ground  for  a  reversal  of  the  judgment.  There  being  no  error, 
it  should  be  affirmed. 

All  concur,  except  Rapallo  and  Tracy^  JJ.,  absent. 

Judgment  affirmed.^ 

'A  portion  of  the  opinion,  not  relating  to  the  question  under  examina- 
iion,  is  omitted. 

=  There  is  no  dissent  from  the  doctrine  of  the  principal  case,  the  apparent 
aberration  of  the  Supreme  Court  of  Iowa  in  Huvafje  v.  Scott,  45  Iowa,  130 
|187G),  having  been  promptly  corrected:  Barthcll  x.  8i/verson,  54  Iowa, 
KiO,  164  (1880).  The  same  result  is  reached  in  Kansas  by  statute.  Gen. 
Stat.  1889,  Ch.  107,  §  148;  Stanclift  v.  Xorton,  11  Kans.  218  (1873).  That  a 
mortgagee  who  has  redeemed  from  tax  sale  is  to  be  allowed  only  the  amount 
of  the  taxes  and  not  the  amount  paid  by  him  for  redemption,  see  Moshier 
V.  Norton,  100  111.  G3,  74  (1881).  As  to  the  position  of  mortgagee  pur- 
chasing at  tax  sale,  see  Dale  v.  McEvers,  2  Cowen  (N.  Y.)  118  (1823)  ; 
Strong  v.  Biirdick,  52  Iowa,  630   (1879). 


^*'*-  ^l  MA\i,()\  i:   c    ham:.  5G!» 

{(l)    Morhjnger.  hoir  fur  n  I'ruslrt'. 

MA.\i.o\i-:  s.  i;aij;. 

IIkiii  ('(Mii'r  (»i- Cir  \\('i:i!y.  KiSS. 
{•i   Vrni.  S4.) 

One  Brutoii  liaving  a  cluireli-IcjiM'  U>v  tlirt'c  lives  in  1004,  con- 
voyed and  assi<;ned  it  to  the  defendant  Hale's  lather,  in  consider- 
ation of  .'),■)()/.  The  conveyance  was  ahsolnte.  But  Mr.  Bale,  the  pur- 
«'ha.ser,  hy  writing'  under  his  hand  and  seal,  agreed  that  if  Mr.  Bru- 
ton,  till'  vendor,  should  at  the  end  of  one  year  then  ne.xt  c:isuin<j 
)»ay  him  si.x  hundred  pounds,  that  he  would  reconvey ;  the  si.x  luin- 
dred  pounds  was  not  j)aid.  ami  two  of  the  lives  di<'d,  ami  the  lease 
was  twice  renewed  hy  the  defendant  Bale  and  his  father;  and  now 
it  was  near  twenty  years  after  the  first  conveyance.  Bruton  heinj; 
a  pri.soner  in  the  Fleet,  and  indehted  to  the  Warden  for  chamlxT- 
rent,  assigns  to  him  all  his  ri<;ht,  title,  interest,  e<|uity  and  power 
of  redemj)tion:  and  thereupon  the  j)laintilT  Manlove,  the  Warden 
of  the  Fleet,  hrou^dit  his  hill  to  redeem  aiul  to  have  an  account  of 
the  rents  and  profits  of  the  premises. 

The  defendant  insisted  on  his  titk",  and  that  the  estate  wa.s 
not  now  redeemahle,  nor  ought  he  to  account  for  the  profits. 

But,  notwithstandinir,  the  ^f-VSTFi!  ok  tmi-:  K<>i.i-s  decreed  a  re- 
tlemj)tion  on  j>aymcnt  of  the  ."j.'jd/.  whieh  was  the  first  consideration 
money,  as  also  the  fines  ])aid  upon  the  renewal  of  the  leases,  which 
monii's  were  to  he  paid  with  interest,  and  the  account  of  profits  was 
to  commence  hut  from  the  death  of  Teter  Bale,  who  was  the  jnir- 
«ha.ser,  and  father  of  the  defendant,  and  until  that  tim«'  thi-  profits 
Were  to  he  set  against  the  interest  of  the  ').")(»/.  consideration  money.' 

'  "  Tlic  inortfrafiof  lioro  dntli  Imt  {.'raft  upon  liis  stock  mid  it  sliall  Ik^  for 
tlio  iiioi tjja^ror's  l)oiiefit." — I'lr  N<)ttiii;,'tiaiii.  I^.  f'li.,  in  Kushirorth's  Cii.sr.  2 
Krcfin.    12    (  l»i7(>) . 

"  Tliis  additional  term  conies  from  tlic  ^ainc  old  root,  and  i-  ol  tlic  same 
nafnrf,  subject  to  tiif  same  e<|iiity  of  redein|)tion.  eNo  liar<Ulii|)s  mi^lit  \h* 
l'roii;;ht  ii|)on  niortna<;ois  hy  tlie  moit{;a<;ee's  {,'etlin;;  sueli  additional  terni'* 
more  onsily,  ns  Immii;;  possessed  of  one  not  expired,  and  liy  that  means 
worminjj  nut  and  oppressing  a  pcMir  mort;,'a;;or." — I'cr  Curutni  in  Rakr- 
■Htnnr  v.  liicirrr,  2  \*.  Wins.  311  (172S).  Hut  see  Scsbitt  v.  TtviUnnirk. 
1  Hall  4  1$.,  2!),  4(5  (ISOS).  and  eompare  Kccvh  v.  Snudford,  Sol.  ('as.  Ch.  61 
(  172(1). 


570  EQUITY    RELATIONS.  [CHAP.  II. 

AMHURST  V.  DAWLING. 

High  Court  of  Chancery,  1700. 

(3  Vern.  401.) 

The  defendant  having  mortgaged  the  manor  of  Thundersley,  to 
which  an  advowson  was  appendant,  to  the  plaintiff,  who  brought 
the  bill  to  foreclose,  the  church  became  void ;  the  defendant  moved 
the  court  for  an  injunction  to  stay  the  proceedings  in  a  quare  iin- 
pedit  brought  by  the  plaintiff. 

Per  Cur.  Although  the  defendant  Dawling  hath  no  bill,  yet  be- 
ing ready  and  offering  to  pay  the  principal,  interest  and  costs,  if 
the  plaintiff'  will  not  accept  his  money,  interest  shall  cease,  and  an 
injunction  to  stay  proceedings  in  the  quare  impedit;  for  the  mort- 
gagee can  make  no  profit  by  presenting  to  the  church,  nor  can 
account  for  any  value  in  respect  thereof,  to  sink  or  lessen  his  debt, 
and  the  mortgagee  therefore  in  that  case,  until  a  foreclosure,  is 
but  in  the  nature  of  a  trustee  for  the  mortgagor. 

And  the  like  order  was  made  between  Jory  and  Cox,i  where  the 
defendant  had  an  injunction  against  the  plaintiff  to  stay  his  pre- 
senting to  a  church,  that  became  vacant  pending  the  suit. 


Cholmondeley  v.  Clinton,  2  Jac.  &  W.  1,  177  (Court  of  Chanc- 
ery, 1820).  In  a  bill  for  redemption  of  certain  mortgaged  estates 
the  plaintiffs  showed  that  the  defendant,  Lord  Clinton,  unlawfully 
claiming  the  equity  of  redemption,  was  in  possession  of  the  estates, 
and  prayed  that  he  be  decreed  to  deliver  them  up.  Lord  Clinton 
answered  and  showed  that  he  had  been  in  quiet  and  undisturbed 
possession  and  enjoyment  of  the  premises  for  upwards  of  twenty 
years,  paying  the  interest  on  the  mortgage  during  the  whole  of  that 
time. 

It  was  argued  on  behalf  of  the  plaintiffs  that  Clinton's  posses- 
sion, being  avowedly  that  of  a  mortgagor,  must  be  referred  to  the 
estate  of  the  mortgagee,  and  that  the  latter,  as  trustee  of  the  right- 
ful mortgagor,  the  plaintiff,  Mrs.  Damer,  could  not  set  up  or  recog- 
nize a  claim  hostile  to  her  interest. 

Sir  Thomas  Plumer,  M.R.  These  appear  to  have  been  the  prin- 
cipal reasons  assigned  for  this  doctrine.  I  cannot  bring  myself  to 
adopt  them.  The  view  which  is  taken  by  them  of  the  relation  sub- 
sisting between  mortgagor  and  mortgagee,  and  the  character,  rights, 
and  duties  sej)arately  belonging  to  each,  is  not  the  view  which  is 

'Fincli,  Pro.  Cli.  71.     See  also  Croft,  v.  Poitell,  Com.  Rep.  C09. 


^^-^-  ^-J  CHOL^fOXDELnY  r.  CLINTON.  571 

taken  and  a(  ted  ujinn  in  a  c(»iiil  of  (■(jiiiiy.  Tlif  n-lation  subsisting 
Ix'twirn  ni()rt^M;,f()r  and  ninrt;:a^'ir  is  one  of  a  jM'culiar  and  anoma- 
lous nature,  anil  is  regulated  not  hy  the  form  of  tlu'  conveyance,  or 
the  legal  consequences  and  eircct  *A'  it.  Imt  l>y  a  system  of  rules  estab- 
lished by  a  long  train  of  decisions,  and  universally  adopted  and 
acted  ui)on  in  a  court  of  equity.  If  the  form  of  conveyance  and  the 
legal  title  were  to  prevail,  the  absolute  ownership  of  the  estate,  after 
the  condition  is  forfeited,  would,  in  the  ca.<e  of  a  mortgage  in  fee, 
belong  forever  to  the  mortgagee,  without  any  trust  or  defeasance  of 
any  kind.  The  mortgagor  would  tlien  i)e  reduced  to  the  condition  in 
which  the  argument  ri'])resents  him  to  be.  But  is  that  the  light 
in  which  ho  is  ever  considered  in  e(|uity:-'  Is  he  there  for  any  pur- 
pose ever  considered  as  a  tenant  at  will,  holding  the  possession 
under  tlie  mortgagee?  Is  any  point  better  cstai)lished  than  that 
a  mortgagor,  alter  executing  a  mortgage  in  fee,  and  after  the  con- 
dition forfeited,  is  still  considered  to  remain  the  absolute  owner  of 
the  estate,  as  he  was  before,  for  every  purpose  as  against  all  the  rest 
of  the  world,  and  as  against  the  mortgagee  for  every  other  purpose, 
exccjit  only  the  security  and  pledge  which  the  estate  is  become  for 
the  re])ayment  of  the  debt  contracted  by  the  mortgage?  It  would 
be  a  uscle.^^s  waste  of  time  to  cite  authorities  ujmn  a  subject  .-o 
familiar.     .     .     . 

It  is  said  that  the  mortgagee  is  a  trustee  for  the  mortgagor;  that 
their  interests  are  parts  of  one  title,  and  together  form  one  entire 
estate;  and  that  the  admission  of  the  title  of  the  one  is  virtually  and 
of  necessity  an  admission  of  the  title  of  the  other;  that  the  length 
of  time  cannot  be  set  up  as  a  bar  by  the  mortgagee  against  his 
crsliii  (jur  Iriisl,  :\Irs.  Damer;  and  that  the  e.xisteiice  and  validity 
of  the  title  of  the  mortgagee  being  on  all  sides  admitted,  the  bene- 
fit of  it  nnr-t  i)e  given  by  the  mortgagee  (tiie  trustee)  to  his 
ceslui  que  Inisl,  Mrs.  Damer.  The  e(|uity  of  redemj)tion  is  ad- 
mitted to  exist,  and  must,  therefore,  be  given  to  the  rightful,  and 
not  the  tortious,  owner. 

I  will  consider  .^-jjarately  each  of  the.se  positions,  and  lirst,  as  to 
that  of  the  mortgagee  being  a  trustee  for  the  mortgagor,  upon  which 
so  mucli  of  the  argument  is  built.  That  the  coiis(H|uences  eon- 
tended  for  would  not  follow,  even  if  the  character  of  trusttv  diti 
proi)erly  belong  to  the  mortgagee,  not  being  in  actual  posse.ssior. 
I  have  already  (Mideavound  to  show.  It  may  be  projxT,  however, 
to  consider  how  far,  and  in  what  rcspei-t,  he  is  to  be  considered  a.s 
possessing  that  charaehr.  The  position  is  to  be  received  with  con- 
siderable (|ualiliealions.  a-  will  appear  by  examining  what  is  the 
true  character  of  a  mortgagee,  ami  how  he  is  considered  in  n  court 
of  equity.     Lonl  Mansdeld,  adverting  to  the  comparisons  made  in 


572  EQUITY    RELATIOXS.  [CIIAP.  II. 

respect  to  mortgages,  has,  I  tliink,  said  there  is  nothing  so  unlike 
as  a  simile,  and  nothing  more  apt  to  mislead.  A  mortgagor  has 
had  ascribed  to  him  a  variety  of  different  characters,  in  which  there 
existed  some  points  of  resemblance,  when  it  was  not  very  material 
to  ascertain  what  his  powers  or  interests  were,  or  to  settle  with  any 
great  precision  in  what  respects  the  resemblance  did,  and  in  what 
it  did  not  exist.  But  it  would  bo  productive  of  much  error  if  it 
were  to  be  concluded  that  the  resemblance  was  complete,  in  every 
point,  to  any  one  of  the  ascribed  characters.  The  relations  of 
vendor  and  purchaser,  of  principal  and  bailiff,  of  landlord  and  ten- 
ant, of  debtor  and  creditor,  trustee  and  cestui  que  trust,  have  been 
applied  to  the  relation  of  mortgagor  and  mortgagee,  according  to 
their  different  rights  and  interests,  before  or  after  the  condition 
forfeited,  before  or  after  foreclosure,  and  according  as  the  posses- 
sion was  in  the  mortgagor  or  mortgagee?  Quo  teneam  vultus  miitan- 
iem  Frotea  nodo?  The  truth  is,  it  is  a  relation  perfectly  anomalous 
and  sui  generis.  The  names  of  mortgagor  and  mortgagee  most  prop- 
erly characterise  the  relation;  they  are  (as  Mr.  Justice  Buller  ob- 
serves, in  Birch  v.  Wright,  1  T.  Hep.  383)  characters  as  well  known, 
and  their  rights,  powers,  and  interests  as  well  settled,  as  any 
in  the  law.  It  is  only  in  a  secondary  point  of  view,  and  under  cer- 
tain circumstances  and  for  a  particular  purpose,  that  the  character 
of  trustee  constructively  belongs  to  a  mortgagee.  Xo  trust  is  ex- 
pressed in  the  contract;  it  is  only  raised  by  implication,  in  subordi- 
nation to  the  main  purposes  of  it,  and  after  that  is  fully  satisfied; 
its  primary  character  is  not  fiduciary.  It  is  a  contract  of  a  peculiar 
nature,  by  which,  under  certain  conditions,  the  mortgagee  becomes 
the  purchaser  of  a  security  and  pledge,  to  hold  for  his  own  use  and 
l)enefit.  He  acquires  a  distinct  and  independent  beneficial  interest 
in  the  estate;  he  has  always  a  qualified  and  limited  right,  and  may 
eventually  acquire  an  absolute  and  permanent  one  to  take  posses- 
sion, and  he  is  entitled  to  enforce  his  right  by  adverse  suit  in  in- 
riium  against  the  mortgagor;  all  which  can  never  take  place 
])etween  trustee  and  cestui  r/ue  trust.  They  have  always  an  identity 
and  unity  of  interest,  and  are  never  opposed  in  contest  to  each  other. 
The  late  Master  of  the  Eolls  observes,  that  in  general  a  trustee  is 
not  allowed  to  deprive  his  cestui  que  trust  of  the  possession,  but  a 
court  of  equity  never  interferes  to  prevent  the  mortgagee  from  as- 
suming the  possession.  In  this  the  contrast  between  the  two  char- 
acters is  strongly  marked.  By  not  interfering  in  this  latter  case,  a 
court  of  equity  does  not,  as  it  is  supposed,  in  opposition  to  its  usual 
])rinciple,refuse  to  afford  protection  to  a  cestui  que  trust,  against  his 
trustee;  but  the  interference  is  refused,  because  the  mortgagor  and 
mortgagee  do  not,  in  this  instance,  stand  in  the  relation  of  trustee 


■•^f:<- ^1  tii()i.MoNi)i:i,i:Y /'.  ri.iN-Toy,  •"•'•'> 

;ui(l  crsfiii  ([Uc  I  nisi.  The  inort;^ii^t'i',  wlicii  he  tiikr>  (lie  j)()>>c.->i()ii, 
is  not  acting  as  a  (riistc*-  for  tli<'  ni')rt;,Mg«»r,  l)nt  in<l<'i«n(kntly  ami 
adversely  for  his  own  ust'  ami  lifm-lii.  A  trustee  is  riloppcd  in  Hjuity 
from  dispossessing  liis  rrslni  que  liusi,  hceause  sndi  di-|)i»ssessinri 
woidd  be  a  breac-h  of  trust.  A  mortgagee  cannot  l>e  stopped,  be- 
cause in  liini  it  is  no  breach  of  trust,  but  in  strii-t  conformity  If)  his 
contract,  whiih  woubl  be  directly  violated  by  any  impediment 
thrown  in  the  way  of  the  exercise  of  this  right.  I'pon  the  same 
princii)le  tlie  mortgagee  is  not  preventt'il,  but  as-istei|  in  e<|uity, 
when  he  has  recourse  to  a  proceeding  which  is  not  only  to  obtain  the 
possession,  but  the  absolute  title  to  the  estate,  by  foreclosure.  This 
presents  no  resemblance  to  the  character  of  a  trustee,  but  to  a  char- 
acter directly  opposite.  It  is  in  this  opposite  character  that  he  ac- 
counts for  the  rents  when  in  jiossession,  and  when  he  is  not,  re- 
ceives the  interest  of  his  mortgage  del)t.  The  j)aynient  of  that 
interest  by  the  person  claiming  to  be  the  mortgagor  is  a  recognition 
of  that  relation  subsisting  between  them,  but  is  no  ri'cognition  of  the 
mortgagee's  possessing  the  character  of  trustee,  much  less  of  his 
being  a  trustee  for  any  other  person  claiming  the  same  chara<'ter 
of  mortgagor. 

The  ground  on  which  a  mortgagee  is  in  any  case,  and  for  any 
purpose,  considi-red  to  have  a  character  resembling  that  of  a  trustee 
is  the  partial  and  limited  right,  which,  in  ecpiity.  he  is  allowed  to 
have  in  the  whole  estate  legal  and  e(iuital>le.  He  does  not  at  any 
time  possess,  like  a  trustee,  a  title  to  the  legal  estate  distinct  and 
.separate  from  the  beneficial  and  ((luitable.  Whenever  lie  is  entitled 
at  all  to  either  he  is  fully  entitled  to  both,  and  to  the  legal  and 
equitable  remedies  incident  to  both;  but  in  e(piity.  his  title  is  eon- 
fined  to  a  particular  purpose.  He  has  no  right  to  either,  nor  can 
make  use  of  any  remedy  belonging  to  either,  further  than  and  as 
may  be  necessary  to  .secure  the  repaynu-nt  of  the  money  due  to  him. 
When  that  is  paid,  his  duly  is  to  reconvey  the  estate  to  the  jierson 
entitled  to  it  ;  it  never  remains  in  his  hands  cloathed  with  any  fidu- 
ciary duty.  lie  is  uiver  entrusted  with  the  can*  of  it,  nor  under 
any  obligation  to  hold  it  for  any  one  but  himself,  nor  is  he  allowed 
tti  use  it  for  anv  other  puri)ose.  The  estate  is  not  I'ommittcd  t<» 
his  care,  nor  has  he  the  means  of  |)reventing  or  being  acquainted 
with  the  changes  which  the  title  to  the  ecpiity  of  redemption  may 
undergo,  either  by  the  act  of  the  mortgagor,  without  his  privity,  or 
by  ojieration  of  law,  bv  descent,  forfeiture,  or  otherwise,  and  con- 
se(pientlv,  as  I  have  alreadv  endeavouretl  to  shew,  by  the  ojieration 
of  the  analogy  to  the  statute  of  limitations.  When  the  interest  of 
the  mortgage  money  is  tendered  to  him  from  year  to  year  by  the  jht- 
.«on  who,  claiming  to  have  succeedetl  the  original  mortgagor  in  the 


5Ti  EQUITY    RELATIOXS,  [CIIAP.  II. 

title  to  the  equity  of  redemption,  is,  by  the  acquiescence  of  the  right- 
ful owner  of  it,  allowed  to  remain  in  the  quiet  and  uninterrupted 
enjoyment  of  the  estate  as  the  sole  and  admitted  owner,  can  he 
be  expected  to  refuse  receiving  it  upon  any  doubts  of  his  own  respect- 
ing the  title,  when  it  is  apparently  abandoned  by  those  who  possess 
better  means  of  judging  of  it,  and  who  alone  are  interested  in  con- 
testing it  ?  If  there  is  no  fraud,  or  collusion  of  any  kind,  the  fault  lies 
wholly  with  those  who  possess  the  rightful  title  to  the  equity  of 
redemption.  The  mortgagee  is  a  mere  indifferent  stakeholder.  The 
real  contest  lies  between  the  competitors  for  the  estate,  which,  in  the 
hands  of  either,  must  continue  subject  to  the  mortgage  till  paid  off; 
when  paid  off,  the  mortgage  title  ends,  and  then,  and  not  before, 
the  implied  trust,  to  surrender  the  estate  to  the  person  entitled  to 
demand  it,  begins.  If  there  is  a  question  who  that  person  is,  it 
must  be  contested,  not  by  the  mortgagee,  but  by  the  parties  con- 
cerned, and  between  them  the  title  must  be  decided  in  the  same 
manner,  and  by  the  same  principles,  though  the  form  in  which 
it  may  be  contested  may  differ,  as  it  would  have  been  had  no  mort- 
gage existed. 


KIRKWOOD  V.  THOMPSON". 

High  Court  of  Chancery,  1865. 

(3  De  G.,  J.  S  S.  G13.) 

This  was  an  appeal  from  a  decree  of  Vice-Chancellor  Wood. 
The  bill  was  filed  by  the  heir-at-law  and  administratrix  of  Stephen 
Kirkwood,  late  of  Kingston-upon-Hull,  to  redeem  certain  heredita- 
ments which  had  been  mortgaged  and  sold  under  the  following 
circumstances:  By  an  indenture  dated  the  ITtli  January,  1846, 
certain  hereditaments,  the  property  of  Stephen  Kirkwood,  were 
conveyed  by  him  to  William  Cash  and  others  in  fee  by  way  of  mort- 
gage for  securing  the  sum  of  5500Z.  and  interest.  The  mortgage 
contained  a  power  of  sale  in  case  of  default  in  payment  of  princi- 
pal or  interest  on  six  months'  notice.  By  another  indenture  dated 
the  16th  June,  1846,  other  premises  were  mortgaged  by  Stephen 
Kirkwood  in  fee  to  George  Davidson  and  otbers,  as  the  trustees  of 
the  National  Provident  Institution,  to  secure  4000?.  and  interest. 
By  an  indenture  of  even  date  the  said  sum  of  4000/.  was  further 
secured  by  a  second  mortgage  of  the  premises  comprised  in  Cash's 
mortgage.    The  two  last-mentioned  deeds  contained  power  of  sale. 


•''I^C-  ^O  KIUK\V()(tI>    r.     1  IloMI'SOX.  57."> 

subject  to  the  proviso  that  the  jH)\ver  shouhl  not  he  exercised  without 
six  months'  notice,  or  unless  three  months'  interest  was  in  arrear; 
smd  tiiey  also  contained  a  proviso  exempt  in;,'  the  purchaser  from 
liahility  to  see  to  the  performance  of  this  condition,  and  restricting 
his  remedy  to  damages  oidy. 

Suhsc(|uen(ly  to  these  deeds  Stephen  Kirkwood,  having  borrowed 
H»i>(i/.  from  the  North  nf  I-]nglaiid  l-'ire  ami  Life  Insurance  Com- 
pany, agrei'd  to  execute  a  good  and  eU'ectual  mortgage  to  the  de- 
fendants Messrs.  'riiomjjson  and  C'arr,  as  trustees  for  the  insur- 
aince  eomj)any,  of  tlie  hereditaments  comprised  in  the  previous 
mortgages.  This  agreement  was  carried  into  effect  by  an  indenture 
dated  the  10th  December,  1847,  and  made  between  Stephen  Kirk- 
wood of  the  one  part  and  ^lessrs.  Thompson  and  Carr  of  the 
other  part,  whereby  Kirkwood  conveyed  to  Messrs.  Thompson  and 
C'arr  in  fee  all  the  hereditaments  comprised  in  the  above-mentioned 
mortgage-ch'eds,  but  subject  to  the  j)rior  mortgages,  upon  trust 
that  Messrs.  Thompson  and  Carr  should,  in  their  discretion,  at 
any  time,  without  any  further  consent  or  concurrence  of  Stephen 
Kirkwood,  his  heirs,  executors,  administrators,  or  assigns,  sell  and 
absolutely  dispose  of  the  premises,  and  should  out  of  the  proceeds 
of  such  sale  jiay  all  costs  and  expenses,  and  the  principal  money 
and  interest  due  to  themselves,  and  all  other  incund)rances,  and 
pay  over  the  sur])his  to  the  mortgagor.  Kirkwood  died  in  July, 
1848,  leaving  a  will,  but  the  executor  renounced  ])robate,  and  ad- 
ministration was  granted  to  ilary  Todd,  one  of  the  plaintiffs,  on 
th.>  10th  February,  IS.')'). 

In  1849,  in  consecpu'nce  of  default  having  l)een  made  in  payment 
of  the  interest  due  to  them,  the  North  of  England  Insurance 
Company  entered  into  pos.session  of  the  pn'mises  and  received  the 
rents,  which  were,  however,  as  they  stated  in  the  answer.  insulTi- 
4-ient  to  pay  the  interest  on  the  company's  mortgage,  after  j>ay- 
ing  the  int(>rest  on  the  prior  mortgages.  In  18r)0  the  trustees 
of  the  National  Provident  Institution,  with  tlu^  consent  of 
the  per.son.s  interested  in  Cash's  mortgage,  j)ut  up  to  auction  the 
whole  of  the  hereditaments  comprised  in  their  mortgag(>.  Pre- 
viously to  the  sale  tlu'  solicitoi-s  of  the  National  Provident  Institu- 
tion communicated  to  the  North  of  Knglantl  Company  their  inten- 
tion to  .sell,  and  gave  them  a  formal  notice  to  pay  the  prior  mort- 
gage, but  no  notice  was  given  to  any  person  on  Ixdialf  of  the  mort- 
gagor, there  being  at  that  time  no  repres(>ntativ«'  of  Kirkwood's  es- 
tate. Mr.  Hall,  one  of  the  directors  of  the  North  of  England  (Com- 
pany, attended  the  sale,  which  took  place  on  the  ?lth  (1ctob(>r, 
}>s')0.  and  became  the  |)urchaser  of  part  of  the  property  for  ."i.^OfV. 
The  North  of  Kngland  Company  adopted  this  purchase  and  paitl  the 


576  EQUITY    RELATIONS.  [CHAP.  II. 

purchase-money,  and  Hall  executed  a  declaration  of  trust  in  their 
favour.  The  North  of  England  Companj'  was  subsequently  dis- 
solved, and  their  business  was  purchased  by  the  Liverpool  and  Lon- 
don Fire  and  Life  Assurance  Company,  and  the  premises  were  con- 
veyed to  their  trustees  in  May,  1860. 

The  plaintiffs  filed  the  present  bill  against  Messrs.  Thompson, 
Carr  and  Hall  and  the  Liverpool  and  London  Assurance  Company, 
praying  that  the  plaintiffs  might  be  declared  entitled  to  redeem  tbe 
premises  purchased  by  Hall,  and  that  Hall  and  all  persons  claiming 
under  him  might  be  declared  trustees  for  the  plaintiffs,  and  that, 
if  necessary,  the  conveyance  to  Hall  and'  to  the  Liverpool  and 
London  Assurance  Company  might  be  cancelled,  and  that  the  prem- 
ises might  be  conveyed  to  the  plaintiffs  on  payment  by  the  plaintiffs 
of  what  should  be  found  due  from  them  on  taking  the  accounts, 
and  that  in  taking  the  accounts  the  defendants  might  be  charged 
with  the  full  value  of  the  mortgaged  premises  at  the  present  time, 
or  at  such  other  time  as  the  Court  might  think  fit.  The  Vice-Chan- 
cellor  was  of  opinion  that  there  was  no  reason  either  in  law  or  under 
the  special  circumstances  of  the  case  for  impeaching  the  sale,  and 
dismissed  the  bill  with  costs.  From  this  decision  the  plaintiffs 
appealed. 

Mr.  Willcock  and  Mr.  T.  A.  Roberts,  for  the  plaintiffs.— The 
sale  to  Hall  was  really  one  to  the  North  of  England  Company, 
who  were  second  mortgagees  and  also  in  possession.  A  second 
mortgagee  cannot  purchase  for  his  own  benefit  from  the  first 
mortgagee.  He  is  in  the  position  of  a  trustee  for  the  mortgagor; 
and  here  we  have  the  additional  circumstance  that  the  purchasers 
were  in  possession,  and  had  thereby  an  advantage  in  getting  up 
the  sale,  and  special  moans  of  knowledge.  Moreover,  they  wert' 
not  simple  mortgagees,  but  trustees  for  sale,  for  their  security  was 
in  that  form,  and  they  were,  therefore,  in  a  special  position  of 
trust.  (Rakestraw  v.  Brewer,  2  P.  Wms.  511 ;  Re  Bloye,  1  Mac.  &  0. 
488;  Ex  parte  Rushforth,  10  Ves.  409;  Smith  v.  Chichester,  1  Con. 
&  Law.  488;  Ex  parte  James,  8  Ves.  337  ■,.Doivnes  v.  Grazelrooh,  3 
Mer.  200;  Ex  parte  Hughes,  6  Yes.  617.)  The  case  of  Shaw  v. 
Bunny,  13  W.  R.  374,  in  which  the  Lords  Justices  differed, 
is  the  only  authority  against  us.  With  respect  to  the  ques- 
tion of  value:  the  sale  must  be  treated  not  as  a  sale  between  stran- 
gers, but  as  strictly  as  any  other  transaction  between  persons  in  a 
fiduciary  relation. 

Mr.  Giffard  and  Mr.  Kay,  for  the  defendants. — The  sale  was  by 
auction,  and  perfectly  fair  and  open.  Strangers  were  present,  and 
purchased  several  of  the  lots.     The  second  mortgagees  had  noth- 


SEC.  v.]  KIKKWOOl)    C.    TIIO.Ml'SON.  .'>7T 

in^'  to  do  with  ;;cttin^'  up  the  sak',  wliiih  wns  entirely  mauagcd  by 
the  first  inert gagt't's. 

The  right  of  a  second  mortgagee  to  j)iin  liasc  from  a  first  mort- 
gagee is  establislied  hy  Slunr  v.  liunny,  \'.\  W.  H.  374.  And  then- 
is  no  distinction  betui-en  an  ordinary  mortgage  and  a  security  in 
the  form  of  a  trust  for  sale.  In  neither  case  does  the  mortgagee 
stand  in  a  fiduciary  relation  to  the  mortgagor.  {Parkinson  v.  Ilan- 
bury.  1  Dr  &  8m.  113;  s.  c.  on  appeal,  13  \V.  \i.  331;  Dob.son  v. 
Land.  S  Hare,  21(!;  Knialtt  v.  Marjoribanks,  'I  Mac.  &  (J.  10.) 

Mr.  WUlcock,  in  reply. 

Tin;  Loud  Chancellor  [Lord  Cr.vnworth  ).  This  case  docs 
not  ajipear  to  me  to  present  any  real  dilliculty.  In  the  first  place, 
that  a  mortgagee  can  purchase  from  his  mortgagor  is  a  matter  that 
is  always  considered  as  settled,  though,  I  helieve,  in  some  early 
cases  there  has  been  allusion  to  a  doubt  on  the  subject;  and  Sir 
Edward  Sugden  said  that  the  relation  between  trustee  and 
cestui  (juc  tnifil,  although  in  some  sense  existing  between  mortgagee 
and  mortgagor,  has  never  been  so  held  to  exist  as  that  the  mort- 
gagee cannot  purchase  from  the  mortgagor.*  That  is  not  disputed. 
Then  if  that  is  so,  why  should  there  be  any  difficulty  on  this  sub- 
ject ?  The  real  reason  why  a  person  standing  in  the  relation  of 
trustee  cannot  purchase  from  the  cestui  qur  trust  is,  that  he  cannot 
purcha.se  that  which  he  is  to  sell;  he  has  a  duty  to  perform  and  of 
course  he  cannot  purchase,  for  that  would  be  putting  himself  in  a 
situation  in  which  his  interest  would  become  an  interest  inconsistent 
with  the  duty  which  he  has  to  perform. 

The  next  step  is,  can  he  purchase  under  a  power  of  sale  executed 
by  a  first  mortgagee?  It  seems  to  me  to  follow  as  a  necessary 
corollary,  because  the  sale  that  is  made*  under  the  power  of  sale  by 
a  first  mortgagee  is  substantially  a  sale  by  the  m(»rtgagor,  for  it  is 
a  sale  made  under  an  authority  given  by  the  mortgagor  jiaramount 
to  the  title  of  the  second  mortgagee.  It  seems  to  me,  that  on  the 
princi|)le  of  the  case  there  is  no  difTerence  whatever  between  a 
j)urchase  from  a  fii-^t  mortgagee  under  a^iowi'r  of  sale  and  a  pur- 
chase from  the  mortgagor  himself.  Kven  if  that  were  doubtful 
upon  i)rineiple,  I  consider  it  to  have  been  settled  by  authority  in  the 
case  of  i<liau'  v.  liunny,  becau.se  there  is  no  way  of  getting  out  of 
the  fact  that  that  case  was  so  decided  by  the  Master  of  the  RolU. 
was  bmught  by  way  of  appeal  before  this  Court,  and  was  so  dei-ided 
by  the  Lords  Justices.  It  is  very  true  that  the  learned  .Judge,  Lonl 
Justice  Turner,  exjiressed  some  doubt  about  it,  but  that  does  not 
signify;  it  is  just  the  same  as  if  the  case  were  brouglit  Iwfore  a 
court  where  tlu^re  are  several  Judges  sitting,  and  the  majority  si> 

'Soo  1  Sii.'drii.  V.  A    1'.    iStli    \m.  o«l.)    r.SO.  ami  iintr    (i-). 


OVi 


EQUITY    RELATIONS.  [CHAP.  II. 


decided ;  and  it  is  by  Act  of  Parliament  determined  that  the  affirm- 
ance of  a  decree  of  the  Master  of  the  Eolls,  or  one  of  the  Vice- 
Chancellors,  by  the  Court  of  Appeal,  is  just  the  same  as  if  it  had 
been  so  decided  by  the  full  Court.  I  think  it  is  clear  that  that 
has  been  so  settled.  Lord  Justice  Knight  Bruce,  in  affirming 
the  decision  of  the  Master  of  the  Eolls  in  Shaw  v.  Bunny,  decided 
in  favour  of  the  mortgagee's  title,  "there  being  no  special  circum- 
stances" to  prejudice  his  right :  the  only  question  is,  whether  there 
are  any  special  circumstances  here  to  vary  the  general  rule. 

Xow  the  special  circumstances  relied  on  were  these :  First,  the 
mortgagee  was  in  possession.  That  makes  no  difference;  being 
in  possession  could  only  make  a  difference  if  it  created  an  obliga- 
tion between  the  mortgagee  and  the  mortgagor  which  would  not 
have  existed  if  he  had  not  been  in  possession.  Nothing  of  the  sort 
is  suggested;  no  duty  arises  on  being  in  possession,  except,  cer- 
tainly, to  account  to  the  mortgagor  in  a  way  onerous  to  the  mort- 
gagee; but  there  is  no  duty  which  would  prevent  the  relation 
between  the  mortgagee  and  his  mortgagor  different  from  what 
would  have  existed  if  he  had  not  been  in  possession. 

Then  it  was  suggested  that  this  was  not  strictly  a  mortgage  at 
all ;  that  it  was  merely  a  conveyance  in  trust  to  sell.  It  is  true 
that  it  is  in  form  a  conveyance  in  trust  to  sell,  but  as  between 
the  mortgagor,  the  person  conveying,  and  the  person  to  whom  it  was 
conveyed  in  trust  to  sell,  it  certainly  was  a  mortgage  as  far  as  he 
was  concerned.  He  took  possession,  and  he  taking  possession  would 
be  liable  to  account  as  mortgagee.  It  cannot  be  contradicted  that 
between  the  parties  conveying  and  the  parties  to  whom  it  was 
conveyed  it  certainly  was  a  mortgage.  It  is  possible — I  do  not 
say  whether  that  would  be  so — that  there  might  have  been  differ- 
ent duties  as  between  him  and  the  mortgagor  if  he  had  sold  than 
Avould  have  existed  in  the  case  of  a  simple  mortgage.  But  what 
took  place  is  something  that  comes  in  paramount  and  prior  to 
the  exercise  of  the  duties  as  trustee;  he  never  can  sell,  because 
persons  having  a  paramount  title  to  his  title  choose  to  exercise  that 
right,  and  therefore  prevent  the  possibility  of  his  exercising  his 
right,  which  is  a  trust  only  to  arise  if  it  was  ever  in  his  power  to  sell, 
which  it  was  not,  in  consequence  of  the  sale  made  by  the  prior  mort- 
gagees. 

That  being  so,  the  next  special  circumstance  that  is  alleged  here 
is,  that  the  parties  stood  in  such  a  situation  that  we  must  take  this 
as  a  sale  at  an  undervalue.  It  was  not  ur-red,  indeed  it  could  not 
be  urged,  that  here  there  was  any  undervalue  as  between  third 
parties,  so  as  to  enable  them  to  set  aside  the  sale;  but  it  was  said 
the  relation  between  these  parties  made  that  capable  of  being  con- 


-»-'«••  v.]  ii(ti,i;ii)«;i:   r.   (;i  i.i.i;si'ii:.  .JT'J 

Mvli-rcil  ill  a  Court  of  I'Jiiiiiy  an  uinliTvaluf  which  would  not  have 
I'rii   an   undcrvaliu'  as   hctwccn   straii^^M-rs.     That    Ix-f^'s   the   whole 
Mit'stion,  bc'tiuist'  the  nionicnt  you  (Ictcriiiim'  that   this  mort^a^'cc 
1-  tjiKini  inort«jagi'C'  was  cntitk'd  to  purchase,  you  put  him  exactly 
11  the  position  of  a  eoniinon  stranj^er  who  purchases;  so  that  there 
■;  jio  reason  to  look  at   the  (juestion  of  undervalue  in  a  dilTeretii 
M\y  from  that  in  which  you  would  have  looked  at  |  it  |  if  any  third 
parties  had  purchased.     It  would  he  out  of  the  (piestion  to  talk  of 
this  as  an  undervalue;  it  was  competed  for  at  an  auction.     I  agree 
with  Mr.  Willeock  that  hein<;  sold  hy  auction  would  not  be  at  all 
Miulusive  of  the  value,  hut  there  is  no  reason  to  treat  this  as  a 
>ale  that  was  not  made  in  the  best  maniu'r  possible;  the  vendors 
had  the  property  valued,  and  precautions  were  taken  tliat  it  should 
not  be  sold  at  an  undervalue;  it  is  perfectly  true  that  sliortly  after 
the  sale  it  would  seem  that  the  persons  who  had  purchased  had  so 
:.ir  made  a  good  bargain, — it  was  a  very  sjieculative  sort  of  prop- 
ity. — that  they  had  an  opj)ortunity  of  selling  it  at  an  advance  of 
lono/..  hut  that  is  quite  immaterial,  and  I  think,  if  that  objection 
Wi-re  to  prevail,  no  sale  could  Ix'  safe,  if  after  lying  l)y  for  eleven 
years  it  was  afterwards  to  be  suggested  in  this  way  tliat  the  j)roperty 
was  sold  at  an  undervalue.     I  tliink,  therefore,  that  the  suggestion 
if  undervalue  fails  entirely,  and  that  that   is  not  a  matter  that 
'Ugiit  to  influence  my  judgment.     I  think  the  decision  of  the  Vice- 
chancellor  perfectly  right,  and  consequently  that  this  appeal  ought 
to  be  dismissed  with  costs. 


IIOLIIIDCK  V.  (MLLESPIE. 

CoriJT  oi"  Cii ANciMiY  OK  Ni:\v  Yoi;k.  1816. 

{•>  Johns.  Cli.  ;{(».) 

The  plaintilT,  being  pos.se.ssed  of  a  lea.se  from  B.  W.  and  others, 
of  a  farm  of  about  300  acres  (parts  of  lots  8.  !>,  and  10.  in  Crosby's 
manor),  dated  in  November,  ISOH,  for  eleven  years,  subject  to  an  an- 
nual rent  of  7.")  dollars,  on  the  ".'(ith  of  May,  ISOS,  assigned  the  lease 
to  the  defendant  Thomas  Ciillespie.  The  assignment  was  absolute; 
but  the  assignee',  at  the  same  time,  extvuted  a  di'feasaneo,  declaring 
that  the  assignment  was  made  to  .secure  a  tlebt  of  7-1  dollars  an<i  1*2 
•  iits.  due  from  the  plaintilT  to  Tbonias  Cillespie,  with  interest. 
Part  of  the  land  was  cultivated  and  improved.  In  April,  180«).  the 
defendant  T.  G.  took  possession  of  the  imjiroved  part  of  the  farm. 


580  EQUITY    RELATIOXS.  [CIIAP.  lU 

On  the  29tli  of  August,  1809,  the  phiintiff  and  defendants  entered 
into  an  agreement,  under  seal,  by  which  the  plaintiff  acknowledged 
that  he  had  received  of  the  defendants  100  dollars,  as  a  compen- 
sation for  one-half  of  his  improvements  on  the  lot,  and  he  gave  up 
one-half  of  the  premises  to  the  defendant  T.  G. ;  and  to  secure  to 
T.  G.  75  dollars,  with  interest,  together  with  what  might  after- 
wards become  due  to  the  defendants,  the  plaintiff  gave  up  the  lease 
to  T.  G.  until  the  75  dollars  and  interest,  and  moneys  to  become 
due,  should  be  paid,  and  T.  G.  engaged  to  give  the  plaintiff  a  good 
lease  for  half  the  farm  for  eight  years  from  the  1st  of  February. 
1808,  subject  to  the  rents,  &c. 

The  plaintiff  averred  in  his  bill  that  the  100  dollars  was  to  bo 
paid  by  the  defendants  to  the  lessors  for  rent;  that  after  the  first 
agreement  he  delivered  T.  B.  G.  produce  of  the  farm  to  the  amount 
of  300  dollars,  and  performed  work  and  services  to  the  amount  of 
150  dollars;  that  T.  G.  went  into  possession  of  part,  and  the  defend- 
ants had  received  the  profits  for  4  years,  at  the  rate  of  180  dollars 
a  year ;  and  that  a  balance  was  due  to  him  from  the  defendants ;  that 
the  defendant  T.  G.,  after  the  first  assignment,  applied  to  the 
lessors,  and  surrendered  up  the  lease  to  them,  and  took  a  new  leaso 
in  his  own  name  and  assigned  it  over  to  T.  B.  G.  The  bill  prayed 
for  an  injunction  against  an  ejectment  brought  by  the  defendants,, 
in  1814,  to  recover  possession  of  part  of  the  premises  occupied  by 
the  plaintiff,  &c. 

The  defendants  admitted  that  no  money  was  paid  to  the  plain- 
tiff, but  that  the  100  dollars  previously  paid  by  them  for  rent  ta 
the  landlords,  and  for  28  dollars  and  3-1  cents  paid  for  a  debt  of  the 
plaintiff,  were  agreed  to  be  the  consideration  of  the  agreement  of 
the  29th  of  August,  1809.  That  the  defendants  had  previously  paid 
the  landlords  the  100  dollars,  but  no  acquittance  or  receipt  was 
given  to  the  plaintiff  for  the  amount.  That  the  defendant  T.  G. 
had  been  in  possession  since  1809,  and  made  improvements,  which 
were  specified ;  had  paid  the  rent  and  taxes  for  the  whole  farm  for 
the  last  three  years,  and  that  the  plaintiff  had  paid  only  one-third 
of  the  rent  for  the  year  1809.  That  the  plaintiff  had  never  paid 
the  75  dollars,  or  interest,  and  that  he  owed  the  defendant  T.  G. 
about  175  dollars,  &c. ;  that  the  defendant  occupied  a  small  house 
and  garden,  and  that  the  ejectment  was  brought  for  the  house  so 
occupied  by  the  defendant  T.  G.,  but  not  for  the  cleared  land. 

The  Chancellor  [Kent].  The  bill  filed  by  the  plaintiff  is  in  tluv 
nature  of  a  bill  to  redeem,  and  the  plaintiff  is  entitled  to  redeem  thr 
whole  of  the  premises  contained  in  the  lease,  and  to  have  the  entire 
advantage  of  the  new  lease  on  such  redemption.  The  renewed  leas*' 
enures  for  the  benefit  of  the  mortgagor.   According  to  the  cases  of 


-**  ■  \J  iii)i,i;ii)(ii:  r.  (iii,i,i;M'n;.  681 

Manluvv  wlUilr,  and  ul"  ll(ilca>lrair  wlircucr  {'2  W-rn.  HI,  2  I*.  Wms. 
1 1),  the  additional  term  comes  from  the  same  old  root,  and  is  sub- 
jtvt  to  the  .same  eciuity  of  redemption,  (itht-rwist'  hardshij)  and  op- 
jtresj^ion  mi<,dit  be  praetiscd  uj)iia  Uu-  m<)r(^M«,^)r.     It  is  anab>gous, 
in  prineij)le,  to  the  case  of  a  trustee  hohling  a  lease  for  the  bene- 
fit of  the  cestui  que  trust.     Courts  of  eijuity  have  said,  tliat  if  he 
lakes  use  of  the  inlluenee  wliieh  his  situation  enabk's  him  to  ex- 
:rise  to  «,'et  a  new  lease,  he  shall  hold  it  for  the  benefit  of  the  cestui 
lie  trust.      (1   Dow.  2(i\)  \  1  Ch.  ('as.   IIH;  1   Hro.  Ch.  Cas.  198.) 
■^o,  if  a  guardian  takes  a  renewed  lea.se  for  lives,  the  trust  follows 
the  actual  interest  of  the  infant,  and  goes  to  his  heirs,  or  executor, 
ji>j  the  ease  may  be.      (18  Vcsey,  274.)      Indeed,  it  is  a  general 
'  imij)le  pervading  the  cases  that  if  a  mortgagee,  executor,  trustee, 
iiant  for  life,  &c.,  who  havi*  a  limited  interest,  gets  an  advantage 
V  being  in  possession,  "or  behind  tlie  back"  of  the  party  interested 
111  the  subject,  or  by  some  contrivance  in  fraud,  he  shall  not  retain 
ihi'  same  for  his  own  benefit,  l)ut  hold  it  in  trust.     (Lortl  Manners, 
in  1  Ball  &  Beatty,  4G,  47;  2  Ball  &  Beatty,  2i)0,  2i»S.)     The  doc- 
trine has  been  uniform  from  the  decision  of  Lord  Keeper  Bridg- 
man,  above  referred  to,  in  1  ("h.  Cas.  191,  down  to  the  most  recent 
decisions.     Xor  do  I   think  that  the  agreement  of  August,   1809, 
ought  to  form  an  obstacle  to  the  redemj)tion  of  the  whole.     That 
jreement  bears  the  mark  of  undue  influence  growing  out  of  the 
list  assignment;  and  contracts  of  that  kind,  made  with  the  mort- 
gagor, to  les.<en  or  embarrass  the  right  of  redemption,  are  regarded 
lib  jealousy,  as  they  are  very  a|)t  to  take  their  rise  in  unconscien- 
i»us  advantages  assumed  over  the  necessities  of  the  mortgagor.      ( 1 
\  em.  8 ;  &  Vern.  520 ;  2  Atk.  495  ;  2  Ball  &  Beatty,  278.)    The  gen- 
al  principle  is,  "once  a  mortgage  always  a  mortgage;"  and  though. 
I  doubt,  the  equity  of  redem])tion  may  be  released  upon  fair  terms, 
yet  the  fairness  and  value  must  distinctly  aj)pear.     In  this  ca.«5e 
there  was  no  satisfactory  consideration  for  an  abandonment  by  the 
plaintiff  of  one-half  of  his  farm.     The  agreement  was  false  on  its 
'lee,  for  the  consideration  was  not  paid.     A  payment  of  the  annual 
■  lit  to  the  landlord  was  no  compensation  {o  the  plaint ilT  for  half  of 
s  farm;  and  if  we  can  credit  the  subse<|uent  di'darations  of  the 
fendants,  they   regarded  the  irhule   farm  as  still  subject   to  re- 
inption.     But  without  placing  relianire  on  sayings  of  this  kind, 
e  j)a|)er  it.<elf,  aeeonipaiiied  with  the  admission  that  the  eonsid- 
ation  was  never  paid  to  llu>  plaintilf.  is  enough  to  justify  me  in 
't  regarding  that  agreement   a-^  a   valid  obstaele  to  the  original 
ght  of  redemption. 

I  shall,  therefore,  direct  a  reference  to  a  master  to  take  and  state 
:;   account    between    the   parties,    in    which    the    plaintilT    is    to   be 


582  EQUITY    RELATIONS.  [CHAl-.  II, 

charged  with  the  74  dollars  and  12  cents  mentioned  in  the  original 
defeasance,  with  interest  from  that  time,  and  is,  likewise,  to  be 
charged  with  all  sums  of  money  justly  due  to  the  defendants  for 
goods  sold,  or  advances  by  them,  or  either  of  them,  made  to  and 
for  his  use,  and  on  his  account ;  and  that  the  plaintiff  is  to  be  cred- 
ited with  all  payments  made,  or  articles  of  produce  delivered,  or 
work,  labor,  and  services  rendered  to  the  defendants,  or  cither  of 
them;  and  that  the  defendants  are  to  be  charged  with  the  net  yearly 
value  of  the  premises  possessed  by  them,  or  either  of  them,  during 
the  time  of  their  possession,  after  deducting  the  rent  and  taxes  ac- 
cruing and  paid  during  that  period;  and  that  the  pleadings  and 
proofs  taken  in  the  cause  be  received  as  evidence  before  the  Master, 
and  that  the  question  of  costs  and  all  other  questions  be  reserved 
until  the  coming  in  of  the  report. 

Decree  accordingly. 


HYNDMAN  v.  HYNDMAN. 

Supreme  Court  of  Vermont,  1845. 
(19  Vt.  9.) 

Appeal  from  the  Court  of  Chancery.  The  facts,  as  they  appeared 
from  the  bill  and  answer  and  the  testimony  taken,  were  substan- 
tially as  follows: 

In  1832  the  orator,  being  indebted  to  the  defendant  and  William 
Hyndman,  executed  to  them  an  absolute  deed  of  his  farm  in  Barnet 
and  received  back  a  writing  of  defeasance.  The  orator  received 
farther  advances  from  time  to  time,  until  1836,  when  the  parties 
reckoned  together  the  amount  due  and  found  it  to  be  $608.60, 
and  then  agreed  that  the  defendant  and  William  Hyndman  should 
have  the  farm,  free  from  the  orator's  equity  of  redemption,  at  eight 
hundred  dollars ;  and  the  defendant  accordingly  surrendered  to  the 
orator  the  notes  due  from  him  and  executed  to  the  orator  a  note  for 
$191.31,  and  the  orator  surrendered  his  writing  of  defeasance;  but 
it  was  at  the  same  time  verbally  agreed  between  them  that  the  de- 
fendant should  sell  the  farm  and  the  orator  should  have  what  was 
received  therefor,  above  the  sum  of  eight  hundred  dollars,  after  pay- 
ing the  defendant  for  his  time  and  trouble  in  the  business.  The 
orator  continued  to  reside  on  the  premises  until  the  commencement 
of  this  suit;  and  the  defendant,  subsequent  to  1836,  leased  the 
premises  from  year  to  year  to  different  persons  and  received  the 


«K^'-  \'l  JIVNDMAN     /•.    UVNUMAN.  ''S.'} 

rt'iit,  until  March  .)»),  ISIO,  when  flic  j)artics  c\ccuic<i  an  indciiiup-. 
in  which  it  was  recite*!  that  the  dcfenthint  and  William  Hyndrnaii 
had  i)aid  to  the  orator  $S(;!».8(),  as  of  the  date  of  March  11,  18  H».  in 
consideration  of  which  tlu-y  held  a  warrantee  deed  of  tiio  premise* 
in  question;  and  it  was  a^'reed  that  the  orator  should  have  tiu-  use 
of  the  farm  for  one  year  for  the  rent  of  $TH.(t!»,  that  if  he  i)aid  the 
rent  and  the  sum  of  .$S(;!».S()  hefore  March  11,  IS  11,  he  should  have 
a  deed  of  the  farm,  hut  that  if  he  did  not  make  j)ayment,  the  d<'- 
fendant  should  sell  the  farm  at  auction  on  the  first  day  of  April, 
1841,  and  should  pay  to  the  orator  what  was  received  for  the  farm, 
above  those  sums,  after  payinj,'  defendant  for  iiis  time  and  trouMe. 
The  defendant  caused  the  farm  to  he  sold  at  auction  in  1841  and 
became  the  purchaser  himself  at  $1001.00,  and  offered  to  pay  to  the 
orator  the  surj)lus  above  the  sums  specified  in  the  indenture;  but  the 
orator  would  not  receive  it.  Testimony  was  given  tending  to  prove 
that  tile  orator  was  ])oor,  and  that  the  farm  was  worth  .$11<»(».  or 
$1200.  William  Ilyndman  conveyed  his  interest  in  the  premi>'  -  i" 
the  defendant  before  the  commencvment  of  this  suit. 

Tiie  orator  prayed  that  an  account  might  be  taken  of  the  amount 
justly  due  to  tlie  defendant,  and  of  the  rents  and  i)rotits  of  the  prem- 
ises received  by  the  defenchuit,  and  that  the  orator  might  be  permit- 
ted to  redeem  the  ])remises. 

The  Court  of  Chancery,  Khdimki.I).  Cli.,  dismissed  the  bill  wiiji 
costs  from  which  decree  the  orator  appi'aK'd. 

The  ojiinion  of  the  court  was  dclivi'red  by 

Heufikld.  .1.  Tlii-;  is  an  a|t|»cal  from  a  decree  made  by  the 
chancellor  of  this  circuit.  When  the  case  was  heard  in  the  Court 
of  Chancery,  it  a|)peared  to  me  to  be  one  of  so  much  doubt  that  I 
did  not  feel  justified  in  e.xjxtsing  tlie  jiarties  to  the  expense  of  taking 
an  account  of  so  long  standing,  until  the  necessity  for  such  expen-c 
was  fully  established  by  the  decision  of  this  court.  In  that  viiw  I 
understand  my  brethren  fully  to  concur.  We  by  no  means  justity 
the  practice,  sometimes  adojited  in  the  Court  of  Chancery,  of  allow- 
ing apjieals  ujion  merely  fonnnl  (K-erees,  without  Ucaniuj.  Such  a 
course  is  only  calcidated  to  increase  tlie  number  of  chancery  ap- 
peals in  this  court  and  delay  the  final  di.sposition  of  many  of 
them,  without  any  ade«iuate  saving.  Every  ease  should  1m'  futlij 
heard  in  the  Court  of  Chancery;  and  then,  no  doubt,  the  chaneellor 
may,  in  his  discretion,  make  a  decree  with  a  view  of  .-saving  needle-s 
expense  to  the  parties,  in  ca-e  the  Supreme  Court  should  be  of  opin- 
ion the  orator  cannot  pn-vail. 

But  upon  a  full  hearing  of  this  ca.<e.  upon  very  satisfactory  ar::u- 
mcnts  upon  both  sides,  we  incline  to  the  opinion  that  the  orator 
ought  to  be  permitted  to  redeem.      Cases  of  this  kind   will  alwa\- 


oS4  EQUITY    RELATIONS.  [CIIAP.  1  r. 

depend  very  much  upon  the  determination  of  the  facts.  In  that 
particular,  one  case  is  not  a  rule  for  the  determination  of  any  other 
case  (unless  the  two  cases  are  alike  in  all  particulars,  which  never 
occurs),  and  therefore  need  not  be  reported,  so  far  as  the  facts  are 
concerned. 

The  points  of  law  here  decided  are,  that  when  the  orator  con- 
tracted to  sell  out  his  equity  of  redemption  to  his  mortgagee,  he  is, 
in  this  court,  entitled  to  very  favorable  consideration,  on  account 
of  the  unequal  relations  in  which  the  parties  stood  at  the  time.  The 
one  was  the  superior  and  the  otner  the  dependent.  The  one  had 
power  and  resources;  the  other  had  neither,  but  was  sore  pressed 
by  necessity.  In  addition  to  this,  the  defendant  was  clearly  the 
inortgagee  of  the  premises  for  such  a  sum  as  it  was  not  in  the  power 
of  the  orator  readily  to  raise.  The  price  was  little  more  than  two- 
thirds  the  value  of  the  premises.  It  was  agreed  that  the  defend- 
ant should  sell  the  premises,  and  if  they  brought  more  than  the 
price  paid  by  the  defendant,  the  plaintiff  should  have  the  surplus. 
I'nder  these  circumstances  we  think  the  contract  must,  in  equity, 
still  be  considered  a  mortgage,  with  a  power  of  sale  in  the  mort- 
gagee. It  is  well  settled  that  in  all  transactions  between  the 
mortgagor  and  mortgagee  the  conduct  of  the  mortgagee  will  be 
watched  very  narrowly  (4  Kent  143,  and  note, and  cases  there  cited). 
This  is  the  language  of  all  the  cases,  and  of  all  the  books,  in  regard 
to  all  purchases  made  by  trustees  of  the  interest  of  the  cestui  que 
irust.  Such  contracts  are  not  positively  disregarded  in  a  court  of 
equity;  but  they  are  viewed  suspiciously  and  criticised  with  some 
degree  of  severity. 

The  only  other  ground  upon  which  the  defendant  claims  to  hold 
the  estate  free  from  the  plaintiff's  equity  of  redemption  is,  that 
in  pursuance  of  the  power  of  sale,  he  caused  the  estate  to  be  sold 
at  auction  and  became  himself  the  purchaser.  Such  sales  have  al- 
ways in  the  English  chancery,  and  in  this  country,  unless  when  the 
matter  is  controlled  by  statute,  been  held  voidable,  at  the  election 
of  tlie  mortgagor,  or  cestui  que  trust,  unless  he  delay  for  an  unrea- 
sonable time  to  make  his  election,  in  which  case  he  will  be  held 
to  have  confirmed  the  sale  by  his  acquiescence.^  The  cases  are 
loo  numerous  upon  this  point,  and  there  is  too  little  conflict  in  the 
decisions,  to  require  an  elaborate  review  of  the  subject. 

The  State  of  New  York,  by  statute,  allows  the  mortgagee,  in  such 
oases,  to  become  the  purchaser,  if  he  conduct  the  matter  with  per- 
fect fairness.    In  that  State,  therefore,  the  decisions  upon  this  sub- 

'That  an  unreasonable  delay  is  fatal  to  the  right,  see  Learned  v.  Foster, 
117  Mass.  305  (1875).  For  the  effect  of  a  transfer  to  a  bona  fide  purchaser, 
see  Burns  v.  Thayer,  115  Mass.  89   (1874). 


«K«\  v.]  WILLI  VMS    V.    TOWXSKND.  58.") 

jt'ct  rrst  »ij)on  a  sonu'wlial  difTtTcnt  hasis  fr«»m  tlio  En;,'lish  cases. 
Ill  the  fonner  the  sale  is  jiriiiin  furiv  ^ood,  and  it  is,  therefore,  in- 
« iinibent  upon  the  cestui  que  trust  to  impeach  its  fairness;  but  in  the 
hitter  the  sale  is  always  either  good  or  had,  at  the  election  of  the 
cestui  que  trust, — as  in  the  case  of  a  contract  of  sale  between  an  in- 
fant and  an  adult.  'Vho  authorities  will  be  found  sutVicicntly  re- 
I't'rred  to  and  digested  in  Davoue  v.  Fanning,  2  Johns.  Ch.  K.  252, 
and  in  Mr.  Sumner's  note  to  Whirhcote  v.  Lawrence,  5  Vcs.  740. 
Itenjen  v.  liennctt,  1  Caine,  1.  is  somewhat  of  an  elaborate  case 
upon  this  point. 

The  di'cree  of  the  ("haneellor  is,  therefore,  reversed  and  the  cause 
remanded  to  the  Court  of  Chancery  to  be  there  proceeded  with.' 


WILLIA^IS  V.  TOWNSEXD. 

Court  of  Atimoals  of  Xkw  Yoiik.  ISi].'). 

(31  X.  ]'.  ill.) 

This  was  an  action  to  enjoin  the  sale  of  mortgaged  premises  under 
a  statutory  foreclosure. 

The  plaintitr  executed  to  the  defendant's  assignor  his  bond  and 
a  mortgage^  of  premises  situated  in  Buffalo,  dated  the  Hth  day  of 
February,  1853,  to  secure  th(>  |)ayment  of  $2,()4«),  in  ten  years  from 
the  date  thereof  with  annual  interest,  which  mortgage  contained 
a  further  condition  in  these  words:  "and  shall  also  pay  all  tissess- 
iMcnts,  taxes  and  charges  on  the  said  j)ri'misi's  to  In-  charged  on  the 
same,  and  in  case  of  default  in  paying  the  .same,  the  said  parties 
of  the  second  j)art  and  their  representatives  may  discharge  such 
assessments,  taxes  and  chargi-s,  and  collect  the  same  with  interest 
from  the  time  of  such  pavnient  under  this  mortgage,  in  the  man- 
ner particularly  s])ecilied  in  the  condition  of  a  certain  bond  or  oldi- 
gation  bearing  even  date  herewith,  itc."  The  condition  of  tin*  bond, 
■^o  far  as  it  relates  to  the  rpu'stion  in  this  case,  was  in  these  wonls : 
"and  shall  also  pay  all  as.sesstnents,  taxes  and  charges  on  the  prem- 

'  .s'/rr  V.  Manhatlnn  Co.,  1  l*ai;,'p  (X.  \ .)  -IH  (1S2.S):  Jirnhnm  v.  Rotcr. 
■1  (ill.  .1S7  (1S.V2)  :  Mapps  v.  Shnrpi.  Wl  111.  l.»  I  IS(i.l)  ;  Carlnnd  v.  U'aMow. 
7-1  .Ma.  .123  (ISS.T).  nmnil.  Coniimro  \fnnlniiur  v.Dnirrs,  14  .Mlon  (  Mn<«««. ) 
:W.)  (1S(17).  and  I'liir  v.  Hroim.  40  Iowa.  20!)  (1S7.*)).  Soo  Th,-  Hntmnis 
V.  I)nvi.t,  t(  Tox.  174  (  IS.-.l)  ;  Triimn  v.  Mnrsh.  r>4  N.  Y.  '^'M  (1H74).  s.  » 
papp  2il!).  siiiiKi,  anil  New  York  Coilc  Civ.  I'ror.  §  2304.  for  the  ctnitrary 
•  l«M-<rinp. 


586  EQUITY    RELATIONS.-  [CIIAP.  II_ 

ises  described  in  the  mortgage  bearing  even  date  herewith  and  col- 
lateral hereto,  and  in  case  of  any  default  in  paying  the  same,  the 
said"  (obligees)  "may  discharge  said  assessments,  taxes  and 
charges,  and  collect  the  same  with  interest  from  the  time  of  pay- 
ment as  part  of  this  bond,  and  the  said  mortgage."  The  mortgage 
contained  a  power  of  sale,  providing  that  if  default  should  be  made 
in  the  payment  of  all  or  any  part  of  the  said  principal  sum  of  $2,G40, 
"or  of  the  assessments,  taxes  and  charges  as  aforesaid,  or  of  the- 
interest  thereof,  at  the  time  or  times  when  the  same  ought  to  be- 
paid,"  then  and  in  such  case  the  mortgagees  were  empowered  to  sell 
the  premises  at  public  vendue,  &c.  "And  out  of  the  moneys  arising 
from  such  sale  or  sales,  to  keep  and  retain  in  their  hands  the  said 
sum  of  two  thousand  six  hundred  and  forty  dollars,  together  with 
such  assessments,  taxes  and  charges  as  shall  have  been  paid  by  them,, 
together  with  all  costs,  charges  and  expenses,  on  account  of  such 
sale  or  sales." 

In  1856  the  city  of  Buffalo  assessed  upon  the  said  mortgaged 
premises  taxes  amounting  to  thirty-three  dollars  and  sixty-six  cents, 
for  which  th?  premises  were  sold  at  auction  by  the  comptroller  of 
said  city  on  the  27th  day  of  May,  1857,  for  taxes,  interest  and  ex- 
penses, then  amounting  to  $36.75.  The  premises  were  bid  off  by 
one  M.  E.  Viele  for  the  term  of  five  hundred  years,  and  certificati's 
pursuant  to  the  provisions  of  the  charter  of  said  city  were  issued 
to  him  by  said  comptroller,  in  his  name.  Viele  was,  in  fact,  the- 
agent  of  the  defendant,  who  was  then  the  assignee  of  the  mortgage, 
and  bid  off  the  said  premises  for  her,  taking  the  certificates  in  his 
own  name,  as  he  testified,  "for  convenience  of  transfer." 

On  the  1st  of  August,  1857,  the  defendant,  by  her  attorneys, 
commenced  a  foreclosure  under  the  statute  by  advertisement  in  one- 
of  the  Buffalo  papers,  which  advertisement  properly  described  said 
mortgage,  &c.,  and  claimed  to  be  due  thereon  "$26-40  and  interest 
thereon  from  February  8,  1857;  and  also  the  sum  of  $36.75,  witlv 
interest  thereon  from  March  27,  1857."  There  was,  in  fact,  no  part 
of  the  principal  of  said  mortgage  or  of  interest  thereon  then  dut' 
and  unpaid.  Before  the  day  of  sale  mentioned  in  said  advertise- 
ment the  plaintiff  paid  to  the  comptroller  of  the  city  of  Buffalo  the- 
amount  legally  necessary  to  redeem  the  premises  from  such  tax 
sale ;  and  defendant  refusing  to  discontinue  the  proceedings  of  fore- 
closure, the  plaintiff  commenced  this  action  to  restrain  her  from 
selling  said  premises. 

The  court  at  Special  Term  held  as  a  question  of  law  "that  the 
purchase  by  the  defendant  at  the  tax  sale,  and  the  taking  and  hold- 
ing by  her  of  the  tax  certificate,  did  not  discharge  the  assessment^ 
taxes  or  charges  for  which  said  premises  had  been  sold  at  sucli 


sf^f'- ^-J  wii.i.iamn  r.    ru\vNM:M).  r»S7 

sale;"  and  that  "the  (lofciidant  was  not  entitled  to  enforce  tin-  repay- 
ment of  the  amount  j)ai(l  on  siieh  |Mireha.-e  as  a  part  of  the  eoiidi- 
tion  of  said  mortixa^'e,"  and  ordered  jndjrnieiil   for  the  jilaintiir. 

The  judguienl  was  allirined  Ky  the  (ieneral  Tirni  of  the  sih 
District. 

Davis.  J.  ]^\  tlie  coiidiiion  ..f  ilu-  hond  and  mort;.M;:e  thi-  <le- 
fendant  undouhtedly  liad  a  ri^rht.  after  failure  l»y  tlie  [)hiintitT  to 
pay  the  taxes  assessed  on  the  mnrtj^a^'e  pn'mises,  to  pay  and  dis- 
charge the  same,  and  thereupon  to  collect  the  amount  so  paid  l»y 
suit  upon  the  l)on<l  or  hy  foreclosure  of  tiie  mort^Mge.  And  the  prin- 
cipal question  in  this  case  is,  whether  the  j)urchase  of  the  |)remises  ai 
the  tax  sales  and  the  taking'  certilicates  of  such  |)urchaM'  under 
the  provisions  of  the  charter  of  BufTalo,  were  a  dischar<;e  of  the 
assessments  and  taxes,  within  the  true  construction  of  the  bond  and 
mortgage. 

By  section  'JO  of  title  o  of  the  charier  of  the  city  of  Buffalo,  as 
revised  hy  the  Laws  of  1S.")(;,  it  is  pr<n  ided  that  the  owner  of  any 
real  estate  sold  for  taxes  may  at  any  time  before  a  declaration  of 
sale  is  granted,  as  elsewhere  provided  by  tlu'  chart«'r.  redeeju  tlie 
same  by  j)aying  to  the  city  treasurer,  for  the  benefit  of  the  holder 
of  such  certificate,  the  amount  ))aid  by  him  with  ihe  addition  of 
fifteen  per  cent.  j)er  annum  on  such  amount. 

The  certificates  are  transferalile :  and  it  cannot  always  be  easily 
ascertained  who  the  holder  is.  Hence  the  statute  has  provided  that 
the  redempticm  may  be  made  by  j)ayment  to  the  city  treasurer.  In 
all  cases  of  sales  for  taxes  the  owner  of  the  land  is  i-lothed  by  law 
with  this  right  of  redemption;  and  the  tax,  together  with  the  ex- 
penses of  the  sale,  remain  a  lien  on  tiie  premises  a.ssessed,  with  an 
addition  thereto  of  fifteen  per  ci'nt.,  until  the  redemplion  or  pay- 
ment to  the  treasurer  is  made.  The  elfcct  of  the  sale  is  therefore 
merely  an  assignment  of  the  lien  of  the  tax  and  the  expen.ses  then 
incurred,  enhanced  by  the  additional  per  centa.4e;  and  this  lien 
continues  till  the  owner  of  the  laml  makes  tiie  redemption,  or  the 
holder  of  the  certificate  tak«'s  title  to  the  property  in  the  j)reseribed 
form.  It  is  therefore  clear  that  the  tax  or  assessment  is  not  dis- 
charged by  the  sale  and  certillcatt'.  In  this  case  the  purchase  at 
the  tax  sale  was  made  by  M.  K.  Viele,  and  the  certificates  of  the 
comptroller  were  made  to  him,  as  he  .says,  "for  convenience  of  trans- 
fer." lie  was  in  fact  the  agent  of  defendant,  imt  there  was  noth- 
ing in  the  manner  of  sale  or  form  of  the  certifii-ate  to  i?idieate  that 
fact.  The  legal  rights  of  the  parties  are  perhaps  the  same  as  though 
the  certificate  had  been  made  to  the  defendant;  but  it  would  ci'r- 
tainly  be  very  embarrassing  to  tith's  of  real  estate  if  tin-  owner'-* 
right   of  redemption   were  dependent    upon   some  undiscIo>ed    rela- 


588  EQUITY    RELATIONS.  [ClIAP.  II. 

tion  of  agency  between  the  apparent  purchaser  and  the  incum- 
brancer of  the  land.  There  would  be  no  safety  for  him  if  he  were 
not  allowed  to  redeem ;  because  the  ostensible  purchaser  could  trans- 
fer the  certificate  to  a  bona  fide  holder  and  subject  him  to  great  em- 
barrassment and  perhaps  to  the  loss  of  his  land.  A  mortgagee  who 
desires  to  pay  oif  taxes  or  assessments  and  charge  them  on  the  mort- 
gaged premises  has  a  very  plain  course  to  pursue.  At  any  stage 
of  the  proceedings  he  can  step  forward  in  his  character  of  mort- 
gagee and  pay  the  assessment  or  redeem  from  a  sale  before  the 
purchaser's  title  has  actually  ripened  by  a  conveyance  under  the 
law.  It  is  no  hardship  to  require  him  to  do  this  in  a  plain  and 
distinct  manner,  so  as  not  to  embarrass  the  title  of  the  mortgagor 
or  owner.  When,  however,  he  purchases  at  a  tax  sale  and  takes 
a  certificate  as  purchaser,  that  is  an  election  on  his  part  to  occupy 
the  relation  of  purchaser,  with  all  the  rights  and  incidents  which 
the  law  attaches  to  it.  He  becomes  then  the  owner  of  an  undis- 
charged lien,  which  the  owner  of  the  land  may  discharge  in  the 
manner  provided  by  law. 

But  it  is  insisted  that  the  purchase  and  taking  of  the  certificate 
by  a  mortgagee,  who  has  the  right  by  the  terms  of  his  mortgage,  or 
under  the  general  statute,  to  pay  off  taxes  and  add  the  amount  so 
paid  to  the  lien  of  his  mortgage,  is  by  operation  of  law,  ipso  facto, 
an  extinguishment  and  discharge  of  the  tax.  To  support  this 
proposition  the  familiar  principle  that  a  person  who  is  placed  in 
a  situation  of  trust  or  confidence  in  reference  to  the  subject  of  the 
sale,  or  has  a  duty  to  perform  which  is  inconsistent  with  the  charac- 
ter of  a  purchaser,  cannot  be  a  purchaser  on  his  own  account. 
(Torrey  v.  The  Bank  of  Orleans,  7  Paige,  6-49;  Van  Epps  v.  Van 
Epps,  9  Paige,  257;  Burhans  v.  Van  Zandt,  3  Seld.  523.) 

But  this  principle  has  never  been  carried  so  far  as  to  prevent  a 
junior  mortgagee  from  purchasing  the  subject  matter  of  the  mort- 
gage at  a  sale  under  a  prior  lien;  nor  has  it  been  held  that  a  title 
fairly  purchased  at  such  sale  was  held  for  the  benefit  of  the  mort- 
gagor. A  mortgage  is  a  mere  security  for  a  debt ;  and  there  is  no 
such  relation  of  trust  or  confidence  between  the  maker  and  holder 
of  a  mortgage  as  prevents  the  latter  from  acquiring  title  to  its 
subject  matter,  cither  under  his  own  or  any  other  valid  lien.  The 
defendant  had  no  duty  to  perform  to  the  plaintiff  or  toward  the 
mortgaged  premises  that  precluded  her  from  buying  at  the  tax 
sale.  Slie  was  under  no  obligation  to  pay  the  taxes.  The  plaintiff 
had  covenanted  that  she  might  do  so  at  her  option,  and  thereby 
acquire  certain  rights;  but  she  had  not  undertaken  to  do  it  nor 
subjected  herself  to  any  burthen  or  obligation  whatever  in  respect 
to  the  assessments  or  taxes.     She  might  pay  them  or  not,  as  she 


•'^Kf.  v.]  \\1I.L1A.MS    r.    TOW  NSKNU.  581> 

chose,  or  she  might  ^liuul  uj)<)n  her  gciuTal  rights  aiKi  purchase  at 
the  tax  sale,  as  others  could  do,  for  the  purjjoses  <)f  investment  or 
protection.  Rut  if  this  wen-  not  so,  all  that  tln'  princijdc  -ought 
to  be  invoked  would  rccpiire  is  that  as  purchaser  ^h»'  >houId  take  a 
redeemable  interest  only  which  never  could  ripen  as  against  tlu' 
mortgagor  into  a  greater  one,  and  not  that  the  lien  she  j)urchased 
should  he  discharged  or  extinguished,  leaving  her  to  no  nniedy 
except  the  jiossibly  inade(|uate  one  under  the  covenants  of  the  honil 
and  mortgage.  It  is  my  oj)inion,  therefore,  that  the  purchase  at 
the  tax  sale  did  not  operate  to  discharge  the  assessment  and  deprive 
the  plaintilT  of  his  right  of  redemption  under  thi'  statute. 

But  it  is  urged  that  the  failure  of  jtlaintiir  to  pay  tiie  tax  was 
a  breach  of  the  condition  of  the  mortgage,  and  gave  defendant 
a  right  to  foreclose  and  collect  the  whole  amount  secured.  There 
is  no  clause  of  the  mortgage  making  the  whole  sum  due  on  failure 
to  pay  the  interest,  or  on  breach  of  any  condition.  The  <lau.se 
wjiich  authorizes  the  retention  by  the  mortgagee  of  the  whole 
amount  secured  after  a  sale  of  the  ])remi.ses  does  not  have  the  elfect 
claimed  for  it;  nor  do  I  think  it  would  countervail  the  provision 
of  the  statute  which  requires  a  sale  in  parcels,  when  that  is  prac- 
ticable, and  i)rohibits  a  sale  of  more  than  suilieiimt  to  pay  the 
amount  actually  due  with  the  exj)ensi's  of  sale.  (.'5  H.  S.,  oth  cd., 
p.  860,  §  ().)  But  no  right  to  foreclose  would  accrue  upon  a  simple 
failure  of  the  mortgagor  to  pay  the  taxes;  to  give  that  right  it  is 
essential  that  the  holder  of  the  mortgage  shall  have  j)aid  off  and 
discharged  the  assessment  or  tax,  otherwise  no  money  has  become 
due  which  the  mortgagee  is  entitled  to  retain  on  a  sale.  The  lan- 
guage of  the  mortgage  settles  this,  for  it  i)rovides  that  "such  assess- 
ments, faxes  and  charijcs  as  shall  hare  been  paiil  hi/  them"  may  i)e 
retained. 

Besides,  in  my  judgment,  a  mere  naked  breach  of  such  a  covenant 
in  the  condition  of  a  mortgage,  without  the  paynu'ut  of  any  amount, 
would  give  no  right  to  commi-nee  a  foreclosure  under  the  statute; 
but  this  it  is  not  necessary  to  deteiinine. 

1  think  the  judgment  should  be  allirmed. 

Jiuhjmenl  affirmed. 


590  EQUITY    UELATIOXS.  [CHAP.  U. 

TEX  EYCK  V.  CEAIG. 

Court  of  x\ppeals  of  New  York,  1875. 

(G3  N.  Y.  406.) 

Appeal  from  order  of  the  General  Term  of  the  Supreme  Court 
in  the  fourth  Judicial  department  reversing  a  judgment  in  favor 
of  plaintiff  entered  upon  a  decision  of  the  court  upon  trial  without 
a  jury.      (Reported  below,  2  Hun.,  452;  5  T.  &  C,  65.) 

This  action  was  brought  to  redeem  certain  real  estate  known  as 
^'Congress  Hall,"  in  the  city  of  Eochester,  from  incumbrances  held 
by  the  defendants  as  executors  of  the  estate  of  John  Craig,  de- 
ceased, and  for  an  accounting  of  the  rents  and  profits. 

The  facts  as  found  by  the  trial  court  are  substantially  as  follows : 

On  the  23d  of  April,  1860,  Nelson  P.  Stewart,  then  being  the 
owner  in  fee  of  the  premises,  executed  a  mortgage  thereon,  and  on 
a  farm  in  Erie  county,  to  the  defendant  John  Craig,  to  indemnify 
him  for  becoming  Stewart's  surety  in  an  undertaking  made  to 
stay  proceedings  on  a  judgment  recovered  in  the  Supreme  Court 
on  the  24th  day  of  October,  1859,  in  favor  of  Maria  L.  Uehon,  exec- 
utrix, against  Stewart,  for  $10,184.83,  on  an  appeal  taken  by  Stew- 
art from  said  judgment.  At  the  time  of  the  execution  of  said  mort- 
gage said  Congress  Hall  property  was  subject  to  three  prior  mort- 
gages, amounting  to  about  $19,000,  two  of  which  were  then  owned  by 
the  defendant  Craig,  and  the  third  by  Asa  Sprague,  who  subse- 
quently transferred  it  to  Craig.  The  said  property  was  also  subject, 
at  the  time  of  the  execution  of  said  indemnity  mortgage,  to  a  lease 
executed  by  Stewart  to  Eobert  D.  Cook,  for  the  term  of  five  years 
from  the  1st  day  of  May,  1860,  at  a  rent  of  $3600  a  year,  payable 
monthly  in  advance.  On  the  34th  of  April,  1860,  Stewart  assigned 
said  lease  and  the  rents  payable  thereon  to  Craig,  as  further  in- 
demnity for  his  becoming  surety  as  above  stated,  by  an  instrument 
in  writing.^ 

Craig  was  made  liable  as  surety,  and  was  compelled  to  and  did 
pay  $12,301.24  on  said  undertaking  on  the  7th  of  August,  1862. 
Craig  foreclosed  his  indemnity  mortgage,  so  far  as  it  related  to  the 
])roperty  in  Erie  county,  and  realized  therefrom  the  sum  of 
$2615.88.  At  the  time  when  Craig  signed  said  undertaking,  and 
took  said  indemnity,  said  Congress  Hall  property  was  subject  to  a 
judgment  theretofore  recovered  in  the  Supreme  Court  in  favor  of 
the  Madison  County  Bank,  or  the  trustees  thereof,  against  Stewart, 
for  the  sum  of  $2500  and  costs,  of  the  existence  of  which  judgment 
(*raig  was  ignorant  at  the  time.     On  being  informed  of  it  he  re- 

'  The  assignnieiit  is  omitted. 


•*'*•«'■  ^l  Ti;\   i:Vt  K    /.    CUAKi.  i)'.i\ 

fused  to  juslirv  as  a  surety  to  said  undertaking^',  nide-s  lie  \\n< 
iiideiniiilii'd  a;,'ain>l  said  jud<,Miieiit.  and  tliercforc  Stewart  oxccutcil 
a  l)()nd,  dated  the  1st  day  of  .June,  IStiO,  and  {jrocured  tho  sanie 
t()  he  exeellled  hy  (leiiri^e  |\ .  Johiison  and  the  defendant  Hlisha  C. 
Liti'hiiehl,  as  his  sureties,  in  tiie  penal  sum  of  $')()()(),  e(»nditioni'd 
to  protect  said  ('onj,M'ess  Hail  property  a;,Minst  the  jud;,'nient  last 
ahove  mentioned,  whieh  hond  was  delivered  to  Crai;,',  and  he  then 
justilied  as  surety  to  the  undertakinfj;  <?ivcn  on  appeal.  On  the  5th 
day  of  Deeeniher,  ISii.'J,  Crai;^  recovered  a  jud^rinent  on  said  last 
mentioned  hond  a;,Minst  Litelifield  for  .$.')n!>.(;!»,  whieh  jud^'mont 
Ijtchlield  paid  to  Crai.i:-.  On  the  ITth  of  Decendjer,  ISKiO.  the 
Congress  Hall  property  was  sold  on  an  execution  issued  upon  said 
.iu(l<;ment  in  favor  of  the  Madison  County  Bank,  and  was  hid  olT  at 
such  sale  I)y  the  defendant  Crai.ir  for  the  sum  of  five  dollars.  On 
the  17th  of  March.  ISC-i.  Daniel  \V.  Powers,  hy  virtue  of  a  judfrmont 
recovered  hy  him  a^^iinst  Stewart  on  the  2(Uh  of  January,  18(10, 
for  $1481.78,  redeemed  the  Congress  Hall  property  from  said  sale, 
and  on  the  31st  of  March,  \S(Vi,  the  sherilT,  in  completion  of  such 
sale,  oxeeuted  a  deed  of  said  property  to  Powers.  On  the  7th  of 
May.  1S()4,  Powers,  in-  deed  of  that  date,  conveyed  said  property 
to  the  defendant  Craig,  in  consideration  of  the  .sum  of  $175;{..")3 
jiaid  by  Craig.  The  judgment  under  which  Powers  redeemed  had 
hei'n  sold  and  assigned  hy  him  hefore  the  redemption,  and  on  the 
10th  of  April,  IXtiO,  to  Oliver  M.  Benedict,  of  Hoehester,  in  con- 
sideration of  the  amount  then  due  on  the  judgment,  paid  by  Bene- 
dict to  Pow('rs  at  the  time.  On  tlie  day  of  the  redemption,  to  wit, 
the  17tli  of  March,  18(>3,  Benedict  reassigned  the  judgment  to  Pow- 
ers, without  any  valuahle  or  valid  consideration.  At  the  time  of  each 
of  those  assignments,  and  for  several  years  next  preceding  that  time, 
Benedict  was  the  attorney  of  Stewart,  and  was  his  confld(>ntial  ad- 
vis<'r.  He  ))urcha.sed  said  judgment  and  took  the  a.ssignnient  of 
it  in  his  own  name,  at  the  recpiest  of  Stewart.  .\nd  the  money 
which  he  |)aid  for  it  to  Powers  was  furnished  i)y  Stewart,  or  was 
replaced  hy  him  immediately  after  such  payment,  in  pursuance 
of  an  arraiigi  iiiciii  between  him  and  Benedict  made  before  the 
money  was  paid  by  lienedict.  There  is  no  evidence  that  the  a.ssign- 
ment  of  the  judgment  from  Benedict  to  Powers  was  authorized  by 
Stewart,  or  thai  he  knew  of  it.  Craig,  when  be  took  the  dcvd 
from  I'owers,  had  knowledge  of  the  facts  as  to  the  relations  between 
liencdict  and  Stewart,  and  as  to  the  a.ssignment  of  the  judgments. 
On  the  37th  of  .\pril,  ISCO,  Stewart  and  Ids  wife  conveyed  "Con- 
gress Hall"  to  Henry  K.  Sanger,  by  deed.  sul)ject  to  tlie  several 
mortgages  above  stated,  excvpt  the  indemnity  mortgage.  SanpT 
died  previous  to  July.  ISC  I.  leaving  a  will  by  whieh  be  gave  to  bis 


593  EQUITY    RELATIONS.  [CHAP.  II. 

wife  all  his  estate,  real  and  personal,  and  named  her  as  sole  executor. 
She,  as  devisee  and  executrix,  conveyed  Congress  Hall  to  the  plain- 
tiff Henry  Ten  Eyck,  hy  deed  dated  3d  of  January,  1867. 

On  these  facts  the  court  decided  as  matter  of  law,  among  other 
things,  that  the  defendant  Craig,  on  entering  upon  the  collection 
of  the  rents  on  the  assignment  of  the  lease  of  the  Congress  Hall 
property,  was  in  the  i30sition  of  a  trustee  for  Stewart,  in  respect  to 
the  leased  property,  and  his  purchase  of  the  same  while  he  occu- 
pied that  position  inured  to  the  benefit  of  the  cestui  que  trust,  at 
his  election.  That  when  Benedict  held  the  judgment  under  whicli 
Powers  redeemed,  he  held  it  in  trust  for  Stewart.  Powers,  as  the 
assignee  of  Benedict,  without  consideration,  took  Benedict's  right 
in  the  judgment  and  no  more.  When  Powers  redeemed  he  took 
the  land  subject  to  the  trust  which  attached  previously  to  the  judg- 
ment in  his  hands.  That  Craig  was  chargeable  with  notice  of  said 
trust.  That  Stewart,  while  he  owned  the  Congress  Hall  property, 
had  the  right  to  redeem  the  same,  on  paying  to  Craig  the  amount 
of  his  liens  and  advances,  over  and  above  his  receipts.  That  the 
plaintiff  Ten  Eyck,  by  means  of  the  successive  conveyances  above 
stated,  has  succeeded  to  such  right  of  Stewart  to  redeem  said  prop- 
erty, and  is  entitled  to  redeem. 

Andrews^  J.  ...  It  will  be  convenient  in  examining  the 
questions  which  arise  in  the  case  to  leave  out  of  view  for  the  present 
the  facts  relied  upon  as  establishing  a  trust  relation  between  Craig 
and  Stewart,  which  disabled  Craig  from  acquiring  a  title  to  the  prop- 
erty hostile  or  adverse  to  Stewart  or  his  grantee,  and  to  consider  the 
])osition  of  Sanger  and  his  relation  to  the  property  after  the  sale  and 
eonveyance  by  the  sheriff,  upon  the  assumption  that  Craig  as  pur- 
chaser on  the  sale  and  the  grantee  of  the  redemption  title  was  unaf- 
fected by  any  special  disability,  and  acquired  the  same  rights 
through  the  sale  and  the  subsequent  proceedings  as  if  at  the  time  of 
the  purchase  he  had  been  a  stranger  to  Stewart  and  Sanger,  owing 
them  no  duty  and  bound  by  no  obligation  to  protect  the  equity  of  re- 
demption. It  is  not  claimed  that  there  was  any  fraud  or  irregular- 
ity in  the  sale  on  the  bank  judgment.  The  judgment  was  unpaid ; 
the  sale  was  open  and  fair,  and  so  far  as  appears  was  not  procured 
by  the  intervention  of  Craig.  The  sum  bid,  so  far  as  appears,  was 
at  the  time  the  full  value  of  the  interest  of  Sanger  in  the  property. 
There  is  nothing  which  in  any  manner  tends  to  impeach  the  bona 
fides  of  the  sale.  It  is  claimed,  however,  that  the  redemption  was 
void,  on  the  ground  that  the  judgment  under  which  it  was  made 
had  been  paid  by  Stewart,  the  judgment  debtor,  before  the  redemp- 
tion, and  was  not  at  the  time  a  lien  upon  the  land.^ 

'  The  discussion  of  tliis  point  is  omitted.  The  learned  judge  reaches  tlie 
conclusion  that  no  light  of  redemption  remains  in  Stewart  or  his  grantees. 


«K<'.  ^'■]  ti:n  KVtK  r.  (  kakj.  r)!i:> 

The  next  and  ])riiK'ii)al  question  to  bo  consicU'rcd  is,wlietlH'r  C'rai^'. 
at  tlu'  tinu'  of  the  sale,  occuj>i('d  siu-h  a  relation  to  the  property, 
or  to  Stewart  or  Sanger,  that  he  was  disahlt-d  from  pureliasing  f<ir 
his  own  henelit,  and  clainiin^'  thi'  title  adversely  to  them.  If  hi- 
occupied  that  rehition,  he  cannot  set  up  any  right  acquired  as  pur- 
chaser on  the  sherifT's  sale  in  bar  of  their  ri;,'ht  to  redeem.  I'ur- 
chases  by  trustees,  or  ])ersons  occupyinj,^  liduciary  positions,  in  con- 
travention of  their  trust  or  duty,  arc  hekl  in  e<iuity  to  be  made  for 
the  benefit  of  the  cestui  qitr  (nisi,  at  his  election.  Xo  irredeemable 
title  can  be  acquired  upon  such  a  purchase.  And  if  the  purchase  by 
Craig  was  within  the  ])rin(ii)le  which  prohibits  a  purchase  by  a 
trustee,  it  is  an  iininaterial  circumstance  that  the  time  within 
which  a  statutory  redemption  might  have  been  made  has  expired. 
The  right  of  redemption  exists  in  favor  of  the  ccsfui  que  trust  and 
those  in  privity  with  him,  independently  of  the  statute,  upon  gen- 
eral principles  of  (>([uity,  and  may  be  enforced  at  any  time  witiiir» 
the  ])eriod  allowed  by  the  statute  of  limitations,  or  the  rule  of  courts 
of  equity  regulating  the  jurisdiction. 

The  rule  which  prohibits  a  trustee  from  purchasing  the  property 
of  a  cestui  que  trust  stands  upon  the  proposition  stated  by  the  chan- 
cellor in  WlticJicote  v.  Lawrence,  3  Ves.  740;  that  one  who  under- 
takes to  act  for  another  in  any  matter  shall  not  in  the  same  jnatt  r 
act  for  him.<elf.  It  applies  in  all  cases  where  the  duty  which  the 
trustee  has  to  perform  in  resju'it  to  the  property  is  inconsistent 
with  his  becoming  a  purchaser  for  his  own  use.  And  the  purcha-e 
will  not  be  allowed  to  stand,  although  the  court  may  not  be  a))le 
to  discover  any  wrong  intention  on  the  part  of  the  trustee,  or  that 
he  has  gained  any  advantage  in  the  transaction.  The  rule  is  inflex- 
ible, that  he  shall  not  place  himself  in  a  |)osition  where  his  interest 
is  or  may  be  in  conflict  with  his  duty.  The  reason  of  the  rule,  as  rv- 
marked  by  Kent,  J.,  in  Bergen  v.  liennrll,  1  Cai.  Cas.  19,  i<  to  bar 
the  more  effectually  every  avenue  to  fraud.  Such  a  punha.^e. 
though  it  may  not  originate  in  any  ])urj)ose  to  defrajul,  is  a  con- 
structive fraud,  because  the  natural  tendency  is  mischievou<  and 
harmful.  The  rule  is  founded  in  the  highest  wisdom.  It  recog- 
nizes the  infirmity  of  human  nature,  and  interposes  a  barrier 
against  the  operation  of  sellishmss  and  gn»ed.  It  discourager  frauil 
by  taking  away  motive  for  its  ju'rpetralion.  It  tends  to  insure  fidel- 
ity on  the  jiart  of  the  trustee,  and  o|)erates  as  a  ))roteetion  to  a  large 
class  of  persons  whose  (>states,  by  reason  of  infancy,  infirmity,  or 
other  cau.ses,  are  intr\isted  to  the  jnanagemont  of  others.  The  rule 
is  not  limited  in  its  application  fo  those  who  are  trustees  stri<'tly. 
holding  the  legal  title  to  the  thing  purchased.  {Van  Epps  v.  Vnu 
Epps.  0  I'aige.  ?r?7.)      It   applies  to  agents  and  j>crsons  stan<ling 


591  EQUITY    RELATIONS.  [CIIAP.  II. 

ill  relations  of  trust  and  confidence  to  others,  which  involve  duties 
inconsistent  with  their  dealing  with  the  property  as  their  own.  The 
books  are  full  of  cases  illustrating  its  application,  and  it  will  be 
sufficient  to  refer  to  a  few  of  them.  {Fox  v.  Mackreth;  2  Bro.  C. 
C.  400;  Oliver  v.  Court,  8  Price,  127;  Van  Home  v.  Fonda,  5  J.  Ch. 
388 ;  Van  Epps  v.  Van  Epps,  supra;  Moore  v.  Moore,  5  N.  Y.  256 ; 
Gardner  v.  Ogden,  22  id.  327 ;  Michoud  v.  Girod,  4  How.  [U.  S.J 
506.) 

It  is  claimed  that  Craig  was  disabled  from  purchasing  the  Con- 
gress Hall  property  at  the  sheriff's  sale,  and  holding  it  adversely  to 
Stewart  and  Sanger,  under  the  rule  just  adverted  to.  There  are 
two  grounds  upon  which  this  claim  is  based :  First,  that  Craig  at 
the  time  was  mortgagee  in  possession;  and,  second,  that  the  rela- 
tion of  trustee  and  cestui  que  trust,  in  respect  to  the  property,  was 
created  between  Craig  and  Stewart  by  the  instrument  of  April  2-i, 
1860,  which  precluded  him  from  purchasing  for  himself,  or  other- 
wise than  as  a  trustee  for  Stewart,  or  his  grantee.  Assuming  that 
the  learned  counsel  for  the  plaintiff  is  correct  in  the  position  that 
Craig,  at  the  time  of  the  sheriff's  sale,  stood,  in  relation  to  the 
premises,  in  the  character  of  mortgagee  in  possession,  the  question 
arises,  whether  a  mortgagee  in  possession  can  buy  the  mortgagor's 
title  on  an  execution  sale,  upon  a  judgment  in  favor  of  a  third  per- 
son against  the  mortgagor,  and  set  up  a  title  under  the  sale,  as  a 
defence  to  an  action  by  the  mortgagor  to  redeem.  Another  mode 
of  stating  the  question  is:  Is  a  mortgage  in  possession  a  trustee 
for  the  mortgagor,  so  that  he  will  not  be  allowed  to  buy  in  the 
equity  of  redemption  on  a  sale  upon  an  independent  lien  held  by  a 
third  person  ? 

Unless  the  mortgagee  in  possession  is  a  trustee  for  the  mortgagor, 
there  is  no  ground  upon  which  he  can  be  precluded  from  purchas- 
ing. It  is  clear  that  no  trust  relation  between  the  mortgagor  and 
mortgagee  is  created  by  the  execution  of  the  mortgage,  unac- 
companied by  possession.  The  mortgage  under  our  law  is  a 
security  merely.  The  mortgagee  has,  by  virtue  of  his  mort- 
gage, no  estate  in  or  title  to  the  land,  or  the  right  of  possession, 
before  or  after  the  mortgage  debt  becomes  due.  He  owes  the  mort- 
gagor no  duty  to  protect  the  equity  of  redemption.  The  power  of 
sale  which  usually  accompanies  a  mortgage  is  given  to  enable  him, 
by  an  adverse  proceeding,  to  sell  the  equity  of  redemption  for  the 
payment  of  the  mortgage  debt.  The  objection  that  he  could  not 
become  the  purchaser  at  his  own  sale  under  the  power  has  been 
removed  by  the  statute  when  the  foreclosure  is  by  advertisement 
(2  li.  S.  546,  §  7)  ;  and  a  provision  is  inserted  in  every  decree  for 
the   <ale    of    mortgaged    premises,   unless    otherwise    specially   or- 


><^:*'  \|  Ti;\  i;v(  K   /•.  cu.vKi.  .'»9r) 

(Icrt'tl.  that  the  plaintilT  may  hocoino  tlu'  purdiasor.  (IJulf  7:5.) 
Ami  he  may  Imy  in  any  outstanding'  title  and  hold  it  a<;ainst  tlj<' 
iMoit,<,M;;or  {('unti'ron  v.  I  ruin,  .')  1 1  ill,  "^SO;  Williums  v.  Totrnsrnil, 
.\\  N.  V.  -ll,");  .^V<(/«-  V.  //»/»«//.  i;{  Wi'ck.  K.  TA  ;  s.  <  ..  •.'  I)r  C,  .J. 
\-  S.  4(18.) 

TluTi'  is,  in  truth,  no  relation  anahi^on-  hi  ih;ii  oi  tru-i«c  and 
ci'siui  (jnr  I  rust  hctwcon  the  niort^Mj;or  and  mortjra;;*'!'  created  l)y 
the  execution  of  the  mort<,'a<^'e.  The  mortga^^ec  is  not  a  trustee  of 
the  le<,'al  title,  hecause,  under  our  law,  he  luis  no  title  whatever. 
{ l\(trlrif/lil  V.  i'lulij,  'i\  X.  Y.  .'M'?,  and  cases  cited.)  lie  may  deal 
with  the  niort^'a^'or,  in  respect  to  the  mort;ra<;e(l  estate,  upon  the 
same  footing;  as  any  other  person;  he  may  huy  in  incundirances  for 
less  than  their  face,  and  liold  them  aj^ainst  the  mort^M;zor  for  the 
full  amount  ;  he  may  do  what  any  other  person  may  do,  and  his  acts 
are  not  suhject  to  impeachment,  simjily  hecause  he  is  mortgagee. 
(  Parcif  V.  II (ill.  1  \'ern.  4S;  k'ni(/kl  v.  Mdrjorilmiilrs,  'i  Mac  X.  »!v:  (J. 
10 ;  Chambers  v.  Waters,  3  Sim.  4:.' ;  3  Sug.  on  V.  and  P.  n"!.) 

Xor  is  the  mortgagee  converted  into  a  trustee  hy  taking  posses- 
sion as  mortgagee  of  the  mortgaged  |)rojt(rty,  so  as,  \n  general,  to 
]>revent  his  purchasing  an  outstanding  title,  or  under  another  lien. 
Tnder  the  English  law  he  has  the  right  to  the  possession,  hecause  he 
has  the  legal  title  to  the  land.  Under  our  law  he  cannot  ohtain 
possession  until  foreclosure,  c.vcejjt  by  the  consent  of  the  mortgagor, 
hecause  until  that  time  he  has  no  title.  .\  mortgagee  is  often  called 
a  trustee,  and  in  a  very  limited  sense  this  character  may  be  attrib- 
\ited  to  him.  There  may  be  a  duty  resting  upon  a  mortgagee  in 
jiossession  to  discharge  a  particular  claim  against  the  land.  If  in 
such  a  case  he  omits  to  do  it,  and  allows  the  land  to  be  sold  on  such 
,-i  claim,  and  becomes  the  |iurchaser,  he  would  hold  the  title  in  trust 
for  the  mortgagor.  .\  mortgagee  in  jjossession  is  allowed,  ami  it 
may  be  his  duty  to  pay  ta.xes  on  the  land  out  of  the  rents  and  jirotits. 
If  he  sulfers  the  land  to  be  sold  for  ta.xes  in  violation  of  his  duty, 
and  purchases  on  the  sale,  he  would   n\Mn\  general   i)rinciples  ho 

♦  leemed  to  hold  the  title  as  trustee.  So,  if  a  mortgagee  is  allowed 
to  take  possession  and  undertakis  to  pay  the  inten-st  on  other  liens 
out  of  the  rents  and  jirotits  and  fails  to  do  so.  he  could  not  purchase 
the  land  for  his  own  iH'nefil  in  hostility  to  the  mortgagor  on  a  fon' 

♦  losure  of  an  incumbrance  for  non-payment  of  interest  which  In* 
was  bound  to  pav.  .\  mortgagee  in  possession  is  bound  to  account 
for  till'  rents  and  |)rolits;  and  in  that  respect,  as  was  said  by  Shaw, 
('.  .1..  in  Kin;/  v.  Insurance  Co..  7  ("ush.  7.  ln>  may  Ik*  denominattHl  a 
trustit'.  Biit.  exccjit  in  some  special  sen.se,  that  is  not  the  relation  he 
bears  to  the  mortgagor.  The  relation  of  mortgagor  and  mortgagtH> 
is  explained  in  the  admirable  judgment  of  Sir  Thomas  Plumer.  in 


596  EQUITY    KELATIONS.  [ciIAr.  II. 

the   leading   case   of   Cholmondelcy   v.    Lord   Clinton,    2   Jac.    & 
Walk.  183.     He  says :  "It  is  only  in  a  secondary  point  of  view  and 
nnder  certain  circumstances,  and  for  a  particular  purpose  that  the 
character  of  a  trustee  constructively  belongs  to  a  mortgagee.     No 
trust  is  expressed  in  the  contract ;  i    is  only  raised  by  implication  in 
subordination  to  the  main  purpose  of  it,  and  after  that  is  fully  satis- 
fied its  primary  character  is  not  fiduciary."     And  again:    "The 
mortgagee  when  he  takes  possession  is  not  acting  as  a  trustee,  but 
independently  and  adversely  for  his  own  benefit."     A  mortgagee 
in  possession  may  purchase  from  a  prior  mortgagee  and  get  an  irre- 
deemable title.      {Kirk wood  v.  Thompson,  2  De  G.,  J.  &  S.,  613, 
and  cases  cited;  Parlcinson  v.  Ilanbury,  2  D.  &  S.  143;  s.  c,  -^ 
De  G.  &  S.  450;  see  also,  Shaiv  v.  Bunny,  supra;  Knight  v.  Marjoi- 
hanks,  supra.)     Lord  Cranworth,  in  Kirhwood  v.  Thompson,  refe. 
ring  to  the  fact  that  the  mortgagee  at  the  time  of  the  purchase  wa 
in  possession,  says :  "That  makes  no  difference ;  being  in  possess:' 
could  only  make  a  difference  if  it  created  an  obligation  bet    ;   ' 
the  mortgagee  and  mortgagor,  which  would  not  have  existed  ii 
had  not  been  in  possession.     Xothing  of  this  sort  is  suggested; 
duty  arises  on  being  in  possession  except  to  account  in  a  way  one' 
to  the  mortgagee." 

A  mortgagee  in  possession  is  sometimes  spoken  of  as  a  tena 
as  having  the  legal  rights  of  a  tenant.   (3  Wash.  150.)     The  a        , 
is  not  very  close  between  the  two  relation  ;  but  it  is  difficn- 
any  reason  for  denying  the  right  of  a  mortgagee  to  pure'  '■ 

hold  adversely  to  the  mortgagor  in  a  case  when  a  tenant  i 
sion  would  be  allowed  to  purchase  and  hold  against  the-         '^ 
and  yet  a  tenant  may  purchase  the  demised  premises  on  .. 

execution  against  the  landlord,  and  when  his  title  is  perf        "'^ 
set  it  up  in  bar  of  a  recovery  for  rent  thereafter  accn 
lease.     {Nellis  \.  Lathrop,  22  \Yci^d.  121.)  ,  ^^®  .^ 

The  first  ground  stated  upon  which  it  is  claimed  tha,  ^..x.       ^    ' 
disabled  from  purchasing  on  the  sheriff's  sale,  viz.,  tha/^^,.^-was  c. 
mortgagee  in  possession,  cannot,  I  think,  be  support.>df;  ahd  it  re- 
mains to  consider  whether  such  disability  existed  b}  x  :.ocn  of  th(^ 
agreement  of  April  24,  1860.     The  purpose  of  that   ■'^-       neut  wa-; 
to  secure  Craig  for  becoming  surety  for  Stewart  on  '" 
on  the  appeal  from  the  Dehon  judgment.     This  j  mttso- 

in  the  instrument.  The  object  was'the  protectior  ^  ...^,  and  if 
any  trust  in  favor  of  Stewart  resulted  from  the  visions  of  the 
instrument  it  was  incidental  and  collateral  to  its        mary  intent.^ 

I  am  unable  to  discover  any  duty  arising  out  o      'le  contract  of 
April  24,  1860,  or  the  circumstances  resting  upon      -aig  which  de- 

'Tliis  part  of  tho  opinion  is  omitted. 


■'■'^^'-  ^1  Ti:\  KYCK   r.  (KArc.  507 

barn.l  him  fnnii  purchasing,  on  his  own  account,  on  tlio  execution 
!:;ilt'.     He  was,  in  sonic  sense,  a  trustee  of  the  rents  received  under 
the  arrangement,  and  was  hound  to  dispose  of  them  as  required  hy 
the  agreement,  and  this  was  the  extent  of  his  duty.     H<>  was  not 
bound  to  protect   Stewart  aga'  ,.-t  the  loss  of  the  rents  through  a 
t^ale  of  the  hind  on  the  hank  judgment.     If  a  mortgagee  in  pos- 
session may  purchase  for  him.'^elf  on  a  foreclosure  of  another  mort- 
gage, or  buy  in  an  outstanding  tith*,  then  a  fortiori  couhl  a  person 
in  the  position  of  Craig.     The  mortgagee  under  the  English  law  has 
the  entire  legal  title,  and  so  far  as  he  is  regarded  as  trustee,  the 
trust  is  the  whole  interest  of  the  mortgagor.     Craig  at  most  was  a 
trustee  of  the  rents  for  a  term  oidy.     He  had  hy  the  agreement  no 
.terest  as  trustee  or  otiu'rwise  in  the  fee  wiiieh  he  purchased  on  the 
^ixocution  sale. 
,  The  conclusion  which  I  have  reached  is  adverse  to  the  existence 
her  in  Stewart  or  Sanger  of  a  right  to  redeem,  and  it  becomes 
'rn'cessary  to  consider  whether,  assuming  such  right  to  exist,  the 

utifT,  as  grantee  of  ;Mrs.   Sanger,  succeeded   to  it.     The  rule 
!ch  avoids  purchases  made  in  violation  of  his  duty  {,t  the  election 

he  rrsiiii  tjuc  trust  is  a  valuable  one  and  ought  not  to  be  im- 
d  l)y  engrafting  upon  it  exci>ptions,  or  indulging  in  subtle  re- 
i\  nts  and  distinctions  to  withdraw  a  particular  case  out  of  its 
tr/  ce.  But  after  cnreful  consideration,  I  am  unal)le  to  perceive 
tax-"  ^  facts  of  this  case  bring  it  within  the  rule,  and  am  therefore 
tain  )n  that  the  order  should  be  airirmed,  and  judgment  abso- 
gag^«^'>  n  for  defendants,  pursuant  to  stipulation,  with  costs. 
of  tl.  cur,  except  Church,  Ch.  .1..  not  voting.  F(»lger,  J.,  not 
of  h '■"'•> 

'  or'ti'i  Order  a/finnci],  inul  itulamcnt  arroriliiuili/.^ 

550:t('  ^  ■ 

the  d  fronoially  aro  nrcnnl.     But  «oo  Ifarrifton  v.  Robrrtfi,  (»  Fin.  711 

to    ,1!  tlKill's  h'xrs.  V.  h'ins,  M  Ala.  !)2   (IS'jiU.  and  h'ohnts  v.  FItm- 

fl,,'    •'  ^".  ^5"'   (1><70),  srmblv,  limiting;  tlio  doctriiu'  <if  tin-  priiicipiil  i-u-c 
»  a  sale    -i-Vr  u  Jiidgiiiont  of  u  tliird  poison  liavin;,'  a   lit-n  |»arainount  to 
tliat  of  tiie  n/ortgagp.    Compare  dri/fin  v.  Mariiu:  Co.,  :>1  ill.  VM)   y  18t>;>). 

•t 


598  "  EQUITY    RELATIONS.  [CIIAP.  II. 

HALL  V.  WESTCOTT. 

Supreme  Coukt  of  Kiiode  Island,  1886. 

(15  R.  I.  373.) 

Bill  in  equity  to  redeem  a  mortgage  and  for  an  account. 

Durfee,  C.  J.  The  bill  states  that  on  October  23,  1873,  Walter 
J.  Reynolds,  being  the  owner  of  a  lot  in  Providence,  mortgaged  it 
for  $800  to  Stephen  H.  Williams ;  that  subsequently  the  lot  passed 
by  mesne  conveyances  to  Charles  W.  Adams,  who,  December  30,. 
1874,  gave  two  mortgages  thereon  to  Hiram  C.  Pierce,  to  wit,  one 
for  $3250,  and  one  for  $500,  subject  to  the  mortgage  for  $3250 ;. 
that  the  mortgage  for  $3250,  though  taken  solely  in  Pierce's  name,, 
belonged  equally  to  him  and  the  complainant  Harriet  Hall;  that 
Pierce  assigned  the  mortgage  for  $3250  to  the  defendant  Charles 
A.  Westcott,  who  thereupon,  January  23,  1875,  gave  the  complain- 
ant Harriet  Hall  a  writing  in  which  he  declared  that  he  held  said 
mortgage  as  to  one-half  in  trust  for  her;  that  said  Pierce  sub- 
sequently assigned  said  mortgage  for  $500,  and  his  interest  in  said 
mortgage  for  $3250  to  said  Harriet,  and  that  said  mortgage 
for  $500  contained  a  power  of  sale  under  which,  in  January. 
1882,  said  Harriet  duly  sold  the  estate,  buying  it  hersei' 
under  notice  as  authorized  by  statute.  The  bill  alleges  that  tie 
defendant  is  in  possession,  and  contains  other  allegations.  It  asks 
for  an  account  and  for  leave  to  redeem.  The  defendant  sets  up. 
several  defences.^ 

The  third  defence  is  that  the  mortgaged  lot  was  sold  for  the  non- 
payment of  taxes,  and  bought  by  and  conveyed  to  the  defeiiiant. 
This  raises  the  question  whether  a  mortgagee  or  his  assignee-,  arc  of 
possession,  can  become  a  purchaser  at  a  tax  sale  with  the  same  efect, 
as  against  the  mortgagor  and  other  mortgagees,  as  if  he  w^re  a 
stranger  to  the  estate.  There  is  some  conflict  of  authority  on  this 
point.  All  the  cases  agree  that  there  are  persons  who  stand  in  sidi 
relations  to  tlie  estate  that  they  cannot  purchase  as  if  they  were 
strangers.  Xo  person  whose  duty  it  is  to  pay  the  tax  can  be  per- 
mitted to  purchase  at  a  sale  for  its  non-payment,  and  acquire  a  good 
title  as  against  others  who  are  interested  in  the  estate,  since  to  per- 
mit him  to  do  so  would  be  to  permit  him  to  profit  by  his  own 
default.  Under  this  rule  mortgagors,  mortgagees  in  possession,  life 
tenants,  and  tenants  obligated  by  contract  to  pay  the  taxes,  are 
incapacitated  to  become  purchasers.  The  incapacity  has  likewise 
been  hold  to  extend  to  tenants  in  common,  for,  if  the  estate  is  sold 
for  taxes  to  one  of  the  tenants,  it  is  sold  for  his  default  as  well  as- 

^Tho  consideration  of  the  first  and  second  defenses  is  omitted. 


KK<'-  v.]  II  vi.i,  1.   \vi;sr('(»Tr.  AMI) 

for  (he  (1. ■fault  of  his  po-tonrtnts.  (l'<i</r  v.  ]Vrh.<lrr.  S  Mich.  203; 
y;w//('/-  V.  y\>//(r.  i;}  Midi.  t.'!l*^;  (%,oh',/  v.  ir«/r;-/»f/«,  Ki  Mich.  'MU\ ; 
Cook'}'  (HI  Tii.vation,  iMil,  ;M7.)  So  a  jmtsoii  who  occupit-.s  a  fnhi- 
ciary  rehition  as  regards  the  I'statc,  cannot  purchase  it  for  himself. 
The  tnist  in  tlie  one  half  of  the  inortga<^e  for  .^iJ^oO  is  protected 
un(h'r  this  rule.  .\iid  there  are  easts  wliich  enounce,  or  at  lea.st 
j)resuppose,  a  still  hroader  doctrine,  which  may  he  stated  thus, 
namely:  that  a  purchaser  who  has  an  interest  in  the  estate,  such  as 
would  entitle  him  to  redeem  it  if  sold  to  another,  will  he  presumed 
to  have  purchased  it  for  the  j)rotection  of  that  interest,  or  to  save  it 
from  sacrifice,  and  will  he  required  to  hold  it,  even  after  tile  statu- 
tory period  for  redemption  has  cxpircfl,  simply  as  security  for  liis 
reimhursement.  We  find  this  doctrine  nowhere  more  clearly  as- 
serted than  in  Fair  v.  liroini.  in  Iowa,  209.  The  defendant  there 
was  interested  in  the  estate  hy  jud<jment  lien  and  as  a  second  mort- 
gagee, lie  hought  certilicati's  of  sale  for  taxes,  and  suhsequently 
took  the  tax  dee<l.  The  court  held  that  the  prior  mortgage  was  not 
defeated.  "The  land,"  says  the  court,  "is  a  common  fund  for  the 
payment  of  tlu"  plaintiff's,"  i.  e.  the  prior  mortgagee's,  "mortgage 
and  the  defendant's  liens.  Defendant  was  authorized  to  redeem 
from  the  ta.x  sale.  Ivpiity  will  not  jiermit  him  to  actiuire  the  title 
for  an  inconsiderahle  sum  when  he  was  authorized  to  n'lnove  the 
trifling  incumhranee  hy  redemption.  Though  not  hound  to  pay  the 
tax,  yet  it  was  his  right  to  do  so  to  protect  his  liens.  He  cannot  ol)- 
tain  that  |)rotection  hy  ])ursuing  a  course  that  will  deprive  the  mort- 
gagee of  his  security,  and  leave  the  mortgagor  to  sustain  the  weight 
of  the  liens,  which  are  personal  jutlgments,  afti-r  hcing  de|)rived 
of  his  property  hy  tax  title.  ((iurrrHson  v.  ScofichJ,  44  Iowa,  .S.") ; 
Porter  v.  Lafjeriii.  3.'i  Iowa,  2")4  ;  Sfcars  v.  Ilollvtihcrk,  3S  Iowa, 
550.)"  In  Miildh'toini  Sdriiu/s  Hunk  v.  Hdclinnuh .  A(S  Conn.  571, 
the  defendant,  having  had  an  undivided  eighth  of  an  estate  suhject 
to  a  mortgage  set  out  to  him  under  an  execution,  j)urciiased 
the  estate  at  a  sale  for  taxes  assessed  hefore  he  hecame  in- 
terested in  it,  and  the  court  held  that  lie  could  not  set  up  the  tax 
title  to  defeat  the  mortgage,  he  heing  entitled  to  redi'cm  the  mort- 
gage, which  yet  he  c-ould  not  do,  if  the  mortgagee  had  paid  the 
ta.xes,  without  reimhursing  him.  The  court  al.^o  said  that  the 
mortgagee  was  similarly  incapacitat<'d,  hecause  he  could  |)ay  the 
tax  and  add  the  amount  of  it  to  the  mortgage  deht.  In  Cininfrtirnt 
Mut.  Life.  /».s-.  (\).  V.  liiiltr,  45  Mich.  113,  the  court  lays  down  the 
doctrine  that  where  a  mortgagee,  or  one  of  two  or  mori'  mortgagei'». 
piircha.<es  the  estate  at  a  tax  sale,  the  purchase  may  he  treated  a* 
payment.  "It  is  as  just  and  as  politic  here."  says  the  court,  "as  it 
is  in  the  case  of  tenants  in  common,  to  hold  that  the  purchase  i< 


(JOO  EQUITY    RELATIONS.  [clIAr.  II. 

a  payment  of  the  tax."  In  the  later  case  of  Maxfleld  v.  Wllley,,  46 
Mich.  252,  the  court  aflfirms  the  doctrine.  "'When  the  mortgagee," 
says  the  court,  "instead  of  making  payment  of  the  taxes,  makes  a 
purchase  of  the  land  at  tax  sale,  we  have  no  douht  of  the  right  of 
the  mortgagor  to  have  the  purchase  treated  as  a  payment,  and  to 
•compel  the  cancelmcnt  of  the  certificate  or  deed  on  refunding  the 
<imount  paid  with  interest."  The  opinions  in  these  cases  were  de- 
livered hy  Judge  Cooley,  who,  in  the  preparation  of  his  book  on 
Taxation,  had  occasion  to  make  the  subject  a  special  study. 

The  most  recent  case  which  we  have  met  with  is  Woodbury  v. 
^^wan,  59  N".  H.  22,  in  which  the  Supreme  Court  of  New  Hamp- 
shire decided  that  the  holder  of  a  mortgage  cannot  defeat  a  prior 
mortgage  by  acquiring  a  tax  title.  The  court  rest  their  decision 
on  the  following  reasons,  as  declared  by  Bingham,  J.,  in  delivering 
the  opinion  of  the  court :  "IMortgagor  and  mortgagee  have  a  unity 
of  legal  interest  in  the  protection  of  their  titles  against  sale  for  the 
non-payment  of  taxes,  and  against  outstanding  tax  titles;  and  it  is 
not  equitable  that  either  of  them  should  act  adversely  to  the  other 
in  the  acquisition  and  use  of  such  titles.  Therefore  the  mortgage 
contract  comprises  an  implied  agreement  that,  while  either  party 
may  buy  a  tax  title  for  the  preservation  of  his  right  in  the  mort- 
gaged property,  neither  of  them  will  buy  a  tax  title  for  the  ex- 
tinguishment of  the  title,  in  the  maintenance  of  which  they,  as  well 
as  partners  and  tenants  in  common,  are  in  law  jointly  concerned. 
The  common  interest  of  these  parties  in  the  mortgaged  property 
creates  a  relation  of  trust  and  confidence." 

Other  cases  may  be  cited  which  support  the  same  view,  though  not 
always  for  the  same  reasons.  (Moore  v.  Titman,  -ii  111.  357 ;  Ilarl-- 
rrader  v.  Clayton,  Sfi  Miss.  383;  Hasl-eU  v.  Putnam,  42  Me.  244; 
Bassett  v.  Welch,  22  Wise.  175;  Whitney  v.  Gunderson,  31  Wise. 
359,  379;  Chickering  v.  Failes,  2G  111.  507;  McLaughlin  v.  Green, 
48  Miss.  175.)  In  California  it  is  held  that  a  person  who  is  under 
any  obligation,  either  moral  or  legcd,  to  pay  the  taxes,  cannot  be- 
come a  purchaser.  {Moss  v.  Shear,  25  Cal.  38;  Christy  v.  Fisher, 
58  Cal.  256.) 

Other  cases  adopt  a  narrower  view,  and  maintain  that  any  per- 
son can  become  a  purchaser  who  is  not  under  any  legal  duty  to 
pay  the  taxes.  {Williams  v.  Townsend,  31  N.  Y.  411:  Waterson 
V.  Devoe,  18  Kans.  223;  Bettison  v.  Budd,  17  Ark.  546;  Ferguson 
V.  Etter,  21  Ark.  160.) 

Our  conclusion  is  that  a  mortgagee,  eitlier  in  possession  or  out 
of  possession,  is  not  entitled  to  purchase  the  estate  at  a  tax  sale,  and 
set  up  the  tax  title  as  against  the  mortgagor  or  the  other  mortgagees. 
They  all  have  a  common  interest  in  the  preservation  of  the  estate. 


i 


^^■^-  ^1  II  M.I.    /•.    WKSTCOTT.  (iOl 

iiiitl  tlnrcroiT.  if  i-itlici-  i,\'  ilimi  |iiir(li;iM's  tlic  olatc  iit  ;i  ta\  sale, 
it  should  lie  |»rc>uiiic(I  in  fiivor  of  the  ollirrs  that  In-  made  thr  [»iir- 
«lin.>it'  for  the  toiiiiuoii  protection.' 

Wo  think   a  ca-c   is  shown   which  entitles   the  coniplainants  to 
relief. 

'Srihiirk  V.  h'rlli)/.  ss  In.l.  1 1 J  (1882),  accord.     Compare  Vedley  v.  rili- 
ott,  02  III.  O.V1  (1872). 


CHAPTER   III. 
EXTENSIOIST  OF  MORTGAGE. 

VANHOUTEX  v.  McCARTY. 

Court  of  Chancery  of  New  Jersey^  1843. 

(4  N.  J.  Eq.  141.) 

The  Chancellor  JPenningtonJ^  In  183G,  during  the  rage 
for  speculation  in  real  estate,  the  complainant  sold  his  farm,  in  the 
neighborhood  of  Paterson,  to  the  defendant,  Jolin  McCarty,  for 
thirteen  thousand  dollars ;  the  conveyance  was  made  on  the  twenty- 
seventh  of  April,  1836,  and,  to  secure  so  much  of  the  considera- 
tion money,  the  defendant  executed  to  the  complainant  a  bond  and 
mortgage,  in  the  same  day,  for  ten  thousand  eight  hundred  and 
twenty-two  dollars  and  fifty  cents,  on  the  premises,  payable  in  the 
following  manner:  one  thousand  dollars  on  the  twenty-ninth  of 
September,  then  next;  two  thousand  dollars  on  the  first  of  May, 
1837,  and  the  residue  on  the  first  of  May,  1838,  with  interest  from 
the  first  of  May  next  after  the  date  of  the  bond,  payable  on  the  first 
days  of  November  and  ]\Iay  in  each  year. 

On  the  same  day  that  McCarty  got  his  deed,  he  conveyed  the 
property  to  Kirk,  Johnston  and  Copland,  and  they,  under  an  agree- 
ment made  by  McCarty  with  Edward  N.  Rogers  and  John  A.  Stim- 
ler  for  a  large  advance,  conveyed  the  property  to  them,  by  deed 
dated  the  twenty-fourth  of  September,  1836.  Since  the  last  deed, 
Edward  N.  Rogers  and  John  A.  Stimler  have  conveyed  to  Archi- 
bald G.  Rogers,  who  has  also  conveyed  to  Nehemiah  Rogers,  in 
AAdiom  the  equity  of  redemption  now  resides. 

The  bill  is  tiled  for  the  foreclosure  and  sale  of  these  premises, 
under  the  mortgage  made  by  ^McCarty  to  the  complainant. 

A  decree  pro  confesso  was  taken  against  McCarty  and  wife,  Ed- 
ward N.  Rogers  and  Stimler.  Archibald  Rogers  and  Nehemiali 
Rogers  have  filed  separate  answers,  upon  which  the  cause  has  been 
put  at  issue,  and  depositions  taken. 

The  first  ground  of  defence  set  up  is  that  the  transaction  is 
usuriou.s,  and  the  bond  and  mortgage  therefore  void.^ 

^  The  opinion  only  is  given. 

-  The  discussion  of  this  point  is  omitted.  The  learned  Chancellor  reachea 
the  conclusion  that  the  evidence  fails  to  establish  a  case  of  usury. 


*'"-^''-    '"•]  VAN    ll(tlTI.\    r.    Mci'AIlTY.  GUIj 

Tho  next  |iniiit  taken  arises  fr<Mii  tlic  olijcct  lln'  punlia.sers 
had  in  l)ii\  iiii:  tliis  in-ojK-rty.  'I'liey  inlcnded  (o  set  it  olF  in  buildiii;,' 
lots,  and  Kdward  X.  K'o^xers,  who  had  a^Ttvd  in  his  purchase  with 
MeCarty  f<>r  live  years  for  the  payment  of  the  money,  after  jjettin;^ 
his  deed,  harned  for  the  lirst  time,  from  the  eomphiinant,  tliat  the 
liond  and  mort,iia;,'e  were  payal)Ie  at  an  earlier  (lay;  lie  expressed 
his  surprise,  and  told  tin-  eomphiinant  that  he  should  look  to 
-MeC'arty  and  those  concerned  with  him  to  make  ;rood  their  a<jrce- 
ment ;  when  the  complainant  told  tho  witness  that  he  did  not  helieve 
there  would  he  any  dillieulty,  as  his  <rre;it  ohjeet  was  to  }H'[  his  inter- 
est ;  that  the  witness  thereupon  told  eom|)laiiiant  he  would  think 
over  the  suhject  and  make  him  a  proposition.  The  witness  then 
says,  that  the  same  afternoon  he  called  on  the  complainant,  and  told 
him  he  would  make  this  a^'reement  with  him — that  if  he  would 
extend  the  time  of  payment  of  the  hond  live  years  from  the  twentv- 
seventh  of  April  ensuin«,'  its  date,  making'  six  years  in  all,  and  re- 
lease the  lots  that  deponent  and  Stimler  should  sell  from  the  lien 
of  the  mort<ra{ie  (provided  such  release  did  not  exceed  one-fourth  of 
the  property)  on  his  hein*;  paid  for  tin-  ])ropi'rty  thus  released,  or 
having  the  hoiids  and  morli^^i^^es  i^'iven  for  their  purchase  money 
assi<,'ned  to  him,  that  comj)lainant  mi^ht  retain  the  jmssession  of  the 
residue  of  the  farm  free  of  rent,  and  that  no  claim  would  he  made 
for  rent  for  the  time  he  had  already  oecu|)ieil  it.  This  proposition, 
ho  says,  was  ai^reed  to  hy  the  com]>lainant. 

'i'he  evidence  then  proceeds  to  show  that  the  complainant  is 
jiuilty  of  a  hreach  of  this  agreement;  and  it  is  insistecl  hy  the 
answer  that  the  defendant,  Xehemiah  IJogers,  is  entitle<l,  hefore 
the  comjilainant  can  have  liis  decree  in  this  eau.se,  to  a  specilic  per- 
formance of  the  complainant's  a<;reement  to  release  lots  as  they 
should  be  sold  on  the  premises,  or  to  have  his  danui;;es  for  such 
hreach  of  his  a^invment  set  off  against  the  amount  of  the  hond  and 
mortgage. 

This  is  taking  a  widi'  range,  and  involving  in  a  case  of  foreclosure 
of  a  mortgage  a  great  variety  of  matters  and  endless  litigation.  If 
this  defence  should  l)e  sustained,  I  see  no  limit  on  a  hill  of  fore- 
closure to  settling  hefore  decree  every  agr(>ement  and  controversy 
nsjiecting  ihe  land  hetween  tiie  complainant  and  all  the  inter- 
mediate owners  down  to  ami  including  the  pn'>ent,  and  tliat. 
too,  whi'tluT  the  mortgage  has  any  connection  with  them  or  not. 
This  agn^Mnent  is  not  made  with  the  mortgagor,  hut  with  Kdward 
X.  l?ogers.  an  internu-diate  owner,  and  is  deelan-d  to  have  heen  en- 
teretl  into  long  after  the  mortgage  was  made,  and  for  purposes 
connected  with  th(^  property  growing  out  of  the  manner  in  which 
sail's  wcri'  pro|)osed  to  l)e  !na«h'.     The  ilefenthint  must,  in  my  opin- 


(iU-t  EXTEXSION   OF    MORTGAGE.  [CHAP.  III. 

ion.  be  left  on  this  agreement  to  his  remedy  at  law.  The  complain- 
ant is  able  to  refund  in  damages,  as  it  is  stated,  for  any  amount  in 
which  he  may  be  Justly  chargeable,  and  there  is  no  safe  mode  in 
this  court  of  settling  questions  of  this  character;  it  is  properly  a 
ease  for  a  jury  to  asseoo  the  damages,  and  not  for  investigation 
before  this  court.  The  e^-jdence  would  lead  me  to  believe  that  the 
complainant  has  not  rega^-ded,  as  he  should  have  done,  the  position 
of  men  who  had  purchased  property  at  so  expensive  a  rate,  and 
who  had  no  way  of  remunerating  themselves  but  by  selling  off 
lots;  still,  I  do  not  see  how  the  defendant  can  avail  him'self  of 
such  a  defence  in  this  action.  C^an  this  court  decree  a  specific  per- 
formance against  the  complainant  of  his  agreement  in  this  action? 
There  is  no  precedent  for  such  a  course  of  practice,  and  to  attempt 
to  settle  the  damages  incident  to  a  breach  of  such  an  agreement 
would  be  equally  against  the  course  of  procedure.  I  am,  there- 
fore, of  opinion,  that  this  defence  cannot  avail  the  defendant  in 
this  action. 

The  last  objection  is,  that  the  time  of  payment  for  the  princi- 
pal was  extended  l)y  the  compl'ainant  for  five  years  from  the 
twenty-seventh  of  April,  1837,  and  the  bond  and  mortgage  will  of 
course  not  be  due  until  the  twenty-seventh  of  April,  1842.  This  is 
clearly  established,  from  the  evidence,  and  the  defendant  is  entitled 
to  this  time  before  payment  can  be  demanded.  Edward  N.  Rog- 
ers expressly  so  swears,  and  the  whole  evidence,  as  well  as  the  state- 
ment in  the  complainant's  bill,  go  to  show  such  an  understanding. 
It  is  well  settled,  that  the  time  for  payment  may  be  extended  by 
parol.  (Chitty  on  Contracts,  27,  in  note;  1  John.  Cases,  23;  3 
John.  528;  2  Wendell,  587;  14  John.  330;  1  Green,  165;  Saxton, 
280.)^ 

There  must,  therefore,  be  a  reference  to  a  master,  to  ascertain 
and  report  the  amount  due  the  complainant  for  interest  on  the 
]»ond  and  mortgage,  after  deducting  a  fair  compensation  for  the 
use  and  oe^iupation  of  the  farm;  and  also,  whether  a  part  of  the 
premises  can  be  sold  without  material  injury  to  the  rest.  The 
justice  of  this  case,  as  far  as  I  am  able  to  reach  it  in  this  suit,  as 
it  appears  to  me,  is  to  consider  the  time  of  payment  for  the  princi- 
pal of  the  bond  enlarged  to  the  twenty-seventh  of  April  next,  leav- 
ing the  interest  payable  half  yearly.  The  contract  made  for 
comjjlainant's  enjoying  the  possession  free  of  rent,  is  part  of  the 
one  for  releasing  a  portion  of  the  lands,  subsequently  made  with  Mr. 
Eogers,  and  must  be  settled  with  that. 

^Tompkins  v.  Tompkins,  21  N.  J.  Eq.  3.38  (1871), 


IIJAI'.    lU.J  VAN  S^CKl.I.  /■.  ()'|II;A1{X.  GOo 

\an  SVCKKI.  v.  olIKAKX. 

CouHT  OF  ('ii\.\(i:i;v  (»F  NiAv  .Ikiiskv.  \H'J2. 

(.■)(»  .V.  •/.  A'7.   1;;!) 

On  final  hearing  on  {)k'a(lings  and  jjiooI's. 

BiiiD,  V.  C.  Tlie  t'oinj)lainants  in  this  case  liled  their  bill  to 
foreclose  a  n\ortgage  which  was  lu  Id  hy  the  testator,  in  his  lifetime, 
on  lands  in  the  l)ill  descrihi-d.  The  hond  which  tiie  mortgage  was 
given  to  secure  had  been  due  for  many  years.  The  bill  was  filed  on 
the  25th  day  of  November,  18«)1.  In  the  month  of  March,  18!>1, 
the  then  owner  of  the  premises  entered  into  negotiatif)ns  with  Fat- 
rick  O'llearn,  one  of  the  defendants,  for  the  sale  to  him  of  the 
said  premises.  O'llearn  was  willing  to  purihase  the  premises, 
provided  the  testator,  who  was  then  living,  would  not  recpiire  tlu; 
j»aymcnt  of  the  mortgage,  which  he  then  held,  for  one  year  from  the 
1st  of  Aj)ril  then  next  ensuing.  Both  parties  to  the  said  negotia- 
tions requested  Mr.  WyckofT,  a  counselor  at  law  and  intimately 
acquainted  with  the  testator,  to  procure  the  consent  of  the  testator 
that  the  time  for  payment  of  liis  mortgage  should  be  extended  for 
one  year  from  the  1st  of  April,  18«)1.  lie  did  procure  such  con.^ent. 
Thereu|)i)n  the  negotiations  for  the  sale  and  purchase  of  the  prem- 
ises were  carried  through. 

There  being  no  doubt  as  to  the  amount  of  money  actually  due 
uj)on  the  bond  which  the  mortgage  was  given  to  secure,  the  only 
question  is  whether  the  complainants  had  a  right  to  commence 
their  suit  to  fonvlose  said  mortgage  before  the  expiration  of  the 
one  year  from  the  first  day  of  A])ril,  ISDl.  The  complainants  say 
that  the  obligation  being  in  writing  and  under  seal,  the  time  for 
the  performance  thereof  cannot  be  enlarged  by  a  parol  agreement. 
1  think  all  of  the  authorities,  in  this  State  at  least,  hold  the  time 
for  ])erforn>anee  of  every  such  contract  may  be  extended  by  parol. 
(BiCfClow  V.  RonimcU.  !•  ('.  K.  Or.  1  I  •") :  Tompk\n<  v.  Tompkins.  (*» 
('.  E.  Or.  338;  Mnn/oll  v.  Unilnii.  <;  ('.  K.  (Jr.  3S1  ;  <'o.r  v.  lininrlf. 
1  Or.  K;.");  Vniihoiiicn  v.  MrCarh/.  3  (Jr.  Oh.  Ill  ;  Slii/Wr  v.  Vnii- 
(hrhi'll,  1  Dutch.  -IS?;  Hell  v.  lioniniiir.  3  Stew.  Kq.  28;  Sluirp  v. 
Wyrl-off,  12  Stew.  Va\.  37(5;  Mrnsiirall  v.  I\',irr,'.  \  Atl.  Hej).  CuS; 
King  V.  ytorford.  Sax.  274;  Stoutcnhurgh  v.  Tomkinn,  1  Stock. 
332;  TinhUrln  v.  ^^altvr.  8  Paige,  173;  hilliinnn'  v.  Ifnrsm.  If 
Johns.  32!).) 

Again,  the  comi>lainants  say  that  if  the  time  for  performance 
of  a  written  contract  may  be  extended  or  enlarged  by  parol,  sonu» 
consideration  must  bo  shown  therefor  l)efore  the  court  will  cnforco 
such  parol  contract.     The  prop'>sition  tlms  stated  is  supported  by 


606  EXTEXSIOX   OF   MORTGAGE.  [CHAP.  III. 

the  authorities.  {Parl-er  v.  Jameson,  5  Stew.  Eq.  222;  French  v. 
Grij]in,  3  C.  E.  Gr.  279,  281.) 

But  a  court  of  equity  will  sometimes  prevent  parties  from  dis- 
regarding their  promises,  even  when  no  consideration  has  accrued 
to  them  upon  the  making  of  such  promise.  If  a  party  asking 
the  aid  of  the  court  waive  strict  performance  of  his  contract  and 
makes  promises  to  the  defendant  upon  which  the  latter  has  acted 
and  altcrecl  his  position,  and  it  should  appear  to  the  court  to 
work  a  hardship  to  the  defendant  to  allow  the  complainant  to  with- 
draw his  waiver,  a  court  of  equity  always  applies  the  doctrine  of  es- 
toppel. In  such  case,  although  no  consideration  or  henefit  accrues  to 
the  person  making  the  promise,  he  is  the  author  or  promoter  of  the 
very  condition  of  affairs  which  stands  in  his  way;  and  when  this 
plainly  appears,  it  is  most  equitable  that  the  court  should  say  that 
they  shall  so  stand.  (Martin  v.  Fighter,  2  Stock.  510;  Church  v. 
Florence  Iron  Works,  16  Yr.  133;  PhiUipshurg  Bank  v.  Fulmer,  2 
Yr.«55;  King  v.  Morford,  supra;  Huffman  v.  Hummer,  3  C.  E.  Gr. 
83,  90;  8tryl-er  v.  VanderbiU,  supra;  Miller  v.  Chetivood,  1  Gr.  Ch. 
208;  Cox  y.  Bennett,  1  Gr.  165;  Lee  v.  KirhpatricJc,  1  McCart.  264, 
267;  Continental  National  Banl-  v.  National  Bank  Com.,  50  N.  Y. 
575;  Garrison  x. 'Garrison,  5  Dutch.  153.) 

The  bill  should  be  dismissed  with  costs. 


DODGE  V.  CHANDALL. 

Court  of  Appeals  of  Xeav  York,  1864. 

(30  N.  Y.  294.) 

Appeal  from  a  judgment  of  the  Supreme  Court. ^ 
Wright,  J.  The  mortgage  sought  to  be  foreclosed  by  action  was, 
in  the  winter  of  1858-9,  held  by  the  administrator  of  S.  Y.  R. 
Mallory,  deceased.  The  premises  covered  by  it  had,  after  its  execu- 
tion, and  about  the  23d  February,  1856,  been  conveyed  by  the 
mortgagor  to  the  defendant  Ilolcomb,  who  assumed  the  payment  of 
the  mortgage  as  a  part  of  the  purchase  price  of  the  premises.  Thn 
mortgagor  had  i)aid  the  interest,  and  $266.66  of  the  principal  sum 
secured  by  it,  before  the  sale  and  transfer  of  the  premises  to  Ilol- 
comb. Afterwards  Tfolcomb  paid  the  interest.  The  whole  prin- 
cipal became  due  and  payable  on  the  1st  March,  1858.  Shortly 
^  The  staten>ent  of  facts  is  omitted. 


<  "•^'■-    '"•]  DODGL   i.  CIt.VMJALL.  007 

Ix'fon"  thf  "^^stli  February,  l.s.")!)  (tlic  administrator  of  Mallory 
l)i'iii^  about  to  fon-elose  tlie  inortga^a'),  Ilolcomb  entered  into  an 
a^'reenient  witli  the  plaintilF's  tt'stator,  wliereby  the  latter  agreed 
lo  purchase  the  mortgai,'!'  of  Mallory 's  administrator,  who  then  held 
the  same,  and  ('xtcnd  the  time  of  j)aym<'nt  five  years,  or  give  that 
atlditional  time  from  tlu*  time  he  took  the  assignment,  to  pay  the 
balance  due  upon  the  l)ond  and  mortgage;  in  consideration  of  which, 
Ilolcomb  agreed  to  pay  him  fifty  dollars,  which  he  did  j)ay,  and 
llolberton  took  the  assignment  of  the  mortgage,  and  continued  to 
bold  the  same,  and  receive  |)ayments  of  interest  thereon  up  to  his 
death.  The  bond  and  mortgage  were  assigned  to  the  plaintiff's 
testator  on  t2Sth  February,  IS")*!,  and  the  time  agreed  to  be  givcTi 
to  Ilolcomb  to  make  payment  would  not  expire  until  the  28th  Feb- 
ruary, lS(iL 

This  foreclosure  suit  was  brought  \n  -June,  1S<)2,  and  the  question 
is  whether  the  executor  of  llolberton  is  entitled  to  sustain  it,  not- 
withstanding the  contract  of  his  testator  to  purchase  the  mortgage, 
and  forbear  foreclosing  it  for  fivi'  years;  or,  in  other  words,  to 
<-.\ti'nd  the  time  of  j)ayment  of  the  debt  secured  to  be  paid  by  it,  and 
which  was  due,  for  five  years  from  such  purchase.  If  Holberton, 
in  the  face  of  his  contract,  was  not  entitled  to  maintain  an  action 
to  collect  tlie  principal  secured  by  the  mortgage  by  a  foreclosure 
tlu'reof  before  the  five  years  elapsed,  it  is  very  clear  his  representa- 
tive is  not. 

The  ground  taken  at  the  trial  was  that  the  contract  was  void 
by  the  statute  of  frauds,  not  being  in  writing,  and  being  an  agree- 
ment that  by  its  terms  was  not  to  be  performed  within  one  year 
from  the  making  thereof.  (2  R.  S.  13"),  ^  *>,  sub.  1.)  I  am  of  the 
o|)inion  that  it  was  not  affected  by  the  statute.  The  statute  applies 
lo  executory,  and  not  to  executed  contracts;  and  the  one  in  question, 
1  think,  was  of  the  latter  description.  It  was  certainly  executed  by 
Ilolcomb;  and  it  seems  to  me  the  purchase  of  the  mortgage  by  the 
]'laintifF's  testator  was  an  execution  on  his  part.  llolberton  agreed 
in  substance  to  j)urchase  the  mortgage,  and  forbear  to  fonnlose  it 
for  five  years,  in  consideration  of  fifty  dollars.  lit'  did  purchase, 
and  take  an  assignuient  of  it,  and  Ilolcoiub  paid  him  the  fifty  dol- 
birs.  Tims,  the  contract  was  fully  executed.  Nothing  further  re- 
mained to  be  done  by  either  party.  llolberton  had  simply  to  wait 
live  vears  for  his  money.  Ilolcomb  had  j)aid  the  consideration 
monev,  and  llolberton  had  entered  upon  the  contract  by  nveiving 
the  money  and  p\irchasiug  the  mortgage,  and  neither  party  could 
rescind  it.  Neither  <ould  Ilolcomi*  n-eover  back  the  mtuiey.  nor 
llolberton  refuse  to  carry  out  the  contract,  based  as  it  was  upon  .\ 
tri.od  consideration,  ami  which  be  bad  umb'rtaken  to  execute. 


608  EXTENSION  OF  MORTGAGE.  [cilAl'.  III. 

The  further  point  is  now  urged  (although  not  alluded  to  on  the 
.trial),  that  the  mortgage  being  a  siJecialty,  no  agreement  in  regard 
to  it  could  be  Valid  unless  the  agreement  was  also  a  specialty.  It 
may  be  conceded  that  ordinarily  a  sealed  executory  contract  cum  not 
be  rescinded  or  modified  by  a  parol  executory  contract;  but  that 
was  not  this  case.  Here  the  mortgage  was  due.  The  holder  was 
about  to  enforce  it  by  action;  whereupon  Holberton  agrees,  for  a 
valuable  consideration,  to  purchase  and  refrain  from  collecting  it 
for  five  years.  This  agreement  is  executed  by  the  purchase ;  and  as 
respected  the  plaintiff's  testator,  opemted  as  effectually  to  extend 
the  time  of  payment  as  if  it  had  been  under  seal.  Indeed,  as  title 
to  the  mortgage  would  pass  by  mere  delivery  without  a  written  as- 
signment, I  cannot  see  why  an  agreement  to  extend  the  time  of 
payment,  if  founded  upon  a  good  consideration,  would  not  be  valid 
and  effectual  for  that  purpose,  even  if  executory,  and  not  reduced 
to  writing.  The  agreement,  in  this  case,  was  not  one  varying  the 
terms  of  the  sealed  contract  so  as  to  require  it  to  be  under  seal,  but 
rather  an  agreement,  based  upon  a  good  and  valid  consideration,  to 
hold  such  contract  in  abeyance  until  the  expiration  of  the  time  fixed 
upon  by  the  new  contract.  It  was  conceded  upon  the  trial  that  Hol- 
comb  was  in  a  proper  position  to  set  up  the  new  contract,  provided 
such  an  one  was  made. 

But,  in  any  event,  as  suggested  by  the  learned  judge  delivering 
the  opinion  in  the  Supreme  Court,  the  judgment  is  sustainable  upon 
the  equitable  ground  that  the  defendant,  having  a  cause  of  action, 
would  be  allowed  to  set  it  up  to  prevent  circuity  of  action. 
Holberton  having  taken  the  assignment,  and  held  it  under  the  con- 
tract as  proved,  and  received  a  consideration  therefor  from  the  de- 
fendant, and  this  action  being  by  his  representative,  it  is  the  same 
as  if  he  were  seeking  to  foreclose  the  mortgage  by  suit,  notwith- 
standing his  agreement.  If  the  defendant  could  have  no  defense 
to  the  foreclosure,  still  his  agreement  with  Holberton  would  give 
him  a  right  of  action  for  the  injury  he  received ;  otherwise  he 
would  be  remediless.  In  the  face  of  liis  agreement,  Holberton,  or 
his  representative,  ought  not  to  be  allowed  to  foreclose  the  mort- 
gage, and  on  the  principle  of  avoiding  circuity  of  action,  the  law 
will  give  effect  to  such  agreement  as  a  defense  to  the  foreclosurt- 
suit. 

The  judgment  of  the  Supreme  Court  should  l)e  affirmed. 

.ToiTNSON,  J.  The  agreement  between  the  defendant  Holcomb 
and  the  plaintiff's  testator  was  that  the  former  should  pay  to  the 
latter  fifty  dollars,  and  that  the  latter  in  consideration  thereof 
should  purchase  the  bond  and  mortgage  in  question,  and  extend  the 


<■"•*'■    '"■]  DoiM'.i:  r.  cuANDAiJ..  coo 

diiy  of  piiyiiH'iit  of  the  piiiirijtal  for  (Ik-  period  of  five  vcars  from 
till'  tiiiR-  of  tlu'  inakiii','  of  said  a;,'n'(iii('nt.  lloli-oinl)  llu-n'Ujtoii 
paid  llu'  money,  and  tlu-  tostatctr  purcliasi-d  and  look  an  assignment 
of  the  bond  and  mortgage.  The  mortgage  debt  was  then  wholly  due, 
and  the  testator's  assignor  was  about  proeeeding  to  foreclose  the 
mortgage.  Tiie  j)rin('ipal  if  not  the  only  (pjestion  in  the  ease 
is  whether  this,  being  i)y  |)arol,  was  a  valid  agreement,  and  operated 
to  extend  the  time  of  payment  of  the  indebtedness.  If  it  was,  and 
8uch  was  its  effect,  the  action  was  premi^turely  brought,  and  the 
decision  of  the  Suj)renie  Court  was  right,  wiietlier  the  j)roper 
reason  for  the  judgnnent  was  assigned  or  not. 

That  the  time  of  the  payment  of  a  simple  contract  debt  may  be 
thus  extended,  so  that  no  action  will  lie  for  its  recovery  until  the 
expiration  of  the  extended  time,  when  the  agreement  to  extend  is 
founded  on  a  good  consideration,  is  too  well  settled  to  admit  of  ques- 
tion. Indt-r  the  former  system  of  practice,  such  an  agreement,  to 
defeat  the  action,  could  be  proved  under  the  general  issue,  as  it 
went  to  show  that  notiiing  was  due,  and  there  was  no  cause  of  action 
when  the  suit  was  commenced.  (1  Chit.  PI.  i^>\'i.)  And  so,  I  sup- 
pose, under  the  jiresent  system  the  same  evidence  may  be  given 
under  a  general  denial,  as  it  goes  to  controvert  what  the  j)laintitT 
is  bound  to  establish  by  his  evidence,  to  wit:  the  existence  of  a  de- 
mand due  at  the  commenci-ment  of  tlie  action.  In  such  a  case  the 
sub.-ie([Ui'nt  agreemc^nt  o|)erates  uj)on  the  instrument,  where  the  de- 
mand is  evidenced  by  writing,  and  becomi^s  part  of  it,  so  that  tlie 
obligation,  instead  of  becoming  due  according  to  its  terms,  is  only 
due  at  the  exjjiration  of  the  extended  time,  and  until  that  happens, 
no  action  can  be  maintained  iijmn  the  instrument.  The  subscipient 
agreement  does  not  operate  to  destroy  the  original  agreement,  but 
only  to  modify  it  in  respect  to  the  time  of  payment. 

It  is  claimed,  however,  on  the  part  of  the  plaintiff,  that  this  j)rin- 
ciple  has  no  application  to  instruments  \indi'r  .seal,  and  that  in  re- 
gard to  instruments  of  that  character,  it  re(iuires  an  agrei-meiit  in 
writing  of  e(|ual  solemnity  to  etTect  a  change  or  modilication  in  any 
material  particular.  This  seems  to  be  the  rule  in  such  ca.ses,  before 
any  breach  of  tlie  specialty,  and  where  the  sul)se(|uent  agreement  i^ 
executory  UK-rely.  It  was  so  held  in  AUrn  v.  Jntitiisli.  21  Wend. 
fi2S,  and  in  Kthli/  v.  Graves,  23  id.  84.  cited  in  the  opinion  of  the 
court  in  this  case  at  general  term. 

Ii\it  it  is.  I  think,  etpially  well  settled  that  after  the  breach  of  a 
sealed  au'reement  it  may  l»e  mollified  in  any  re<pect,  or  wholly 
rescinded,  by  an  <'\ecuted  parol  agreement  founded  tipon  a  sulTieient 
consideration.  (I.nttimore  v.  Ifarsrti.  It  Johns.  330;  Drnrhoru  v 
fms-.s-,  r  Cow.    IS;  Fh'miuij  v.   CUhrrt,  3  Johns.  r)28;  Keatiug  v. 


610  EXTEXSION   OF   MOKTGAGE.  [CHAP.  III. 

Price,  1  Johns.  Cas.  23;  Delacroix  v.  BuMcy,  13  Wend.  71;  Town- 
send  V.  Empire  Stone-dressing  Co.,  6  Duer,  208.)  Many  other 
ca.ses  might  be  cited  to  the  same  effect,  but  the  rule  seems  to  be  too 
well  settled  to  require  it. 

That  this  was  an  executed  and  not  a  mere  executory  contract 
between  the  parties  is  extremely  clear.  The  defendant's  proposi- 
tion was  to  pay  $50,  in  consideration  that  the  plaintiff's  testator 
Avould  buy  the  bond  and  mortgage  and  extend  the  time  of  payment. 
This  proposition  was  accepted  by  the  testator  who  received  the 
money  and  made  the  purchase.  Nothing  else  was  to  be  done.  The 
agreement  did  not  contemplate  the  doing  of  any  further  or  other 
act  to  effect  the  extension.  The  extension  was  effected  completely 
and  perfectly  in  law  the  moment  the  agreement  was  consummated 
by  the  payment  of  the  consideration  on  one  side  and  the  purchase 
of  the  securities  on  the  other.  The  agreement  was  then  completely 
executed,  and  took  effect  upon  the  bond  and  mortgage  which,  in  the 
hands  of  the  assignee,  became  due  and  payable  as  against  the  de- 
fendant Ilolcomb  in  five  years,  and  not  before.  After  that  it  was 
in  no  conceivable  sense  an  executory  agreement.  Its  entire  object 
and  purpose  had  been  completely  and  perfectly  fulfilled.  It  is  upon 
this  principle  only  that  the  proof  of  an  agreement  to  extend  the 
time  defeats  the  action  brought  before  the  expiration  of  the  ex- 
tended time.  The  defense  in  such  case  does  not  proceed  upon  the 
ground  of  recoupment  of  damages  for  a  breach  of  the  agreement  to 
extend,  but  upon  the  ground  that  the  agreement,  by  its  own  force, 
operates  upon  the  original  contract,  and  effects  the  extension  by 
way  of  a  modification  of  the  contract.  The  statute  of  frauds  has, 
clearly,  nothing  to  do  with  the  case.    .     .    . 

The  judgment  should,  therefore,  be  affirmed. 

All  the  judges  were  for  affirmance,  except  Selden,  J.,  who 
thought  the  agreement  void  under  the  statute  of  frauds,  as  not  to 
be  performed  within  a  year. 

Judgment  affirmed. 


OLMSTEAD  v.  LATIMER. 

Court  of  Appeals  of  New  York,  1899. 

(158  N.  Y.  313.) 

Appeal  from  a  judgment  of  the  Appellate  Division  of  the  Su- 
preme Court  in  the  second  judicial  department,  entered  October  9, 


'  "Ai'.  iir.]  (>LMsTi:\ii  I.  i..\iiMi:i{.  (ill 

IS!)(i,  iiKxlih  iii^f  and.  a-   iiiiidifird,  allinuiii^  a  jiid;^mt'iU  entered 
ii()oii  a  decision  of  the  (■(•iirt  on  trial  at  Spcoial  'rcriii. 

in  August,  ISTS,  one  .lolm  (i.  LatinuT  ('xccutrtl  Ids  Itond  with  a 
niort^'a^^'c  on  a  lot  and  l)uildin>j:  on  Allaidir  stn-et.  Hrooklyn,  to  sc- 
.  HIT  tlu'  Sinn  ot"  $1S,n()0  JKirrowcd  l»y  him.  'Tlic  plaintiff  snhsc- 
ijiimtly  aniuircd  that  hond  and  inorl;,M^t'.  in  I  SKI  Latimer  died 
int«'>tate,  seised  ol  the  nior(;;a,i:ed  premises,  leavin;;  a  widow  and 
four  lirothers  (the  three  defendants  and  one  .lames  D.  Latimer), 
his  only  heirs  at  law.  Letters  of  administration  were  issued  on  the 
I  -tate  of  Jolin  (J.  Latimer,  and  upon  ."Settlement  of  the  estate  it 
,[)peari'd  that  the  piTsonal  estate  was  I'xliausted  i)y  the  payment 
I  the  dehts  and  expenses  of  administration,  leavin;;  a  deficiency  in 
Me  amount  due  for  administrator's  fees.  The  deceased  left  real 
I -tate  of  considerahle  value,  all  of  which  was,  prior  to  the  com- 
mencement of  this  action,  sold  hy  the  three  defendants  Latimer,  as 
heirs  at  law,  for  the  a;,'frrej:ate  sum  of  $r)7,r)00,  the  value  of  the 
willow's  dower  in  which  was  estimated  at  $8, -!'.?(),  leavin;;  the  not 
value  of  the  lands  sold  in  the  hands  of  each  of  the  defendants  at 
the  time  of  the  trial  at  $12,'2()S.r)(),  outside  of  the  mortpi«red  prem- 
ises. The  latti'r  were  conveyed,  during  the  years  1888  and  188!), 
to  Fre(lerick  li.  Latimer  hy  hargain  and  sale  deeds,  each  recitinir  the 
( cinsideration  of  one  dollar,  .\fter  Frederick  had  accpiiretl  all  the 
interest  of  his  hrothers  in  the  mortgaged  prennses,  he  and  the 
[•laintitr  executed  the  following  agreement  [October  15,  1801]  : 

"We  agree  that  the  time  for  the  paynu'nt  of  the  Bond  and  Mort- 
gage for  $18,0(10  on  '201  and  "io;?  .Vtlantic  .\ venue,  Brooklyn,  made 
hy  .John  (i.  Latinu-r  to  the  executors  of  Xoah  T.  Tike  and  recorded 
in  the  Kogistor's  oflice  of  Kings  (Vmnty  in  Liher  H'i')  of  Mortgages, 
page  17,  August  'M.  1878,  heing  the  date  thereof,  shall  he  and 
lierehv  is  extended  to  May  1.  18!),"i,  subject  to  the  same  terms  and 
tuuditiiMis,    including   tax.    insuraiu-e   and    interest    clau.«ies,   as   at 

pit'sent." 

In  .\pril,  is:i'.\  a  lin-  (xcurred  in  the  buildings  on  the  mortgaged 
}»r<'mises,  by  which  they  were  jiartially  inj\ired.  Tn  an  attemj)t  to 
restore  the  buildings  they  collapsed  and  became  a  total  loss.  By 
this  accident  the  vahie  of  the  mortgaged  j)remi.<es  fell  below  the 
amount  of  the  mortgage.  Thereafter,  the  plaintifT  instituted  this 
action  to  foreclose  the  mortgage  and  hold  the  defendants,  as  hcifi? 
at  law  of  the  original  bondsman  and  mortgagor,  liable  for  any  de- 
ficieiuy.  The  trial  co\irt  held  the  defendant  Frederick  liable  for 
•^1  of  anv  deliciency,  and  I  lie  other  defendants  not  liable  From 
this  decree  the  plaildifT  and  the  defendant  Frederick  appeah^  to 
ihe  .\ppellate  Division,  the  former  seeking  to  hold  all  the  defend- 
ants, the  latter  to  hr  relieved  from  liability.     The  court  modified  the 


612  EXTENSION   OF    MORTGAGE.  [CIIAP.  UU 

judgment  by  increasing  the  liability  of  tlie  defendant  Frederiek  to 
one-quarter  of  any  deficiency  that  may  arise  on  the  foreclosure  sale, 
and  in  all  other  respects  affirmed  the  judgment. 

Parker,  Ch.  J.  The  defendants  Latimer,  as  heirs  at  law  of  the 
mortgagor,  were  res})ectively  liable  under  section  1843  of  the  Code 
for  the  debts  of  the  said  mortgagor  decedent  to  the  extent  of  their 
interest  in  the  real  property  that  descended  to  them  from  him.  The 
premises  covered  by  the  mortgage  were  primarily  liable  to  pay  the 
mortgage  debt.  As  there  was  no  personal  estate  the  defendants 
Avcre  secondarily  liable,  and  they  were  properly  made  parties  in  the 
action  of  foreclosure  by  virtue  of  section  1627  of  the  Code,  which 
jirovides  that  "any  person  who  is  liable  to  the  plaintiff  for  the  pay- 
ment of  the  debt  secured  by  the  mortgage  may  be  made  a  defendant 
in  the  action;  and  if  he  has  appeared,  or  has  been  personally  served 
with  the  summons,  the  final  judgment  may  award  payment  by  him" 
of  any  deficiency.  The  judgment  as  it  comes  to  us  decrees  that  the 
defendant  Frederick  B.  Latimer  shall  pay  one-quarter  of  the  de- 
ficienc}^,  but  it  has  been  held  that  the  effect  of  the  conveyance  of  the 
premises  to  the  defendant  Frederick  by  his  brothers  in  the  years 
1888  and  1889,  together  with  the  fact  that  he  informed  the  plain- 
tiff of  such  conveyance,  and  thereafter  made  an  agreement  to  extend 
the  time  of  payment  of-  the  bond  and  mortgage,  had  the  legal  effect 
of  making  Frederick  the  principal  debtor  and  his  brothers  sureties, 
and  hence  that  the  effect  of  the  agreement,  extending  the  time  of 
payment,  operated  to  release  the  sureties  from  all  liability  to  the 
plaintiff  on  account  of  the  indebtedness  evidenced  by  the  bond.  As- 
suming, but  not  deciding,  that  the  effect  of  the  conveyance,  and  that 
which  subsequently  happened,  was  to  change  the  obligation  of  the 
defendants  other  than  Frederick  towards  the  plaintiff,  from  that  of 
principals  to  that  of  sureties,  we  come  to  the  question  whether  the 
agreement  to  extend  the  time  of  payment  was  invalid  for  want  of 
consideration. 

There  are  several  decisions  in  this  court  in  which  the  question 
has  been  considered,  and  they  are  in  harmony  with  one  another.  In 
Kellogg  v.  Olmsted,,  25  N.  Y.  189,  the  action  was  on  a  promissory 
note  by  the  transferee  of  the  payee.  The  answer  alleged  that  after 
the  note  became  due  it  was  mutually  agreed  between  the  holder 
thereof,  the  payee,  and  the  defendants,  "that  in  consideration  that 
the  defendants  would  keep  the  principal  sum  of  the  said  note  until 
the  first  day  of  April,  18-57,  and  pay  the  same  with  interest  on  that 
day,  he.  the  said  payee,  would  extend  the  time  of  payment  of  the 
principal  of  said  note  until  the  first  day  of  April,  1857 ;  that  the  said 
defendants  then  and  there  assented  to  such  proposition,  and  then 
and  there  agreed  to  and  with  said  Covil  to  keep  said  principal  sum 


'"^'■-    '"J  (iLMSIT.  Vl>   C.    I.AIIMKU.  (',].] 

..f  -iiid  iioir  until  the  fir.-t  iLiv  (if  Ajtiil,  ]9,y,,  ;in<l  to  imv  llif  sjiiiif 
with  inti'ivst  on  that  diiy."     On  the  trial  of  the  action  the  rcfercn 
'  \iliuk'd  eviik'lK'c  oircn-d  hy  the  drfi'iidunts  to  (■.-.tahlish  the  drfcns*- 
-(•  sjH'cially  sot  n|t,   ;iiid   cxfcptions  were  taken   thmtn   that    pro- 
■  nti'd  the  (jui'stion  to  this  court.     It  was  lidd  that  an  a;:rccnii'nt 
'\  a  creditor  to  j)osti)one  |»aynient  of  a  deht  until  a  future  day  cer- 
tain,  without  other  or   further  consideration   than   the  agreement 
•  if  the  dehtor  to  pay  the  deht  with  interest,  is  void  f<ir  want  of  eon- 
ideration  ;  the  court  citintr.  in  se.pjxtrt  of  its  position.  Miller  v.  Ilol- 
i.ru,,!,-.   1    W.n.l.   ;'.i::  (lihsaii  v.   /!niin\   i:»  Wctid.  :V.)0 ;  Pabndu'  v. 
Kiinj.    \-l   .lolm.    l->(;:   h'rifiKjIds   v.    W'unl.   ."i   Wend.   .'tOI  :    F>iTh>„    v. 
.]f(if(li>'irs.   1.',  .lohn.  -\:V.]. 

A  dissent in^-^  opinion  was  written  l)y  Judiie  Davies,  who  two  or 
ihree  years  later  wrote  tlie  ])rincipal  ojiinion  in  Ifiillidni/  v.  Ifurt, 
'•"   X.   ^.    17  1.      In   tlial    t-A<r   the  action   was   l)rought   to  recover 
-i.Minst   the  maker  and  two  indor.-ers  on  a  proniiss«»rv  note.     The 
indorsers  defended  on  the  ;rround  that  the  plaintiff  had,  for  a  val- 
iiahle  consideration,  and  in  writing,  (Extended  the  time  of  pavment 
'>r  a  period  of  soitie  months,  and  claimed  that   the  etrect  of  such 
xti'nsion  was  to  discharge  the  sureties  from  liahility.     The  authori- 
iies  bearing  upon  the  question  were  very  carefully  considered,  and 
the  court  tlecided  that  a  partial  payment  hy  the  maker  on  account 
f  an  overdue  note  is  not  a  valid  consideration  for  a  ))romise  of 
iiltearance  as  to  the  residue  so  as  to  discharge  the  indorsers.     .\ 
'•noiirring  opinion    was   written    l»y   Judge    Iloirehoom,    in    which 
'■>•  says:  '"The  sureties  wi-re  not  discharged.     There  was  no  nilid 
greenient  for  the  extension  of  the  time  of  payment.     'i'lu*re  was  no 
payment  of  any  sum  which  the  ))arty  ))aying  was  not  ol)lig«>d  to  j)ay. 
The  performance  of  an  nn<iualified  legal  obligation  l)y  iiaynvnt  of 
part  of  a  sum  due  u])on  a  note  is  not  a  valid  consideraliiMi  for  the  ex- 
tension of  |)ayment  of  the  remainih-r." 

The  next  ca.se  in  this  court  was  Loiniutn  v.  ]'iilr.<.  ;">*   X.  Y.  ('.01. 
The  action  was  upon  a  hond  given  hy  Ivly,  as  princi|>al,  with  Par- 
■Monter,  as  surety,  conditioned  that  Ely  should,  before  a  given  date, 
ike  uj)  and  deliver  to  the  plaintifT  two  mortgages  ivxeeutcd  by  him, 
mounting    to    ten    thousand    dollars.     The    action    was    brought 
gainst    the   jiersonal    representatives  of   the   surety,   the   principal 
laving  <lie(l.     The  defense  relied  upon  was  that  the  |)lainti(T,  with- 
out the  surety's  consent,  took   from   the  principal   four  negotiable 
})romissory  notes,  to  be  applied  upon  the  bond  for  the  payment  in 
the  aggregate  of  about   seven  thousand  dollars  of  principal,  three, 
three  and  one-half,  four  and  fwv  years  after  date,  and  indorsi^l  the 
-.line  upon  the  bond,  tliereby  extending  the  time  of  payment  and 
!  -charging  the  defendant   a-  .>uivty.     The  court,  recognizing  the 


614  EXTENSION   OF   MORTGAGE.  [CHAl'.  III. 

principle  that  a  creditor  by  a  valid  and  binding  agreement  between 
himself  and  the  principal  debtor,  extending  the  time  of  payment 
without  the  consent  of  the  surety,  thereby  discharges  the  latter  from 
liability,  said  that  in  order  that  an  agreement  shall  accomplish  that 
result  it  must  have  a  sufficient  consideration,  so  as  to  prevent  the 
prosecution  of  the  debt  by  the  owner,  and  to  prevent  the  surety 
from  compelling  him  to  enforce  it.  It  was  claimed  by  the  plaintiff 
that  he  was  induced  to  enter  into  the  agreement,  and  take  notes 
extending  the  time  of  payment,  by  the  fraudulent  representations 
made  by  the  principal  debtor,  and  it  was  held  that  the  court  prop- 
erly left  it  to  the  jury  to  determine  whether  the  notes  were  imposed 
on  the  plaintili'  by  fraud,  and  if  so  that  their  receipt  by  the  plaintitl' 
under  the  agreement  did  not  operate  to  extend  the  time  of  payment 
of  so  much  of  the  amount  of  the  bond  as  their  face  value  repre- 
sented. It  was  also  held  that  the  judge  properly  charged  that  in 
any  event  the  extension  of  the  time  of  payment  did  not  discharge  the 
surety  as  to  the  residue  of  the  bond  beyond  the  amount  of  the  notes. 
In  Parmelce  v.  Thompson,  45  N.  Y.  58,  one  of  the  makers  of  a 
promissory  note  after  maturity  paid  to  the  payee  a  sum  equal  to  the 
amount  due  thereon  and  took  possession  of  the  note.  Subsequently 
he  brought  suit  against  another  maker,  who  gave  evidence  tending 
to  show  that  while  the  payee  held  the  note  an  action  was  brought 
thereon  in  the  Supreme  Court,  and  that  it  was  agreed  between  the 
defendants  and  the  plaintiff  therein  that  the  suit  should  be  discon- 
tinued, the  defendant  to  pay  the  costs  and  have  until  the  ensuing 
December  to  pay  the  note;  that  the  costs  were  paid  and  the  suit 
discontinued,  after  which  the  plaintiff  became  the  owner  of  the 
note  and  brought  the  action  before  the  expiration  of  the  time  agreed 
upon,  and  the  trial  judge  held  that  there  was  no  valid  agreement 
to  extend  the  time  of  payment.  The  judgment  was  affirmed  in  this 
court,  the  opinion  being  written  by  Judge  Allen,  in  which  he 
said  :  "It  is  competent  for  the  parties,  by  a  parol  agreement,  to  en- 
large the  time  of  performance  of  a  simple  contract.  .  .  .  But  a 
promise  to  extend  the  time  of  payment,  unless  founded  on  a  good 
consideration,  is  void.  A  payment  of  a  part  of  the  debt,  or  the 
interest  already  accrued,  or  a  promise  to  pay  interest  for  the  future, 
is  not  a  sufficient  consideration  to  support  such  promise."  (Citintr 
Miller  v.  llolhrooJ,-,  Gibmii  v.  rienno.  and  Kellogg  v.  Olmsted, 
supra. ) 

In  Powers  v.  Silherstein.  108  N.  Y.  1(J9,  the  action  was  brought 
upon  a  promissory  note  made  by  the  firm  of  Joy  &  Bowman  and  in- 
dorsed by  the  defendant  Silberfitein.  who  alone  answered,  setting 
up  as  a  defense  that  the  note  was  indorsed  l)y  him  for  the  accom- 
modation of  the  makers,  and  that  the  time  of  payment  was  extended 


''"•^''-  "••]  «»i,msti:ad  c.  i.vtimkk.  G1,"> 

by  an  a;;rc'cin('ii(,  made  wiilioiii  his  c-onsciit,  Ix'twccn  the  makers 
and  tlie  plaintill'.  'I'lic  jilaintiir  had  jud^Miicnl  in  tlie  trial  eourt, 
which  was  allirnu'd  at  the  (JcntTal  'rcrin,  hut  reversed  in  this 
eourt  on  the  ;,M<)un(l  that  there  was  evich-nce  tending  to  establish 
tliat  the  phiintiir,  after  the  maturity  of  the  note,  a^^reed  with  the 
makers,  .Joy  i'lL'  Bowman,  to  forhear  the  ectlleelion  of  it  if  they  wouhl 
continue  phiintilT's  son  in  tlieir  emj)U)yment,  and  that  Joy  &  How- 
man  consenti'd  and  did  retain  him  in  their  service  ui)on  this  e.)ii- 
sideration.  In  the  course  of  the  opinion  the  court  cited  Luu-nm/t 
V.  Yates,  supra,  upon  the  proposition  that  a  mere  indulgence  by  a 
creditor  of  the  principal  debtor  will  not  discharge  the  surety,  and 
that  the  agreement  for  an  extt-nsion,  made  without  the  consent  of 
the  surety,  must  be  upon  a  valid  consideration,  such  as  will  preclud  • 
the  creditor  from  enforcing  tiie  debt  against  the  principal,  but 
argued  that  the  ])laintifT  did  not  deny  that  the  employment  of  his 
son  was  an  inducement  to  the  original  loan,  or  that  the  subject 
of  his  continuing  employment  was  referred  to  in  his  conversation 
with  the  makers  of  the  note  after  matui.ty,  and  that,  taken  in  con- 
sideration with  the  fact  that  the  loan  was  allowed  to  remain  stand- 
ing for  three  years  after  the  maturity  of  the  note,  presented  a  (jues- 
tion  f(n-  tlu'  jury  a>  to  whether  there  was  an  extension  of  the  time 
ujion  a  good  consideration. 

Our  attention  has  not  been  called  to  any  authority  in  this  court 
in  hostility  to  the  jxisition  taken  in  the  decisions  we  have  referred  to. 
The  rule  laid  down  by  them  has  been  followed  in  many  cases  in  the 
trial  courts,  and  among  tlu-m  may  bi'  found  the  comparatively  re- 
cent cases  of  Mdiicheslcr  v.  Vdii  linnit.  l!i  X.  Y.  Suj)p.  085,  anil 
Bahcock  V.  Kuntzsch,  85  Hun,  i!].").  The  ri'asous  assigned  by  the 
learne<l  justice  who  wrote  for  the  A])pellate  Division,  in  favor  of 
overthrowing  the  doctrine  of  these  eases,  while  presented  with 
marked  ability  and  clearness,  are  not  at  all  ii  w.  They  were  ad- 
vanced in  the  dis.senting  opinion  by  .hidge  Davies  in  Krlloiji/  v. 
Olmsted,  supra,  the  first  case  in  which  the  (juestion  received  atteii- 
ti(»n  in  this  court,  so  far  as  we  are  advist'd.  Whether  the  ri'a.<oning 
of  the  prevailing  or  dissenting  opinion  seems  the  better,  it  is  not 
l)rofltal)le  to  impure,  for  the  (piestion  was  settled  by  the  decision 
of  this  court,  and  has  by  later  adjudications  becomt>  so  flrndy 
grounded  that  it  may  not  now  l)e  (piestioned. 

The  judgment  should  be  reversed  as  to  the  defendants  Henry  .\. 
and  Hrainanl  (!.  Latimer,  and  that  of  the  Special  Term  moditi-il 
by  striking  out  tlie  direction  to  the  reforpo  to  pay  co.sts  to  Hrainard 
Ci.  and  Henry  .\.  Latimer,  and  so  further  modified  as  to  adjudg'' 
that  the  defendants,  Frederick  H.  Latimer.  Henry  .\.  Latimer  and 
Brainard  (J.  Latimer,  each  |»ay  to  the  plaint ilT  one-quarter  of  any 


()lfj  EXTENSION   OF   MORTGAGE.  [CHAP.  III. 

deficiency  that  may  arise  on  the  sale  of  the  mortgaged  premises 
under  said  judgment,  and  as  thus  modified  affirmed,  with  costs. 
All  concur. 


LOOMIS  V.  DONOVAN. 
Supreme  Court  of  Judicature  of  Indiana,  1861. 

{17  I nd.  198.) 

Appeal  from  the  Cass  Common  Pleas. 

Perkins,  J.  Suit  to  foreclose  a  mortgage,  which  was  the  sole 
written  evidence  of  the  debt,  no  note  or  bond  having  accompanied 
the  mortgage.  The  suit  is  against  W.  A.  Parry  and  C.  C.  Loomis. 
The  mortgage  was  given  by  Parry  to  Donovan.  After  it  became 
due,  Donovan  agreed  by  parol  with  Parry  and  Loomis,  all  three 
being  together,  that  if  Parry  would  sell,  and  Loomis  would  purchase 
Parry's  equity  of  redemption  in  the  mortgaged  premises,  assume 
Parry's  mortgage  debt,  and  pay  $50  down  upon  it,  he  would  extend 
the  time  of  payment  of  the  balance,  and  the  foreclosure,  until  July 
1,  1861.  The  agreement  was  concluded  between  the  three.  Loomis 
made  the  purchase  of  the  equity  of  redemption,  assumed  Parry's 
mortgage  debt,  and  paid  $50  upon  it. 

Donovan  did  not  delay  the  foreclosure  suit  till  July  1,  1861,  and 
Loomis,  one  of  the  defendants,  sets  up  the  foregoing  facts  in  answer 
to  the  action.  The  court  below  held  them  no  bar,  and  gave  judg- 
ment of  foreclosure  and  sale.  Was  the  ruling  of  the  court  right? 
This  is  the  only  question. 

The  point  is  this.  A  creditor  who  holds  a  sealed  obligation  for 
the  debt,  past  due,  agrees  with  the  debtor,  by  parol,  for  a  valuable 
consideration,  viz.,  that  he  procure  a  third  person  to  perform  an 
act,  that  he  will  extend  the  time  of  payment ;  and  ho  agrees,  in  like 
manner,  with  such  third  person,  that,  if  he  will  do  the  proposed  act, 
time  shall  be  given  on  the  debt,  as  to  him.  Here,  then,  is  an  agree- 
ment by  parol,  with  an  existing  and,  substantially,  a  new  debtor, 
for  a  consideration  which  is  executed,  at  least  in  part,  to  give  time, 
as  against  both  of  them,  on  an  existing  bond  debt,  till  a  given  day, 
and  the  question  is,  will  a  court  of  equity  give  effect  to  it?  It  does 
not  involve  the  question  of  discharging  sureties;  but  of  how  far  the 
debtor  and  a  new  surety  can  have  the  benefit  of  an  agreement  for 
time.   (See,  as  to  giving  time  where  sureties  are  concerned,  Halstead 


'^"Al--    III.]  LOOM  IS    r.    DONOVAN'.  Gl7 

V.  liroirn.  post,  j).  202;  and  wlicrc  tlifv  arc  not,  Mcndenhall  v.  Lcn- 
>r,'l/,  :,  Black f.  125.) 

It  is  st'ttlcd  law  that  Riving  time  to  the  principal  by  a  binding,' 
contract,  though  made  after  broach,  dischar<:('s  the  surety.  Why? 
Because  it  is  .•^aid  that  the  surety  has  two  rights  under  the  contract 
;i«;  originally  made,  at  coininon  law,  viz.,  to  j)ay  otT  the  del)t  a.s  soon 
IS  it  becomes  due,  or  at  any  tinu'  afterward,  and  then  immediately 
-ue  the  principal  to  recover  back  his  money;  or,  to  apply  to  chancery 
tor  the  collection  of  the  debt  l)y  the  creditor,  in  which  suit  the 
<  reditor  and  principal  debtor  are  brought  before  the  court  imme- 
diately; and  that  a  valid  contract  by  the  creditor,  extending  the 
lime  of  payment  to  the  i)rincij)al,  ties  up  the  hands  of  the  former, 
-o  that  he  can  not  enforce  payment  of  the  contract  when  thus 
brought  into  ihancery,  and  that  the  surety  can  not  enforce  it,  and, 
iieiue,  is  injured  by  the  act  of  giving  time.  (Ijcading  Cases  in 
\-A[\ui\\  Vol.  2,  Part  2,  p.  3G2,  side  p.  71(5.)  It  is  evident  that 
c(piity  will  not  enforce  a  contract  upon  which  time  has  been  validly 
^iven,  till  the  extended  time  has  elapsed.  And  this  doctrine  of  dis- 
charging sureties  becausi'  of  the  extension  of  time  to  the  principal, 
in  a  contract  which  forbids  its  enforcement  within  such  time,  was 
of  chancery  origin  (Dirkersun  v.  Tlte  Hoard,  tl'-r.,  G  Ind.  128),  and 
Ix'longed  intrinsically  to  equity.  (1  Eden  on  Injunctions,  3d  ed., 
1>.  (!.">.)  And  it  made  no  difTerence  that  time  was  given  by  parol 
upon  a  contract  under  seal.  (T-,eading  Cases  in  E([uity,  Vol.  2, 
Part  2,  top  p.  3(;!i;  Burge  on  Suretyship,  p.  212.)  Later,  the  doc- 
trine was  applied  at  law  to  the  extent  of  releasing  the  sureties,  but 
not  to  the  extent  of  suspending  the  action  at  law  against  the  princi- 
)ial.  where  the  new  contract  was  made  after  breach  of  the  original. 
{Pit kv ISO II  V.  The  Hiuird,  S:r.,  supra.  But  see  MrCuinb  v.  A'i7- 
liidijr,  14  ().  Hep.  IMS.  And  see  Rigshce  v.  liowlrr,  ante,  p.  1G7.) 
I'erhaps  e(|uitv  would  grant  an  injunction  to  restrain  the  action  at 
law  again.st  the  princi])al  till  the  extended  time  had  elapsed. 
(Hurge  on  Suretyship,  p.  2n(;.)  "This  doctrine  (says  th»>  Su- 
preme Court  of  Verm(mt).  which  is  derived  from  chancery,  is 
f«)untled  on  the  obligation  which  the  contract  for  delay  imposes  \\\wn 
the  con.<cience  of  tlie  eretlitor  to  jx-rform  it."  {Aiislin  v.  Ponrin, 
•'1  \'rrmonl,  3H.)  .\nd  such  are  the  contracts  which  chancery  was 
■  riginally  createcl  to  enforce;  but  chancery  will  never  lend  its  aid 
to  enforce  a  contract  "in  opposition  to  conscience  or  good  faith." 
iCnalli's  Adni'r  v.  ,<li,is,  '^  How.  (U.  S.)  Hep.  102.)  It  would  be 
a  opposition  to  conscienc*'  and  good  faith  to  I'uforce  a  contract  in 
opposition  to  an  agreement,  for  a  valuable  consideration,  to  give  an 
•  xtension  of  time. 


618  EXTEXSIOX  OF  MORTGAGE.  [cilAi-.  in. 

A  suit  to  foreclose  is  an  appeal  to  the  equity  powers  of  the  court. 
The  present  is  a  chancery  suit.  It  is  brought  in  bad  faith,  in 
fraud  of  the  rights  of  Loomis.  The  plaintiff  does  not  come  into 
court  with  clean  hands.  He  has  not  done  equity.  His  suit,  upon 
the  defense  set  up  being  established,  should  be  dismissed  without 
prejudice. 

It  is  a  general  proposition  of  law,  that  parol  evidence  may.  be 
given  to  rebut  an  equity.  (See  Page  v.  Lasliley,  15  Ind.  152.) 
Browne,  in  his  valuable  work  on  the  Statute  of  Frauds,  says ; 
*'And  while  it  is  not  accurate  to  say  that  the  verbal  agreement  will 
be  always  admitted  as  a  defense  in  those  courts  (equity  courts),, 
since  that  would  be  to  relieve  them  from  the  binding  power  of  the 
statute,  it  seems  to  be  clear  that  they  will  not  lend  their  aid  to 
enforce  and  perfect  a  legal  right  which  the  plaintiff  sets  up  against 
his  conscientious  dutv,  under  a  verbal  contract  interposed  on  the- 
part  of  the  defense."  "  (P.  133.) 

Per  Curiam. — The  judgment  is  reversed,  with  costs. ^ 


MILLS  V.  TODD. 

Supreme  Court  of  Judicature  of  Indiana,,  1883. 

(83  Ind.  25.) 

From  the  Ripley  Circuit  Court. 

BiCKNELL^  C.  C.  The  appellees  brought  this  suit  against  the- 
appellants  to  foreclose  a  mortgage,  claiming  that  the  writing  sued 
on,  although  in  form  an  absolute  deed  from  the  appellants  to  the 
appellees,  was  intended  to  secure  $1,400,  the  purchase-money  of  cer- 
tain land,  and  $400  for  another  debt. 

The  land  had  formerly  belonged  to  Robert  Mills,  deceased,  who 
was  the  husband  of  the  appellant  Mary  Mills,  Sr.,  and  the  father  of 
the  appellants  Joseph  Mills  and  William  Mills;  it  had  been  sold 
to  one  Wheeler,  upon  a  judgment  against  Robert  Mills,  and  the  ap- 
pellants were  seeking  to  repurchase  it  for  $1,400;  they  agreed  with 
the  appellees  that  if  the  latter  would  advance  the  $1,400,  they 
should  have  a  mortgage  on  the  land  to  secure  the  same,  and  also  t<v 
secure  said  $400,  payable  in  two  years,  with  interest  at  nine  and  a 
half  per  cent.     Under  this  agreement  the  appellees  advanced  the 

^Trayser  v.  Trustees  of  Indiana  Ashury  University,  39  Ind.  556  (1872),. 
accord. 


<  "AI-.    111. J  MILLS    r.     iniM).  r.r.» 

$1, ■)(»(>;  it  w;is  paid  to  Wlicclcr ;  In-  cfinvcvcd  the  laiul  to  the  aj)- 
])C'llants  on  Manli  .inih,  ISTT;  ami  tlicv  coiivryt'd  it  to 
the  a])iH'lk't's  liy  an  al)>oiiitc  dfcd,  dated  .Fnnc  IKtli,  is'T. 
TluTc  ^^'as  ovidcnco  ttMidin;;  t<»  >\un\  tlial,  l»y  tlic  aj^'rcemt-nt, 
the  appollees  were  to  execute  a  hoiul  to  the  appi-llants  for  a  recon- 
vevancc  of  the  land  on  the  repayment  of  $1,H(K>  and  interest,  in  two 
jiionths  from  the  date  of  the  bond,  hut  there  was  no  proof  of  the 
execution  of  the  bond,  and,  on  the  2(\  <»f  Au;iust,  1S7U,  more  than 
two  years  after  the  date  of  the  deed,  the  prinei|>al  and  all  tlie  in- 
terest beinj:;  unpaid,  tills  suit  was  commenced. 

The  issues  joined  were  tried  by  the  Court,  who  found  for  the 
appellees,  that  they  were  entitled  to  foreclosuri-  for  $'.*,0.'i-.' ;  the 
a))])ellants'  motion  for  a  new  trial  was  overruled;  jud^'incnt  was 
rendered  upon  the  finding,  and  this  appi-al  was  taken. 

Several  errors  were  assi},mcd,  but  only  one  is  discus.-^cd  in  the 
a])pe]Iants'  brief:  the  others  are  therefori'  waived. 

The  error  relied  on  in  the  brief  is,  sustaining  the  a|»pellee-'  de- 
murrer to  the  second  j)aragraph  of  the  appellants*  answer. 

That  answer  is  pleaded  to  the  entire  complaint.  The  lirst  para- 
graph of  the  complaint  avers  that  the  deed  was  executed  to  .seeun; 
the  payment  of  $1,S00.  of  wliieh  $1,400  was  the  purchase-money  of 
said  land,  paid  by  plaintilFs,  and  that  there  is  now  due  an<l  unpaid, 
of  said  indebtedness,  the  sum  of  $2,200. 

The  second  jiaragraph  of  the  complaint  slates  liiai  Whe.  j.r 
owned  the  land,  which  ajjpellants  desired  to  buy  for  $1,K)(».  and 
that  plaint ilTs  held  a  judgment  against  the  estate  of  said  lJol»ert 
Mills  for  $500,  and  that  the  appellants  agreed  that  if  the  ai)pel!ees 
wtnild  lend  them  $1,400  for  the  j)urchase  of  said  land,  they  would 
mortgage  the  same  to  the  a])pellees,  to  secure  said  $l,loa,  anvl  also 
$400  of  said  judgment,  and  ten  per  irnt.  interest  for  two  y»'ars 
and  until  jiaiil,  and  that  the  ajipellees  accordingly  advanced  to  ap- 
pellants said  $1,400,  which  they  paid  to  said  Whecder,  and  look  frou 
liim  a  deed  for  said  land,  and  then,  on  .lune  l.Stli,  1H7T,  cxecuti'd  to 
appellees  the  instrument  sued  on,  to  .M-cure  the  payment  of  the 
aforesaid  sum  of  money.  The  averment  in  each  of  these  paragraphs 
is  substantially  that  the  deed  was  intended  as  a  mortgage  to  seeun* 
^l,H()()  and  the  interest,  in  all  $2,200,  and  that,  although  two  years 
had  ela|)sed  before  suit  brought,  yet  the  entire  principal  and  interest 
remains  unpaid. 

These  matters  were  fully  put  in  isstie  by  tlu-  first  paragraph  «'f 
the  ap|)ellants'  answer,  which  was  the  general  denial. 

The  second  paragraph  of  the  answer  states  that  the  de«'d.wa>  not 
executed  to  secure  the  money  and  ten  per  cent.,  but  to  .secure  the 
consideration  therein  expressed,  antl  six  per  cent.,  which  .-ix   j>er 


620  EXTENSION  OE  MORTGAGE,  [CHAP.  HI. 

cent,  was  paid  before  suit  brought,  and  that,  on  x\pril  1st,  1879,  the 
appellees  agreed  that  if  appellants  would  pay  to  them  six  per  cent, 
interest  yearly  on  said  $1,800  they  would  extend  the  time  of  pay- 
ment two  years  from  April  1st,  1879,  and  that  appellants,  in  con- 
sideration of  such  extension  of  time,  faithfully  undertook  and  prom- 
ised to  pay  the  appellees  said  six  per  cent,  yearly,  which  they  are 
ready  to  do  as  the  same  shall  mature.  Wherefore  the  defendants 
say  the  money  secured  by  said  conveyance  is  not  yet  due. 

So  far  as  this  plea  alleges  that  the  interest  was  to  be  six  per  cent., 
and  that  no  interest  was  due  at  the  commencement  of  this  suit,  it 
is  embraced  in  the  general  denial  already  pleaded.  So  far  as  it 
states  an  agreement  in  April,  1879,  to  extend  the  time  of  payment 
two  years  further,  in  consideration  of  the  appellants'  undertaking 
to  pay  six  per  cent,  interest  yearly,  it  amounts  to  nothing;  this  un- 
dertaking is  not  averred  to  have  been  in  writing  and  was  not  to  be 
performed  within  a  year,  and  there  was  no  consideration  for  it ;  the 
money,  already  past  due,  bore  six  per  cent,  interest,  without  any 
agreement.  In  substance,  the  plea  states  an  agreement  not  to 
sue  for  a  limited  time,  and  states  no  consideration  therefor;  but 
such  an  agreement,  even  if  founded  on  a  sufficient  consideration, 
can  not  be  pleaded  in  bar  of  an  action  within  the  time.  {Irons  v. 
^VoodfiU,  32  Ind.  iO;  MendenhaU  v.  Lcnivell  5  Blackf.  125;  33  Am. 
Dec.  458;  Berry  v.  Bates,  2  Blackf.  118;  Newlirh  v.  Neild,  19 
Ind.  194.)  The  Court,  therefore,  committed  no  error  in  sustaining 
the  demurrer  to  the  second  paragraph  of  the  appellants'  answer.  Its 
judgment  should  be  affirmed.^ 

Per  Curiam. — It  is  therefore  ordered,  on  the  foregoing  opinion, 
that  the  judgment  of  the  court  below  be  and  it  is  hereby  in  all 
things  affirmed,  at  the  costs  of  the  appellants. 

^  Aijers  V.  Hamilton,  131  Ind.  98  (1801),  accord.  Contra,  that  a  valid 
agreement  to  extend  the  time  of  paj'ment  enlarges  the  period  of  redemption 
and  suspends  the  right  of  foreclosure:  SchoonJwrcn  v.  Pratt,  25  111.  379 
(1861);  Union  Central  Life  Ins.  Co.  v.  Bonnell,  3.5  Oh.  St.  365  (1880); 
doodall  V.  Boardman,  53  Vt.  92  (1880).  And  see  Seymour  v.  Bailey,  66 
111.  288,  306  (1872),  and  Alhcrt  v.  Crosvenor  Investment  Co.,  L.  R.  3  Q.  B. 
123    (1867). 


AssK.NMKN'r  oi'  M()ii'i'(;.\<;i-:. 

Section  I.     Mum:  ok  'ri(AN>,i-i:u. 

LAW1{KX(1-:  V.  K\AI'\-  MKNZKV. 

SrriiKMi:  Coiim-  ok  1-j;i;oi;s  oi-  ( '(txxiicrK  ri-.  ITHl. 

( 1  A'oo/.  -.M.S.) 

Petition  in  chaneerv,  shewing  thai  Lownsbiiry  was  indcljt.'d  to 
Plat,  for  whieh  he  gave  his  note  and  a  mortgage  as  eoUatcral  se- 
eiirity.  which  deed  was  recorded.  Phit  was  indebted  to  HunfiT,  and 
for  a  vahni])h'  consideration  assigned  said  note  to  him  (an<l|  at  th«' 
same  time  delivered  him  said  mortgage-deed.  Hunter  assigned  .said 
note  to  the  petitioner  for  a  debt  which  he  owed  him,  and  aNo  deliv- 
ered to  him  said  mortgage. 

The  petitionei's  attached  the  mortgaged  lands  and  had  them  set 
ofT  to  them  on  executions,  as  Plat's  estate,  in  satisfaction  of  debts 
due  from  Plat  to  them.  The  petitioner  had  recovered  judgtnent  in 
ejectment  for  said  lands  in  Plat's  name  and  had  taken  possession, 
and  now  prays  that  the  petitionees  may  be  compelled  to  release  to 
him  their  right  and  title  to  said  jiri'mises,  or  that  he  be  in  >omf 
way  quieted  in  his  right  to  said  lands. 

This  cause  was  twice  argued.  The  court  now  granted  the  peti- 
tion and  passiMl  a  decree  against  ^Fenzc^v  (Ktiap  having  d«'eeased 
j)en(ling  the  suit)  for  him  to  reh^ase  all  his  right  to  said  mortgage.l 
jtremises,  upon  the  principl(>  that  the  petitioner  owned  the  debt  for 
which  said  mortgage  was  given  as  collateral  security — that  hi>  who 
is  entitled  to  the  debt,  which. is  the  principal  thing,  hath  right  to  all 
the  collateral  .securities  given  to  ensure  the  j)ayment  of  the  <1ebt  ; 
especially  as  in  this  ca<e,  where  the  actual  delivery  of  the  mortgage 
neeompanied  the  assignment  of  the  nole.  of  which  the  pelition(X's 
had  notice. 

.\fterwards  a  petition  was  brought  again-;!  the  heir  of  Knaji  and 
a  similar  decree  passed  airain-^t  thiMU.  tiotwilhstanding  they  had  pur- 
chased the  equity  of  r<'<lem|iti<m  of  T.owiKburv,  whieh  might  entitle 
them  to  redeem,  but  was  no  bar  to  the  petition.' 

'.ti/.s/iii  V.  IliiihaHk.  2  Day.   t7l    (IS07). 


G22  ASSIGX.MEXT    OF    MORTGAGE,  [cilAP.  IV. 

GEEEN^  V.  HART. 

Court  of  Errors  of  Xew  York,  1806. 
(1  Johns.  580.) 

Aylmar  Johnson,  on  the  2d  September,  1796,  being  justly  in- 
debted to  William  Green  in  the  sum  of  $1,551.64,  gave  him  a 
promissory  note  for  that  sum,  payable  to  him,  or  his  order,  at  the 
Bank  of  New  York  on  the  1st  of  May,  1798.  To  secure  the  pay- 
ment of  this  note,  tlonas  Piatt,  who  was  a  trustee  of  Johnson,  exe- 
cuted a  mortgage  of  two  lots  of  land  in  Corley's  Manor,  which  was 
duly  registered. 

In  October,  1706,  Green  endorsed  the  note  to  the  respondent,  and 
delivered  it  to  him,  with  the  mortgage,  which  he  holds.  The  re- 
spondent filed  his  bill  against  the  appellant  and  others,  stating  the 
above  facts,  and  that  he  paid  a  valuable  consideration  for  the  note 
and  mortgage,  and  that,  by  non-payment  of  the  money,  he  was  seised 
of  the  mortgaged  premises ;  requiring  an  answer  to  every  part  of  the 
bill,  and  praying  that  the  money  might  be  paid,  or  the  premises  sold 
in  the  usual  manner. 

The  respondent,  on  the  3d  of  March,  1798,  gave  a  receipt  to 
Green  acknowledging  that  he  received  the  note  of  Johnson  as  col- 
lateral security  for  the  payment  of  Green's  note  to  him  for 
$1,491.11,  payable  the  3d  of  May,  1798,  and  stating  that  the  note 
of  Johnson  was  secured  b}^  a  mortgage  which  was  "  not  assigned." 

Johnson,  in  his  answer,  insisted  that  the  mortgage  had  not  been 
assigned  to  Green,  Avho  stated  that  the  sum  really  lent  to  him  by  the 
respondent  was  only  $1,03.t;  the  residue  of  the  note  being  for 
usurious  interest.  There  was  no  satisfactory  evidence  of  the  usury ; 
and  the  chancellor  decreed  a  sale  of  the  mortgaged  premises,  and  an 
■account  to  l)e  taken  of  what  was  due  on  Johnson's  note,  and  directed 
the  proceeds  to  be  applied  to  the  payment  of  what  was  due  and  the 
costs.     From  this  decree  Green  appealed  to  this  court. 

The  reasons  for  the  decree  were  assigned  by 

The  Chancellor^  : 

As  to  the  second  point,  whether  the  respondent  acquired  any 
right  to  the  mortgage  in  question  by  the  transfer  of  the  note : 

The  note  given  to  the  appellant  by  Aylmar  Johnson  was  coeval, 
and  part  of  the  same  transaction,  with  the  mortgage  in  question, 
and  the  only  reason  why  the  agency  of  Jonas  Piatt  was  at  all  con- 
nected witli  it  appeared  to  have  been  because  he  held  the  mortgaged 
Innd^,  which  w(>re  intended  as  collateral  security  for  the  payment 

W  poilioTi  of  llic  opinion,  rclatinj,'  to  the  qiiostion  of  usury,  is  omitted. 


***^"-'-  "vl  CiHKKN    V.    IIAKT.  Ov'.'] 

<if  till'  (J('l)t  (hie  11(1111  .I(>liii.-(iii,  as  his  iru^lcc.  .lolui.-oii,  ilicivfun-, 
in  (.'ViT}  niuital)k'  point  of  view,  was  holli  the  niakt-r  of  the  note  ami 
jiiurtga^'or,  as  the  niort<;age  was  executi-tl,  hy  his  direction  or  pro- 
curement, \)\  his  ini>tte,  who  has  disehiiinetl  all  other  interest  than 
siuii  as  \n'  hol(I>  as  irii>trr,  and  respecting'  whose  interi'st  the  parties 
tlo  not  iliU'er. 

The  endorsement  of  the  note  hy  the  appelhmt  to  the  respondent 
was  aeeompanied  \)\  th(  delivery  of  the  mort^'a^'e.  If  the  note  was 
>aiisHed,  it  involved  the  satisfaction  of  the  mortji;af,'e,  for  the  exist- 
ence of  the  mort«,M;^'e,  hy  express  reference,  dependetl  upon  that  of 
the  note.  In  its  essence,  and  by  act  ami  operation  of  law,  it  was 
parcel  of  the  same  contract,  executed  at  the  same  time,  directed  to 
the  same  object,  and  to  be  satisfied  ijy  the  same  means. 

The  doctrine  laid  down  by  Lord  Mansfield  in  the  case  of  Martin, 
c\  dem.  Weston  v.  Moirlin,  2  Burr.  IMi!),  which  was  cited  in  ar;;u- 
mmt  l)efore  me,  apjilies  to  this  jioint  with  much  force.  The  ques- 
tion in  that  case  arose  on  a  bill  between  the  representatives  of  the 
real  and  the  repivsentatives  of  the  personal  estate  of  the  testator. 
In  definin-,'  the  sjiecies  of  property  of  a  mortjra^'or.  Lord  ^h^ns- 
titld  observed  :  "  .1  ntorffjaye  is  a  clianje  upon  the  land,  and  ivhat- 
ner  irill  giro  lite  nioncij  ivill  carry  the  estate  in  the  land  along  iritk 
tt.  to  every  purpose.  The  estate  in  the  land  is  the  same  thing  as 
the  money  due  upon  it.  It  will  be  liable  to  debts;  it  trill  go  to  ex- 
ciutors:  it  u-ill  jxtss  hy  a  will  not  made  and  executed  with  the  solem- 
nities required  by  the  statute  of  frauds.  The  assignment  of  the 
drlit,  or  forgiving  it,  will  draw  the  land  after  it,  as  a  consequence; 
nay,  it  would  do  it.  though  the  debt  were  only  forgiven  by  parol; 
for  the  right  of  the  laud  would  follow,  notwithstanding  the  statute 
of  frauds."^ 

The  receipt  of  Ki)hraim  Hart  designates  the  mortgage  as  deliv- 
ered, but  not  assigned.  This,  it  apjiears  to  me.  was  merelv  descrip- 
tive of  its  situation  at  the  time  of  its  delivery.  It  had  no  fonnal 
a^-ignment  ;  but  if  it  was  intended  not  to  be  assigned,  its  delivery 
l<i  the  res|)on(lent  is  inexplicable,  unless  the  slight  ligament  con- 
necting the  note  with  the  mortgage  is  the  rea.son,  as  alleged  by  the 
appellant.  But  that  ciniinistance  would  appear  to  intimate  that 
the  parties  intended  tbcv  should  remain  inseparalde. 

I  think,  however,  that  the  transfer  of  the  not*',  and  the  delivery 
of  the  mortg-age,  are  decisive  on  this  point.  an<l  that  tlu'  respondent 
took  the  latter  as  a  legal  incident  of  the  transfer  of  the  debt. 

Sim:v('i:i{.  .T..  delivered  the  unanimous  opinion  of  the  court. 

On  the  argument  it  has  been  insist4'(l  by  the  apjM'llant's  ctuinsel. 

"»><•  .TikIl'c  Tmwlii  i<l:.'o'^  ('lahornto  nrj^i"'*""*.  ••ontrovortinj;  T.or.i  Mans- 
I'l'I.r^   view,   in   S   Ma--.   .">.")1     (lSl-2),  '/wru  in  part,  viz/mi  p.   21. 


(j2-i  ASSIGNMENT    OF    MORTGAGE.  [CHAl*.  IV. 

1st.  That  the  respondent  having,  in  his  bill  of  complaint,  inter- 
rogated the  appellant  as  to  the  consideration  for  the  note  and  mort- 
gage, his  answer,  in  relation  to  the  usury,  becomes  evidence  in  the 
i-ause,  and  is  not  disproved. 

2d.  That  it  was  not  Green's  intention  to  transfer  the  mortgage 
to  Hart;  and  had  it  been  so,  nothing  passed  by  the  mere  delivery, 
as  the  statute  to  prevent  frauds  and  perjuries  requires  a  deed  or 
note  in  writing. 

3d.  That  the  decree  is  erroneous  in  directing  the  whole  amount 
of  Johnson's  note  and  mortgage  to  l)e  paid  to  Hart,  inasmuch  as  it 
Avas  a  security  to  him  for  $1,191.11  only,  the  difference  between 
which  and  Johnson's  note  being  clearly  due  to  Green. 

With  respect  to  the  first  point,  it  is  to  be  observed  that  the  re- 
spondent was  in  possession  of  Johnson's  note  as  endorser;  and  the 
fact  of  the  absolute  endorsement  by  Green  was  prima  facie  evidence 
of  a  full  and  adequate  consideration  paid  for  the  note.  The  re- 
spondent was  under  no  necessity  of  inquiring  into  it;  but  he  did 
allege  that  the  consideration  was  a  full  and  valuable  one.  Tliis  the 
appellant  might  have  denied;  and  had  it  been  incumbent  on  the 
respondent,  he  must  have  proved  liis  allegation,  or  failed  in  the 
suit.  The  burthen  of  showing  that  the  consideration  was  illegal 
or  inadequate  rested  on  the  appellant.  When  he  goes  into  a  charge 
of  usury  he  departs  from  the  question  put  to  him,  which  admitted 
only  of  an  affirmative  or  negative  answer ;  and  it  was  wholly  imma- 
terial whether  it  was  the  one  or  the  other.  I  view,  therefore,  the 
appellant's  answer, charging  usury, as  insisting  on  a  distinct  fact,  by 
way  of  avoidance.  The  respondents  having  replied,  and  given  him 
an  opportunity  to  prove  the  fact,  and  he  having  failed  to  do  so,  his 
answer  is  no  evidence  of  the  fact.  This  is  a  well  established  prin- 
ciple in  Aancery  proceedings,  and  will  be  found  recognized  in  every 
treatise  on  evidence  in  that  court. 

Courts  of  equity  consider  mortgages  according  to  the  essential 
nature  of  contracts,  and  give  them  operation  according  to  the  in- 
tention of  the  parties :  the  debt  is,  consequently,  there  esteemed  the 
principal,  and  the  land  the  incident;  and  whenever  the  debt  is  dis- 
charged, the  interest  of  the  mortgagee  in  the  land  ceases  of  course. 
There  is,  then,  a  manifest  distinction  between  absolute  estates  in 
fee  and  conditional  estates  for  securing  the  payment  of  money. 
Mortgages  are  not  now  considered  as  conveyances  of  lands  within 
the  statute  of  frauds;  and  the  forgiving  the  debt,  with  the  delivery 
of  the  sccuritv,  is  holden  to  be  an  extinguishment  of  the  mortgage. 
(Powell,  3d  edit.,  Mort.  54;  Barnard,  90;  Eichard  v.  Sims,  2  Burr. 
079.)  If,  however,  a  mortgage  was  within  the  statute,  the  circum- 
etanees  of  this  case  would  exempt  ii  from  its  operation.     In  case  of 


^^^-  '■■!  (ii{i:i:.\   r.  jiaki'.  62.> 

tliL-  payiiicm  ni  ihr  iiu.iu'V  siriiivd  by  inorlgagf,  in  I'ljuity  a  trusl 
arises  for  tlic  bcndit  of  tlio  mortgagor;  so,  whoro  the  debt  thus  se- 
lured  is  tran.-lVrrcd  by  the  inortgagtr,  he  l)eeoiijcs  a  trustee  for  the 
benefit  of  the  person  having  an  ini'Tesl  in  tlie  del)t.  {2  Anstruther. 
4:]S.)  In  the  ease  of  Mmiiit  v.  ]foirlln.  v!  Burr.  !>T;»,  I^rd  Mans- 
field lays  it  down  as  an  '-tablishcd  principle,  that  the  assignment 
of  the  debt  will  draw  the  land  after  it  ;  and  1  cannot  agree  that  this 
was  an  obiter  did  inn  of  tlie  iud-M'. 

In  the  jiresent  case  the  mortgage  was  delivered  to  the  assignee  of 
the  debt.  Had  it  not  been  delivered,  nor  anything  said  about  it,  I 
should  have  eonsidc  red  the  resj)ondent,  on  the  failure  of  Joimson 
to  pay  the  note,  entitled  to  the  aid  of  the  mortgage.  It  was  compe- 
tent to  the  jtarties  to  agree  that  the  mortgage  should  not  be  resorte  I 
to  by  the  holder  of  the  note;  but  the  i)roof  of  such  agreement  lie-^ 
on  the  appellant,  and  it  slKMild  be  cxplieit.  The  receipt  furnishes 
no  evidenee  of  such  agreement  ;  it  describes  the  real  situation  of  tlu- 
mortgage  as  not  a.ssigned.  Rut  this  expression  falls  far  short  of  an 
agretMuent  that  it  was  not  to  be  assigned.  It  does  not  appear  that 
the  appellant  had  any  rights  prejudieed  by  the  assignment  of  th  • 
mortgage;  and  it  is  impossible  to  evade  the  force  of  the  fact  of  hi. 
depositing  it  in  the  resj)ondent's  hands.  It  speaks  a  language  in- 
capable of  being  misunderstood,  and  is  decisive  of  the  question.  An 
issue  to  investigate  the  intention  of  the  parties,  on  that  act,  would 
have  been  useless.  T  th<»refore  think  that  the  respondent  ha.l  an 
equitable  interest  in  the  mortgage  equivalent  to  tlie  amount  of  the 
principal  and  interest  of  his  note  against  CIreen. 

I  shall  be  very  brief  on  the  last  j)oint,  because  I  understand 
the  chancellor  as  saying,  in  assigning  his  rca.<ons,  that  the  question 
of  distributing  the  fund  to  be  produced  by  the  sale  is  yet  before 
him.  The  master's  report  furnishes  him  the  neccssarv  data  on 
which  to  nuike  a  just  distribution;  and  it  would  be  unneeessarv  to 
give  din'ctions  on  that  sid)ject.  the  res|)ondents  not  claiming  anv- 
thing  heyond  the  principal  and  interest  of  the  appellant's  note,  and 
his  costs,  to  which  T  think  him  well  entitled.  The  decree  ought  to 
be  anirmed  with  costs.  T  cannot  think,  however  appearances  mav 
he,  thai  the  respondent,  or  his  counsel,  considered  the  points  now 
decided  as  n(>cessarily  or  absolutely  adjudged  on  the  former  appeal ; 
and  I  am,  therefore,  disinclined  to  allow  anything  heyond  the  tax- 
able costs. 

Jiiflgmrnf  of  nffirmnni-r} 

^Southrriii  v.  \(rn<lii„i.  ".  \.  H.  V2(\   (\A:i\)  ;     WhiH,$nnn-  v.   dibbt.  21    N. 

H.   4S4    (IS.Vi);    On/  v.    U'/vT.  .-,  Cul.   .^,1.",    (IS.->.')),  urmni. 


626  ASSIGNMENT    OV    MORTGAGE.  [CHAP.  IV. 


WAEDEN  V.  ADAMS. 

Supreme  Judicial  Court  of  Massachusetts,  1818. 

(15  Mass.  233.) 

This  was  a  writ  of  entry  by  the  said  Warden,  as  assignee  of  a 
mortgage  made  by  the  said  Adams  to  one  John  Earle. 

The  action  came  on  for  trial  before  the  Chief  Justice  at  the  last 
April  term  in  this  county,  and  the  parties  agreed  that  the  follow- 
ing facts  should  be  considered  as  proved  in  the  case,  viz. :  The 
said  Adams  made  and  executed  the  mortgage  deed  declared  on,  con- 
ditioned for  the  payment  of  six  promissory  notes  made  by  the  said 
John  and  one  Lewis  Adams,  payable  to  the  said  Earle  or  his  order. 
Afterwards  the  said  Earle  became  insolvent,  and  from  the  15th  of 
November  to  the  5th  of  December,  1815,  was  in  failing  circum- 
stances. Previously  to  the  assignment  hereafter  mentioned  Earle 
had  pledged  one  of  the  said  notes  to  a  person  not  interested  in  this 
suit,  but  did  not  assign  or  deliver  over  to  him  the  mortgage  deed 
as  security,  and  he  afterwards  redeemed  the  note,  which  he  had 
since  transferred  to  one  Sewall  Hamilton,  but  not  until  after  the 
execution  of  the  assignment  to  Warden.  On  the  20th  of  November, 
1815,  he  deposited  with  a  scrivener  two  of  said  notes,  and  also  the 
mortgage  deed,  for  the  purpose  of  having  an  assignment  thereof 
made  to  Warden  to  secure  a  debt  due  from  Earle  to  him. 

On  the  27th  of  the  same  November,  Earle  endorsed  one  of  the 
said  six  notes  to  said  Hamilton,  as  part  security  for  a  debt  due  him 
from  Earle,  and  at  the  same  time  assigned  said  mortgage  deed  and 
the  premises  therein  mentioned  to  Hamilton,  by  his  deed  duly  ac- 
knowledged and  recorded  on  the  same  day:  the  said  assignment 
being  made  on  a  separate  piece  of  paper,  and  referring  to  the  mort- 
gage. 

On  the  28th  of  said  November,  the  said  Earle  executed  an  assign- 
ment of  said  mortgage  deed,  on  the  back  thereof,  to  said  Warden,  as 
security  for  his  said  debt  to  him  and  of  some  debts  due  from  Earle 
to  certain  other  persons,  which  Warden  was  to  assume.  This  as- 
signment was  not  acknowledged  or  recorded.  The  mortgage  deed 
and  the  two  notes,  left  with  the  scrivener  for  the  purpose  of  having 
an  assignment  made,  remained  in  the  scrivener's  hands  until  the 
actual  execution  of  the  said  assignment  to  Warden.  Hamilton  re- 
covered judgment  for  possession  of  the  mortgaged  premises  against 
Adams,  and  possession  was  delivered  to  him  by  the  proper 
officer:  and  Adams  afterwards  entered  and  continued  in  possession 
by  a  parol  lease  from  the  assignee  of  Hamilton. 


^*'-'-  '•]  w  .\i;i)i;\   /'.  AiiA.Ms.  021' 

The  (li'iii;iii(I;iiil  otTcrcd  to  jn'ovr.  \)\  the  tc.-t iiiioiiv  of  Earlc,  that 
wlicii  lie  iiiiiilr  the  assignnuMit  to  Ilaniilton.  and  prior  to  that  time, 
Hamilton  kiuw  that  the  ori^'inal  inort^ia'rc  (Iml  was  in  the  hands 
of  the  scriveniT,  for  the  i)uri)os('  of  an  assignment  Ijein;,'  maih-  to 
tlu'  <leman(hint,  for  .seeurin<x  the  payment  of  tht-  two  notes  trans- 
fern'd  tt»  him  as  aforesaid. 

Hut  tlie  Chief  Justice,  bein«r  of  opinion  that  thi-  dcmanchint  eould 
not  maintain  his  action,  in  conse(|uence  of  the  jirior  assi^rnment  to 
Hamilton,  uiuh-r  which  the  tenant  is  in  possession,  and  also  tiiat 
Karle  was  not  a  competi-nt  witness  to  prove  the  fact  for  whidi  he 
was  ofTered,  if  such  fact  were  material,  directed  a  nonsuit,  which 
was  to  be  set  aside  and  a  new  trial  granted,  if  \i|)on  the  above  facts, 
t(»jri'tlu'r  witji  the  said  kn<nvled<j[e  of  Hamilton,  this  action  could  bo 
maintained. 

liurnsiilc  and  Banns,  for  the  demandant. — The  delivery  of  the 
mort<ra<ie  deed,  toi^ether  with  the  notes  endorsed,  for  the  {)urpose 
specified,  amounted  to  sueh  an  eipiitahle  assignment  as  the  law  will 
protect.  It  is  said  by  Tiord  ^fansfield  in  the  case  of  Martin  v.  Motr- 
lin,  2  Burr,  !>*S,  that  "  a  mortgage  is  a  charge  upon  the  land:  aJid 
whatever  would  give  the  money  will  carry  the  estate  along  with  it, 
to  every  iturjHise.  The  estate  in  tlie  land  is  the  sanu'  thing  as  the 
money  due  uj)on  it."  ''  The  assignnu'Ut  of  the  debt,  or  forgiving  it, 
will  draw  the  land  after  it.  as  a  con.sequence ;  nay,  it  would  do  it 
though  the  debt  were  forgiven  only  by  parol :  for  the  right  to 
the  land  would  follow,  notwithstanding  the  statute  of  frauds."' 
This  doctrine  is  recognized  and  confirmed  by  the  Su])reme  Court 
of  Xi'W  York  in  the  ca.se  of  Green  v.  Harl.  1  .Tohns.  TiSO;  see  also 
Powell  on  Mortgages,  18G  to  lf)0;  11  Mass.  Hep.  47:).  Then  the 
second  assignment  by  Earle  to  Hamilton,  with  the  knowledge  of 
the  latter  of  tlu'  prior  transaction,  was  frauduU-nt  aiul  void  as  to 
the  demandant.  And  if  we  should  be  debarred  from  fixing  this 
knowledge  upon  him,  we  contend  that  lu'  mu-t  be  presumed,  from 
the  facts  found  in  the  case,  to  have  known  of  the  delivery  of  the 
deed  to  the  scrivener,  and  the  purpose  of  such  delivery.  The  ab- 
s«'iu-e  of  the  mortgage  deed  should  have  jtut  Hamilton  on  his  guard  ; 
and  he  is  chargeable  with  fraudulent  motives  in  taking  an  assign- 
nu'Ut  under  sucli  circumstances.  It  can  make  no  dilTerence  that 
but  two  f)f  the  six  notes  were  endorsed  to  the  denuindant.  The 
nitirtgage  was  given  as  security  for  these  two  notes,  and  might 
legally  and  e(|uitably  be  assigneil  with  them. 

That  Karle  was  a  cojupetent  witness,  we  refer  the  court  to  the 
<'asos  of  Loker  v.  Uatjnes,  11  Mass.  Kep.  II)S;  The  Inhahilants  of 
Worcester  v.  Eaton,  ibid.  3(58,  and  ///'//  v.  Paifson  tf-  nl.,  3  Mass. 


"638  ASSIGNMENT    OF    MORTGAGE.  [CUAI".  I\% 

Eep.  559.  He  was  not  offered  to  impeach  his  own  deed,  but  merely 
to  postpone  the  security  intended  to  be  given  by  it. 

Newton  for  the  tenant. — The  assignment  to  Hamilton  was  prior 
to  that  to  the  demandant,  and  being  in  every  circumstance  con- 
formed to  the  requisitions  of  the  statute,  must  have  the  preference. 
The  assignment  of  a  mortgage  is  a  conveyance  of  the  rents  and 
profits.  (11  Mass  Hep.  474,  Goodivin  v.  Eichardson,  Adm.)  Then 
the  assignee  has  such  an  interest  in  the  land  as  cannot  pass  without 
writing. 

The  dictum  of  Lord  Mansfield  in  the  case  of  Martin  v.  Moivlin 
has  been  completely  put  down  by  Judge  Trowbridge  in  his  tract 
upon  mortgages  (8  Mass.  Kep.  557,  and  seq.)  ;  and  it  may  well  bo 
presumed  that  if  the  judges,  who  agreed  in  the  decision  in  the  case 
of  Green  v.  Hart,  had  read  that  tract,  they  would  not  have  given 
the  opinion  they  did.  That  decision  was,  however,  in  chancery, 
and  is  no  precedent  for  the  government  of  this  court. 

If  the  fact  proposed  to  be  proved  by  the  testimony  of  Earle  were 
legally  in  evidence,  it  would  not  better  the  demandant's  case.  (See 
12  Mass.  Rep.  523;  11  Mass.  Rep.  312;  5  Mass.  Rep.  133.)  Ham- 
ilton had  the  first  legal  assignment  of  the  mortgage,  and  there  was 
no  fraud  in  the  transaction:  for  Earle  had  a  right  to  prefer  making 
him  secure,  rather  than  another.  All  that  the  demandant  can  com- 
plain of  amounts  to  nothing  beyond  a  violation  of  a  promise  or  un- 
dertaking, on  the  part  of  Earle,  to  give  him  the  preferenee.  (5 
Mass.  Rep.  144.) 

By  the  Court.  By  force  of  our  statutes  regulating  the  transfer 
of  real  estates  and  for  preventing  frauds,  no  interest  passes  by  a 
mere  delivery  of  a  mortgage  deed  without  an  assignment  in  writing 
and  by  deed. 

An  assignment,  made  by  a  separate  deed,  without  the  delivery 
over  of  the  original  mortgage  deed,  conveys  all  the  interest  of  tbe 
mortgagee,  and  makes  the  grantee  the  assignee  of  the  mortgage. 

The  knowledge  imputed  in  this  case  to  Hamilton,  the  assignee, 
of  an  intention  on  the  part  of  Earle,  the  mortgagee,  to  assign  the 
mortgage  to  the  demandant,  does  not  impair  the  tenant's  title:  he 
being  a  bond  fide  creditor,  and  having  a  right,  by  his  vigilance,  to 
secure  his  demands  in  this  way :  just  as  he  would  have  had  by  an  at- 
tachment, although  he  might  know  that  another  creditor  in- 
tended to  make  an  attachment,  and  had  taken  incipient  measures 
therefor. 

The  nonsuit  is  not  set  aside. ^ 

hSmith  V.  Kellcy,  27  Me.  237  (1847),  Adams  v.  Parker,  12  Gray  (Mass.) 
53  (1858);  Cottrell  v.  Adams,  2  Biss.  (111.)  351  (1870);  Williams  v. 
Teachey,  85  N.  C.  402    (1881),  accord. 


***'•  '-^  JACKSON    r.   UUONSOV.  G2!) 

JACKSON   V.   BKONSOX. 

SliMU'MK  CoiiiT  (»!•  .hincATcifi;  OF  Ni;\v  ^'oi;k.  1822. 

(lit  J  alt  U.S.  :]2rj.) 

Kjoftmcnt  for  land  in  Onondaga,  tried  before  Mr.  .Justice  Yates 
Jit  the  Onondaga  Cireuit  in  -lune,  IM'^I.  The  lessor  of  the  plaintiff 
proved  a  tith^  nnder  Ahijah  Karl,  for  a  lot  of  sixty  acres,  by  a  det'(| 
to  him,  dated  ;5(1  of  March,  l^'(ll,  duly  recorded  on  the  same  dav. 
and  that  the  defendant  was  in  possession  of  six  acres  of  the  land. 
The  defi'ndant  proved  a  mortgage  from  Curtis  to  Earl,  dated 
March,  1801,  of  the  wliole  lot.  to  secure  i)ayment  to  the  State  of 
ij^Kto.fit^.  and  to  indemnify  Karl.  Also,  a  deed  from  Karl  to  the 
defendant  for  the  premises  in  (piestion,  dated  5th  of  June,  1804. 
.\  verdict  M'as  taken  for  tlie  plaintifT,  subject  to  the  opinion  of  the 
Co\irt.  on  a  case  which  was  su])mitted  to  the  Court  without  argii- 
nicnt. 

Pir  Ciirlinii.  It  is  now  well  settled,  that  the  mortgagee  has  a 
nu'ri'  chattel  interest ;  and  the  mortgager  is  considered  as  the  pro- 
prietor of  the  freehold.  The  mortgage  is  deemed  a  mere  incident 
to  the  I)ond  or  personal  security  for  the  de])t ;  and  the  assignment 
of  th'^  interest  of  the  mortgagee  in  the  land,  without  an  assignment 
of  the  debt,  is  considered  in  law  as  a  nullity. 

In  tlie  case  of  Rnni/nn  v.  Mn-ticrrnn.  11  J(»hns.  l?ep.  5:14, 
it  was  decided  that  the  mortgager,  or  a  purchaser  of  the  e(piity  of 
redemption,  may  maintain  trespass  against  the  mortgagee,  or  a  per- 
son acting  under  his  license.  There  the  defendant  pleaded  lihrrum 
tfiii'iiirnftiw  :  and  tlie  jilaintifT  (the  purchaser  of  the  e(|uity  of  re- 
demjition)  replied,  that  tlie  freehold  was  in  him.self ;  and  there  was 
judgment  for  the  plaint i IT.  Tfere  the  fpiestifui  is,  whether  Curtis, 
the  mortgager,  can  maintain  an  <jectment  a<rainst  Rronson,  whi> 
appear.*!  as  a  grantee,  by  deed  in  fee-simple,  under  the  mortgagee. 

We  are  of  opinion  that  tlic^  plaintifT  is  (>ntitled  to  jiulgment.^ 

^FUisoii    V.   Dnniiln,    11    N.   11.   274    (1S40),  Prtrrs    v.   .himr.sloirn    liruhv 
r„.  r>  f'al.  .335   (1S55),  acconl.     Soc  al.so  Mtrrilt  v.  liartholivk,  30  N.  Y.  44 

(ISrtT). 


G30  ASSIGNMENT    OF    MORTGAGE.  [CIIAP.  IV, 

PAGE  V.  PIEECE. 
Superior  Court  of  Judicature  of  New  Hampshire^  1853. 
(26  N.  H.  317.) 

Writ  of  entry^  brought  by  the  plaintiffs  to  foreclose  a  mort- 
gage made  by  the  defendant  to  Hiram  Mnnger,  and  which  they 
claim  to  hold  by  virtue  of  the  sale  and  indorsement  to  them  of  a 
note  secured  thereby. 

The  case  was  submitted  to  the  court  upon  papers  exhibited  by  the 
parties. 

The  first  was  a  mortgage  deed  conveying  the  premises  from  the 
defendant  to  Hiram  Hunger  for  the  security  of  five  notes  for  $100' 
each,  payable  to  Manger  or  order  at  different  times,  one  of  which,, 
being  the  last  payable,  was  indorsed  before  maturity  to  the 
plaintiffs.  The  four  other  notes  were,  together  with  the  mortgage; 
assigned  by  Hunger  to  Pliny  Cadwell  by  an  instrument  under  seal, 
which  was  duly  recorded.  The  notes  so  assigned  were  afterwards 
paid  by  Pierce  to  Cadwell,  who  thereupon  gave  a  written  discharge 
of  the  mortgage,  which  was  also  duly  recorded  on  the  margin  of 
the  mortgage  record.^ 

Woons^  J.  It  is  settled  in  this  State  that  the  assignment  of  a. 
debt  secured  by  a  mortgage  of  land  is  ipso  facto  an  assignment 
of  the  security  also.  (Son.theriii  v.  Mendum,  5  X.  H.  Rep.  420; 
Rigney  v.  Love  joy,  13  N".  H.  Eep.  247,  and  cases  there  referred  to.) 
And  it  is  also  settled  that  the  interest  of  a  mortgagee  is  incapable 
of  being  conveyed  by  him,  except  in  connection  with  the  debt  se- 
cured by  the  mortgage,  and  as  a  mere  incident  or  appurtenance  to 
it.  {Ellison  V.  Daniels,  11  N.  H.  Pep.  274,  and  cases  there  cited.) 
It  was  held  in  Rigney  r.  Love  joy,  before  referred  to,  that  the  parol 
assignment  of  a  negotiable  note  secured  by  a  mortgage,  although 
it  did  not  authorize  the  assignee  to  sue  for  the  debt  in  his  own  name,, 
carried  with  it  the  mortgage  interest,  and  enabled  the  assignee,  by 
his  writ  of  entry,  to  assert  his  claim  to  the  land  in  his  own  name. 

As  a  corollary  to  the  doctrine  that  an  assignment  of  the  debt  car- 
ries with  it  the  mortgage,  it  has  been  held  that  where  the  debt  con- 
sists of  several  bonds  or  notes  the  assignment  of  each  operates,  pro 
tanfo.  an  assignment  of  the  mortgage.  In  Loive  v.  Morgan.  1  Bro. 
C.  C.  268,  the  mortgagee  had  assigned  to  a  trustee  in  trust  for 
three  persons  who  had  contributed  equal  proportions  of  the  money. 
One  of  the  three  brought  a  bill  to  foreclose,  and  took  a  decree.  But 
the  cause  stood  over  to  enable  him  to  make  the  other  two  parties,  be- 

This  luicf  sfatoiiiont  of  facts  is  abbroviated  from  that  given  in  the  re- 
port. 


'*^-'-'-  'J  TAtiK  r.  I'iKiici;.  G:n 

causi'  it  was  deciucd  iinpossiblc  for  out-  to  foreclose  without  the 
others.  In  Cooper  v.  Ulinan,  Walker's  Mich.  Ch.  [{ep.  ',!.') I,  it  was 
held  that  the  assi;,Miiiicnt  of  one  of  sevenil  notes  secured  hv  nu)rt- 
ga^'e  carries  with  it  a  proportional  interest  in  the  niort;;aj,'e,  unlegs 
it  is  aji^reed  between  the  parties  at  the  time  that  no  interest  in  the 
mortgage  is  to  pass  to  the  assignee.  In  Slcvcnsun  v.  lihuk,  Sax- 
ton's  N.  J.  Hep.  ;{;]8,  it  was  held  that  where  tiic  mortgage  is  made 
to  secure  several  bonds,  and  the  mortgagee  assigns  them  to  different 
persons,  and  the  mortgage  to  one  of  them,  the  several  assignments 
of  the  bonds  operate,  pro  tanto,  an  assignment  of  the  mortgage. 
And  if  he  to  whom  the  assignment  of  the  mortgage  and  of  one  of 
the  bonds  is  made  buys  in  th(»  eipiity  of  redemption,  the  mortgage 
is  extinguished  as  to  the  bond  held  by  him,  but  will  continue  as  a 
security  for  the  residue  of  the  bonds.  In  Crane  v.  March,  4  Pick. 
Kep.  13G,  the  same  general  principle  is  involved  in  the  conclusion  to 
which  the  court  arrived.  In  lieiz  v.  Ilcphncr,  1  Penn.  280,  it  was 
decided  that  an  assignee  of  one  of  the  bonds  took  the  benefit  of  the 
mortgage  made  to  secure  it,  although  at  the  time  of  the  assignment 
he  did  not  know  there  was  such  mortgage;  and  that  he  should  not 
be  postponed  to  subsequent  assignees  of  the  other  bonds,  to  whom 
the  mortgage  likewise  was  assigned,  although  the  latter  (li<l  not 
know  that  the  first-named  bond  was  unpaid.  In  CiiUum  v.  Eruin, 
4  Ala.  452,  it  was  al.<o  held  that  an  assignment  of  one  of  several 
notes  secured  by  a  mortgage  was  an  assignment,  pro  tanto,  of  the 
mortgage,  and  if  the  |)ro|)erty  wa-^  insullicient  security  for  the 
whole,  such  assignee  should  have  a  preference  over  the  mortgagee; 
which  preference  was  not  disturbed  by  a  subsi-cpu-nt  assignment  of 
the  other  notes;  each  of  which  took  priority  of  lien  in  the  order 
of  its  assignment,  without  n^gard  to  the  order  in  which  they  .sev- 
erally fell  due;  but  that  the  assignor  might  at  the  time  of  tlie  as- 
signment give  a  ])referenence  to  on(>  or  more  of  the  assignet>s. 

In  Liintplon  S-  a.  v.  Keith,  9  Verm.  '?0!>,  of  the  several  notes  se- 
cured by  the  mortgage,  all  but  one  was  assigned  with  the  mortgage, 
to  one  from  whom  the  defendant  received  them.  The  material  part 
of  the  first  assignment  was  in  these  words:  ''  We  do  hereby  grant, 
bargain,  sell,  transf«'r  ;.nd  make  over  to  said  H.,  his  heirs,  \"e.. 
the  above  mortgage  deed  and  premises  therein  describ(>d,  and  the 
notes  in  the  condition  mentioned,  except  the  fifty-five  dollar  note," 
&c.  The  defendant,  after  he  became  pos.ses.^ed  of  the  notes  and 
mortgage,  made  further  advances  to  the  mortgager,  and  trM>k  a 
.second  mortgagi'  <»f  the  same  property.  .\nd  the  question  was. 
whether  the  fifty-five  dollar  note  named  in  the  first  mortgage,  and 
excepted  out  of  the  assignnnMit.  shotiM  take  prece<lence  of  thi» 
siM'ond  tnorlgage.  And  it  was  held  that  it  should  not.  First,  ln^- 
cause  the  defendant  was  an  innocent  purchaser,  having  no  notice 


*Jo2  ASSIGXMEXT   OF   MORTGAGE,  [ciIAl-.  IV. 

that  the  fifty-five  doHar  note  was  unpaid,  or  that  the  plaintiffs 
claimed  an  interest  in  the  mortgage,  which  they  had  in  terms  fully 
iissigned.  Second,  because  it  was  clearly  competent  for  the  parties 
to  the  first  assignment  to  agree  as  they  did  agree,  that  the  whole 
mortgage  should  pass.  Mr.  Chancellor  Collamer  cites  the  lan- 
guage of  the  Court  in  Wright  v.  Wright,  2  Aik.  Rep.  ^12,  in  these 
words :  "If  the  mortgagee  choose  to  assign  all  his  interest  in  the 
mortgaged  premises,  to  secure  but  a  part  of  the  notes  therein  as- 
t^^igned  by  him,  he  has  a  right  to  do  so,  and  in  such  case,  no  interest 
in  the  premises  could  remain  in  him.''  And  the  Chancellor  con- 
cludes that  the  assignment  "  clearly  conveys  the  whole  mortgage, 
<uid  all  the  notes  except  one."  "'It  is  however  true,"  he  adds,  "  that 
as  against  ]\Iead  (the  mortgager),  this  mortgage  may  be  kept  on 
foot  for  the  security  of  all  for  which  it  was  given,  until  paid  by 
him  or  legally  discharged.  The  orators  may  have  the  right  to  pay 
Keith,  the  defendant,  both  his  mortgages,  and  redeem  as  to  him  and 
them,  and  hold  the  mortgages  for  all  the  debts  therein  mentioned 
against  Mead." 

These  cases  all  maintain  or  admit  the  principle,  that  the  mort- 
gage is  a  mere  attendant  upon  the  debt,  and  in  the  absence  of  an 
agreement,  express  or  implied,  to  the  contrary,  if  the  debt  be  as- 
signed in  parcels  to  different  persons,  the  mortgage  will  follow  and 
give  equal  protection  to  these  fragments,  into  whose  hands  soever 
they  may  pass  by  any  proper  mode  of  transfer.  Whether  mere  pri- 
ority of  assignment  affords  the  note  or  bond  that  is  the  subject  of 
it,  the  preference  asserted  in  some  of  the  cases,  it  is  not  necessary 
here  to  decide;  because  the  notes  first  assigned,  in  this  case,  were 
fully  paid,  and  the  property  exonerated  with  respect  to  them  on  the 
fourteenth  of  Deceml)or,  1850. 

From  the  principle  laid  down  in  Ellison  v.  Da7iich,  before  cited, 
it  might  be  fairly  inferred  that  the  assignment  from  Munger  to 
Cadwell,  on  the  18th  of  January,  1849,  conve^'cd  no  interest  in 
the  mortgage,  beyond  Avhat  was  properly  appurtenant  to  the  notes 
then  assigned  to  him,  for  the  reason  that  Munger  had  no  power  to 
assign,  and  Cadwell  no  capacity  to  take,  any  interest  in  the  land  or 
the  mortgage,  except  to  the  extent  of  securing  those  notes.  But 
it  is  not  necessary  so  to  decide  in  this  case.  And  it  is  not  necessary 
to  decide  whether  an  assignment  of  a  mortgage  with  part  of  the 
debt,  in  the  terms  used  by  the  parties  on  the  18th  of  January,  1849, 
has  or  has  not  the  effect  of  giving  priority  to  the  accompany- 
ing notes,  over  those  retained  by  the  mortgager;  nor  whether  that 
priority,  having  so  attached,  would  be  disturbed  in  favor  of  a  party 
taking  the  residue  of  the  notes  from  the  mortgagee,  by  a  subsequent 
assignment,   without   notice.     These   questions,   unavoidably   sug- 


% 


s*-*^"-  '1  r.viii:  /.   I'iKKt  K.  (j33 

grstiil   liy  till'  cases  ri't'cllrd   In   I'or  :l   iliircrclll    jilirjMi.-.(',  Ulr  liol  coll- 

cliidcd  by  tlic  (It  (i.-iiMi  of  I  lie  one  Itcfdn-  lis.  It  may  be  adiiiilhMi 
that  ilio  assigiiiiu'iii  id'  llii-  m<)r(:,M<,fi'  to  Cadwrll  carrii'd  lla-  wliolr 
iMorl«rag(',  as  in  lIi.-  la-i-  of  ImikjiIuh  \.  k'rilli,  with  the  (jualirk-a- 
lidii  admitted  in  that  case.  For  hero  is  no  siih>e<|iient  piircha.ser 
without  notice,  and  no  mesne  iiuiimljrancer,  who  hy  the  princiitlcs 
of  that  ca>e,  rould  inter|»o>e  l)etween  this  |dainlill'  and  the  security. 

Bill  here  the  plaint itf,  the  assiirnee  of  one  of  the  notes,  is  entitled, 
I'ven  upon  the  theory  of  that  case,  to  an  interest  "in  the  niort<^age. 
'I'he  j)arty  again>t  whom  he  seeks  to  enforci'  it  is  tlu'  mortgager 
himself,  and  the  makt  r  of  tlie  note.  He  did  not,  like  the  defi-nd- 
aiit  in  Lamjilun  v.  k'fllli,  advance  money  upon  the  land  in  faith  of 
an  assignmeni  of  the  mortgage  to  Catlwell,  and  of  Cadwell  to  him- 
self, and  in  ignorance  that  the  other  note  was  outstanding  and  un- 
]>aid,  which  was  the  strong  feature  in  that  case.  On  the  contrary, 
when  he  took  from  Cadwell  the  formal  dischargi*  of  the  mortgage, 
he  knew  it  was  not  paid  ;  that  hefore  he  could  rightfully  hold  the 
land,  there  was  a  note  of  $100  with  which  he  liad  himself  charged 
it,  still  outstanding  against  him,  which  he  must  pay.  He  eould 
not,  therefore,  have  supposed  that  any  di.scharge  which  Cailwi-ll 
^ould  give  him  wonid  exonerate  the  land,  and  without  imputing 
a  sini.<ter  design  to  the  parly,  we  cannot  suppose  that  he  intendeil, 
in  taking  the  di>(harge.  to  give  any  such  effect  to  it. 

The  conclusion  therefore  is,  that  the  plaintiffs  were,  from  and 
nfter  Deccmher  11,  ISoO.  solo  assignees  of  the  mortgage  of  the 
liremiscs,  hy  virtue  of  the  purchase  of  one  of  the  nottN  secured  by 
it.  and  the  pp.-!nent  of  the  others,  which  had  been  a.ssigned  to  Cad- 
well. 

When  two  or  more  are  interested  as  mortgagees  or  assignees  of  a 
mortgage,  it  has  been  held  that  they  are  all  necessary  parties  to  a 
bill  to  foreclo.s,..  (Pahiirr  v.  Carlish'.  1  Sim.  &  Stu.  43:^;  Lotrr  v. 
Murgnn.  before  cited.)  But  where  the  interest  of  all  but  one  has 
heen  extinguished,  there  stvms  no  rea.son  why  he  may  not  proc«vd 
alone.  (King  v.  Ilarrinqtnn.  2  .\ikcn,  .U.)  The  plaintitTs  in  thi.>? 
case  are  joint  assignees  of  the  mortgage,  and  as  such  are  entitled  to 
maintain  this  action  to  foreclose  the  mortgage.' 

,7u(l(jnuiit  for  till'  ftlaiiitiffs. 

I'htlan  V.  Olnri/.  t]  Ciil.  47!»  (IS'iO),  turord.  C'oinpar.'  K>  ;i>-<  v.  W'ihhI, 
51  Vt    .^r?!    (1840). 


634  ASSIGNMENT    OF    MORTGAGE.  [CHAP.  IT. 

BAKEETT  v.  HINCKLEY. 

Supreme  Court  of  Illinois,  1888. 

(124 /Z/.  32.) 

Appeal  from  the  Superior  Court  of  Cook  County;  the  Hon. 
Joseph  E.  Gar}',  Judge,  presiding. 

Mr.  Justice  Mulkey  delivered  the  opinion  of  the  Court : 

Watson  S.  Hinckley,  claiming  to  be  the  owner  in  fee  of  the  land 
in  controversy,  on  the  26th  day  of  February,  1885,  brought  an 
action  of  ejectment,  in  the  Superior  Court  of  Cook  County,  against 
the  appellants,  George  D.  Barrett,  Adalina  S.  Barrett,  William  H. 
Whitehead,  and  others,  to  recover  the  possession  thereof.  There  was 
a  trial  of  the  cause  before  the  court,  without  a  jury,  resulting  in  a 
finding  and  judgment  for  the  plaintitf,  and  the  defendants  ap- 
pealed. 

The  evidence  tends  to  show  the  following  state  of  facts :  In  1870 
Thomas  Keanis  was  in  possession  of  the  land,  claiming  to  own  it  in 
fee  simple.  On  August  3  of  that  year  he  sold  and  conveyed  it  to 
William  H.  W.  Cushman  for  the  sum  of  $80,000.  Cushman  gave 
his  four  notes  to  Kearns  for  the  balance  of  the  purchase  money, — 
one  for  $12,500,  maturing  in  thirty  days;  three  for  $16,875  each, 
maturing,  respectively,  in  two,  three  and  four  years  after  date,  and 
all  secured  by  a  mortgage  on  the  premises.  The  notes  seem  to  have 
all  been  paid  but  the  last  one.  In  1878  Kearns  died,  and  his 
Avidow,  Alice  Kearns,  administered  on  his  estate.  Previous  to  his 
death,  however,  he  had  hypothecated  the  mortgage  and  last  note 
to  secure  a  loan  from  Greenebaum.  Subsequently,  and  before  the 
commencement  of  the  present  suit,  Greenebaum,  in  his  own  rights 
and  "Mrs.  Kearns,  as  administratrix  of  her  husband,  for  value,  sold 
and  assigned,  by  a  separate  instrument  in  writing,  the  mortgage 
and  note  to  the  appellee,  Watson  S.  Hinckley. 

This  is,  in  substance,  the  case  made  by  plaintiff.  The  defend- 
ants showed  no  title  in  themselves  or  any  one  else.  The  conclusion  to 
be  reached,  therefore,  depends  upon  whether  the  case  made  by  the 
])laintiff  warranted  the  court  below  in  rendering  the  judgment  it 
did. 

It  is  claimed  by  appellants,  in  the  first  place,  that  much  of  the 
evidence  relied  on  by  appellee  to  sustain  the  judgment  below  was 
im])roperly  admitted  by  the  court,  and  various  errors  have  been 
assigned  upon  the  record  questioning  the  correctness  of  the  rulings 
of  the  court  in  this  respect.  They,  however,  go  further,  and  insist 
that,  even  conceding  the  facts  to  be  as  claimed  by  appellee  himself, 


^'^^'  ^-J  IJAliltKTT   C.   lil.\(Kl.i;V.  Go5 

tlu-y  ari'  iiol  .-uHicitiit  in  law  to  sustain  I  he  ad  ion.  As  the  jud;,'- 
mt'iit  bi'low  will  have  to  he  rcv.TsctI  on  the  ;,M-oun(|  last  sug<,'t'stf<J, 
it  will  not  be  ncci'ssary  to  consi*!.-!-  the  other  errors  assigned. 

We  projio.si-  to  state,  as  hrielly  as  may  he,  .some  of  the  reason.s 
Avhich  have  lead  ns  to  tiie  eonelusion  reached.  In  doing  so,  it  id 
perhajjs  ])ro|)er  to  eall  attention  at  the  outset  to  some  eonsiderations 
tiiat  should  he  steadily  kept  in  mind  as  we  proceed,  and  to  which 
we  attacii  not  a  littli'  imi)ortance. 

It  is  first   to  he  specially   noted,  that   this   is  a  suit   at   law,  as 
contradistinguished  from  a  suit  in  e(piity.     It  is  brought  to  enforce 
a  naked  legal  right,  as  distinguished  from  an  equitable  right.     The 
plaintiff  seeks  to  recover  certain  lands,  the  title  whereof  he  claims 
in  fee  simj)le.    To  do  this,  he  is  bound  to  show  in  himself  a  fee  sim- 
ple  title   at    law.   as   contradistinguished    from    an    e(|uitable    fee. 
{Fi:<chcr  v.  KshiiiKin,  (!S  111.  TS;  \V,ihs  v.  Iloi/iir,  :\]  id.  404;  Flem- 
ing V.  Carirr.  TO  id.  '.^S(i ;  Dmrson  v.  ILii/dcn.  (IT  id.  ."i'i.)      Has  he 
done  this?     lie  attempts  to  derive  title  remotely  through  the  mort- 
gage from  Cushman  to  Kearns,  hut  uj)on  what  legal  theory  is  not 
very  readily  perceived.     His   innnediate  source  of   title,  however, 
seems  to  be  ^Irs.   Kearns,  as  administratrix  of  her  husband,  and 
(ireenebaum,  as  ])lcdgee  of  the  note  and  mortgage     The  instru- 
ment  through   which   he  claims   is  lost   or  destroyed,  and   all   we 
know  concerning  its  character  is  what  the  plaintiff  himself  says 
about  it.     As  to  its  contents,  he  does  not  pretend  to  state  a  single 
sentence  or  word  in  it,  but  characterizes  it  as  an  assignment,  and 
gives  the  conclusions   which   he  draws   from   it    in  general    terms 
only.     After  stating  his  purcha.<e  of  the  note  and  mortgage  in  Jan- 
uary, 1880,  he  says:  "The  assignnuMit  was  from  Mrs.  Kearns,  the 
administratri.x  of  Thomas  Kearns*  estate,  and  Elias  (ireenebaum, 
the  bank(M-.     .\t  the  time  of  the  purchase  a  separate  writing  wa.s 
given  to  me, — a  full  assignment.   ...   It  was  a  very  explicit  as- 
signment, or  full  assignment   of  the  note  and   mortgage  and   the 
land,  the  property,  and  all  the  right  and  title  to  the  laiul."     It  will 
be  observed,  the  instruim'nf   is  throughout  chanu-terized  as  an  as- 
signment  only,   which  dor-   not,   like  the  term   "deed,"  or  "  s|)e- 
«ialty, "•signify  an  instrument  under  seal.      A  nurc  written  assign- 
ment, founded  upon  a  valuable  consideration,  is  just  as  availal>le 
for  the  purpose  of  passing  to  the  assignee  the  etpiitable  title  to  land 
as  an  instrument  under  .seal.     Such  being  tlu'  ea.se,  we  would  clearly 
not  be  warranted  in  inferring  that  the  assignment  was  under  .seal 
from  the  simple  fact  that  the  witness  gives  i(  as  his  opinion  that 
the  instrument  was  "a  full  a.-?signment"  of  the  land,  which  is  noth- 
ing more  than  the  witness"  opinion  \ipon  a  qiu'stion  of  law.     There 
'•it  being  sulVicicnt  evidence  in  the  record  to  show  that  the  assiirn- 


63G  ASSIGNTMEXT    OF    MOKTGAGE.  [cUAP.  I\\ 

luvnt  was  under  seal,  it  follows  that  even  conceding  the  legal  title 
to  the  property  to  have  heen  in  Mrs.  Kearns  and  Greenehaum,  or 
either  of  them,  it  could  not  have  passed  to  the  appellee  by  that  in- 
strument, and  if  not  by  it,  not  at  all,  because  that  is  the  only  muni- 
ment of  title  relied  on  for  that  purpose.  This  conclusion  is,  of 
course,  based  upon  the  fundamental  principle  that  an  instrument 
intei-  partes,  in  order  to  pass  the  legal  title  to  real  property,  must  be 
under  seal. 

But  this  is  not  all.  Even  conceding  the  sufficiency  of  the  assign- 
ment to  pass  the  legal  title,  the  record,  in  our  opinion,  fails  to  show 
that  the  assignors,  or  either  of  them,  had  such  title ;  hence,  there  was 
nothing  for  the  assignment  to  operate  upon,  so  far  as  the  legal 
estate  in  the  land  is  concerned.  Having  no  such  title,  they  could 
not  convey  it.  Nemo  plus  juris  ad  aliutn  transferrc  potest  qiiam 
ipse  habet.  That  the  legal  estate  in  this  property  was  not  either  in 
Greenebaum  or  ]Mrs.  Kearns  at  the  time  of  the  assignment  to  plain- 
tiff, is  demonstrable  by  the  plainest  principles  of  law.  Let  us  see. 
Thomas  Kearns  was  the  owner  of  this  property  in  fee.  He  conveyed 
it  in  fee  to  Cushman.  The  latter,  as  a  part  of  the  same  transaction, 
reconveyed  it,  by  way  of  mortgage,  to  Kearns.  By  reason  of  this  last 
conveyance,  Kearns  became  mortgagee  of  the  property,  and  Cush- 
man mortgagor.  According  to  the  English  doctrine,  and  that  of 
some  of  the  States  of  the  Union,  including  our  own,  Kearns,  at  least 
as  between  the  parties,  took  the  legal  estate,  and  Cushman  the  equi- 
table. According  to  other  authorities,  Kearns,  by  virtue  of  Cush- 
man's  mortgage  to  him,  took  merely  a  lien  upon  the  property  to  se- 
cure the  mortgage  indebtedness,  and  the  legal  title  remained  in 
Cushman.  For  the  purposes  of  the  present  inquiry  it  is  not  im- 
]iortant  to  consider  Just  now,  if  at  all,  which  is  the  l)etter  or  true 
theory.  It  is  manifest,  and  must  be  conceded,  that  the  legal  estate 
in  the  land,  after  the  execution  of  the  mortgage,  was  either  in  the 
mortgagee  or  mortgagor,  or  in  both  combined.  Such  being  the 
ease,  it  is  equally  clear,  appellee,  to  succeed,  must  have  deduced 
title  through  one  or  both  of  these  parties.  This  could  only  have 
})een  done  by  showing  that  the  legal  title  had,  by  means  of  some 
of  the  legally  recognized  modes  of  conveying  real  property,  passed 
from  one  or  both  of  them  to  himself.  This  he  did  not  do  or  attempt 
to  do.  Indeed,  he  does  not  claim  through  them,  nor  either  of  them. 
Not  only  so,  neither  Mrs.  Kearns  nor  Greenebaum,  through  whom 
appellee  does  claim,  derives  title  through  any  deed  or  conveyance 
executed  by  either  the  mortgagor  or  mortgagee.  Nor  does  either  of 
them  claim  as  heir  or  devisee  of  the  mortgagor  or  mortgagee. 

As  the  assignment  of  the  note  and  mortgage  to  appellee  did  not, 
as  we  hold,  transfer  or  otherwise  affect  the  legal  title  to  the  land,  it 


si:('.  i]  h.\i;i;i;tt  c.  iiin<ki.i;y.  <^{V 

may  br  a.-kcil,  what  ''ircct,  tlifii,  diil  it  liav.-?  This  (|ucslion,  like 
most  others  inTtainiiii;  to  the  hiw  of  mortgages,  admits  of  two 
answers,  (Icpciidiiig  upon  whether  the  rides  and  princi{iles  which 
prevail  in  eourls  of  ecpiity.  or  of  law,  are  to  Ix*  applieil.  If  the  lat-- 
tcr,  we  would  say  none;  beeause,  as  to  the  note,  that  could  not  b<! 
assigned  by  a  separate  instrument,  as  was  done  in  this  case,  so  as 
to  pass  the  legal  title.  (Ri/an  v.  ^f(l^/.  14  111.  4!» ;  Furlicr  v.  Darift, 
31  id.  213;  I'li'ukrrimj  v.  Ilnymond,  1">  id.  'M\'l.)  \>  to  the  mort- 
gage, it  is  well  settled  that  could  not  he  assigned,  like  negotiable  pa- 
per, so  as  to  pass  the  legal  title  in  the  instrument  or  clothe  the 
assignee  with  the  immunity  of  an  innocent  holder,  except  under 
certain  circumstances,  which  do  not  apply  here.  {Cliicaffo,  Dnn- 
villc  and  Vinccnnes  RoiUcaij  Co.  \.  LorircnlliaJ,  !>3  111.  433;  Ilniiiif- 
ion  County  v.  Lubnkcr,  51  id.  415;  Olds  v.CMHJmiHgs,  31  id.  188; 
Mclntyrc  v.  Yates,  104  id.  491 ;  Forticr  v.  Dnrsl.  31  id.  '^13.)  But 
that  the  mortgagee,  or  any  one  succeeding  to  his  title,  might,  by 
deed  in  the  form  of  an  a-signment,  pass  to  the  assignee  the  legal 
as  well  as  the  equitable  interest  of  the  mortgagee,  we  havt! 
no  doubt,  though  there  is  some  conflict  on  this  subject. 
(2  Washburn  on  Iteal  Prop.,  p.  115,  and  authorities  there 
cited.)  Yet  the  assignors  in  the  case  in  hand,  not  having  the 
legal  title,  as  we  have  just  seen,  could  not,  by  any  form  of  instru- 
ment, transmit  it  to  another.  If,  however,  the  rules  and  principles 
which  obtain  in  courts  of  equity  are  to  be  a[)plie<l,  we  would  say 
that  by  virtue  of  the  assignment  the  aj)j)ellee  became  the  cipiitable 
owner  of  the  note  and  mortgage,  and  that  it  gave  him  siu-h  an  in- 
terest or  equity  respecting  the  land  as  entitled  him  to  have  it  sold  in 
satisfaction  of  the  debt. 

There  is,  perhaps,  no  species  of  ownership  known  to  ilie  law  whicli 
is  more  comj»lex,  or  which  has  given  rise  te.  more  divi'rsity  of  ojiin- 
ion,  and  even  conflict  in  decisions,  than  that  which  has  sj)rung  from 
the  mortgage  of  real  property.  By  the  common  law,  if  tin*  mort- 
gagor paid  the  money  at  the  time  specified  in  the  mortgage,  the 
estate  of  the  mortgagee,  by  reason  of  the  performance  of  the  condi- 
tion therein,  at  once  determined  and  was  forever  gone,  and  t)\c 
mortgagor,  by  mere  o])('ration  of  law,  was  remitted  to  his  former 
pstato.  On  the  other  hand,  if  the  mortgagor  failed  to  pay  on  the 
dav  named,  the  title  of  the  mortgagee  became  absolute,  and  the 
mortgagor  ceased  to  have  any  interest  whatever  in  the  mortgaged 
premises.  By  the  execution  of  the  mortgage,  th(>  entire  legal  es- 
tate passed  to  the  mortgagee,  and  unless  it  was  expressly  provide<l 
that  the  mortgagor  should  retain  possession  till  default  in  payment, 
the  mortgagee  might  maintain  ejectment  as  well  before  as  after  do- 
fault.     Thi<  is  the  view  taken  bv  the  common  law  courts  of  Eng- 


G38  ASSIGNMENT    OF    MORTGAGE.  [CIIAP.  IV. 

land,  and  which  has  obtained,  with  certain  limitations,  in  most  of 
the  States  of  the  Union,  including  our  own,  in  which  the  common 
law  system  prevails. 

In  Carroll  v.  BaUance,2G  111.  9,  which  was  ejectment  by  the  mort- 
gagee against  the  assignee  of  the  mortgagor  to  recover  the  mort- 
gaged premises,  this  court  thus  states  the  English  rule  on  the  sub- 
ject :  "  In  England,  and  in  many  of  the  American  States,  it  is  un- 
derstood that  the  ordinary  mortgage  deed  conveys  the  fee  in  the 
land  to  the  mortgagee,  and  under  it  he  may  oust  the  mortgagor 
immediately  on  the  execution  and  delivery  of  the  mortgage,  with- 
out waiting  for  the  period  fixed  for  the  performance  of  the  condi- 
tion,— citing  Coote  on  Mortgages,  339 ;  Blaney  v.  Bearce,  2  Greenlf. 
132;  Brown  v.  Cramer,  1  N.  H.  1G9;  Hohart  v.  Sanborn,  13  id. 
226 ;  Northampton  Paper  Mills  v.  Ames,  8  Mete.  1.  And  this  right 
is  fully  recognized  by  courts  of  equity,  although  liable  to  be  de- 
feated at  any  moment  in  those  courts  by  the  payment  of  the  debt." 
Again,  in  Nelson  v.  Pinegar,  30  111.  181,  which  was  a  bill  by  a  mort- 
gagee to  restrain  waste,  it  is  said :  "  The  complainant,  as  mort- 
gagee of  the  land,  was  the  owner  in  fee,  as  against  the  mortgagor 
and  all  claiming  under  him.  He  had  the  jus  in  re  as  well  as  ad 
rem,  and  being  so,  is  entitled  to  all  the  rights  and  remedies  which 
the  law  gives  to  such  an  owner."  So,  in  Oldham  v.  P/leger,  81  111. 
102,  which  was  ejectment  by  the  heirs  of  the  mortgagor  against  the 
grantee  of  the  mortgagor,  this  court,  in  holding  the  action  could 
not  be  maintained,  said:  '"'Under  the  rulings  of  this  court,  the 
mortgagee  is  held,  as  in  England,  in  law,  the  owner  of  the  fee,  bav- 
in the  jus  in  re  as  well  as  the  jus  ad  rem."  In  Flnlon  v.  Clarh,  118 
111.  32,  the  same  doctrine  is  announced,  and  the  cases  above  cited 
are  referred  to  with  approval.     (Taj/lor  v.  Adams,  115  111.  574.) 

Courts  of  equity,  however,  from  a  very  early  period,  took  a  widely 
diiferent  view  of  the  matter.  Tliey  looked  upon  the  forfeiture  of 
the  estate  at  law  because  of  non-payment  on  the  very  day  fixed  by 
the  mortgage  as  in  the  nature  of  a  penalty,  and,  as  in  other  cases 
of  penalties,  gave  relief  accordingly.  This  was  done  by  allowing 
the  mortgagor  to  redeem  the  land,  on  equitable  terms,  at  any  time 
before  the  right  to  do  so  was  barred  by  foreclosure.  The  right  to 
thus  redeem  after  the  estate  had  become  absolute  at  law  in  the  mort- 
gagee was  called  the  "equity  of  redemption,"  and  has  continued 
to  be  so  called  to  the  present  time.  These  courts,  looking  at  the 
substance  of  the  transaction  rather  than  its  form,  and  with  a  view 
of  giving  effect  to  the  real  intentions  of  the  parties,  held  that  the 
mortgage  was  a  mere  security  for  the  payment  of  the  debt;  that 
the  mortgagor  was  the  real  beneficial  owner  of  the  land,  subject  to 
the  incumbrance  of  the  mortgage;  that  the  interest  cf  the  mort- 


*"'-^'-  '•]  IJ.VIMtKTT    /•.    Ill\(   KI.|;Y. 


03!) 


pigoe  was  siniply  a  lien  and  inouiiilH-aiicc  upon  the  land,  rather 
llian  an  cstati-  in  it.  In  short,  the  positions  of  mortgagor  and 
mortgagee  were  substantially  reversed  in  the  view  taken  by  courts 
of  ecjuity.  These  two  systems  gn-w  up  side  hy  side,  and  were  main- 
tained for  centuries  without  eonlliet,  or  even  frietion,  between  the 
Ia\r  and  e(|uity  tribunals  by  wliieh  t he v  were  respectively  adminis- 
tered. The  e(|uity  courts  did  not  attemjit  to  contr()l  the  law  courts, 
or  even  question  the  legal  doctrines  which  they  announced.  On  the 
cimtrary,  their  force  and  validity  were  often  recognized  in  the  relief 
granted.  Thus,  equity  court.>,  in  allowing  a  redemption  after  a 
forfeiture  of  the  legal  estate,  uniformly  required  tho  mortgagee  to 
reconvey  to  the  mortgagor,  which  was,  of  course,  necessary,  to  make 
his  title  availal)le  in  a  court  of  law. 

In  maintaining  these  two  systems  and  theories  in  England,  there 
was  none  of  that  confusion  and  conflict  which  we  encounter  in  the 
decisions  of  the  courts  of  this  countr\',  resulting  chiefly  from  a 
failure  to  keep  in  mind  the  distinction  between  courts  of  law  and 
of  equity,  and  the  rules  and  princii)les  api>licalile  to  them,  respec- 
tively. The  courts  there,  by  observing  these  things,  kept  the  two 
systems  intact,  and  in  this  condition  they  were  transplanted  to  this 
country,  and  became  a  part  of  our  own  system  of  laws.  But  other 
causes  have  contributed  to  destroy  that  certainty  and  uniformity 
which  fonnerly  prevailed  with  us.  Chiefly  among  these  cause."? 
may  be  mentioned  the  statutory  changes  in  the  law  in  many  of  the 
States,  and  the  failure  of  the  courts  and  authors  to  note  those 
ihanges  in  their  expositions  of  the  law  of  such  States.  Perhaps 
another  fruitful  source  of  confusion  on  this  subject  is  the  fact  that 
in  many  of  the  States  the  common  law  forms  of  action  have  been 
abolished  by  statute,  and  instead  of  them  a  single  statutory  form  of 
action  has  been  adopted,  in  which  legal  and  equitable  rights  are 
administered  at  the  same  time  and  by  the  same  tribunal.  Yet  the 
distinction  between  legal  and  e»|uitable  rights  is  still  preserved,  so 
that  although  the  action,  in  tlu'ory,  is  one  at  law,  it  is  nevertheless 
subject  to  be  defeated  by  a  purely  equitable  defence. 

Under  the  influence  of  these  statutory  enactments  and  radical 
chunges  in  legal  procedure,  by  which  legal  and  equitable  rights  an'' 
given  efl'ect  and  enforced  in  the  same  suit,  the  equitable  theory'  of 
a  mortgage  has,  in  many  of  these  States,  entirely  superseded  the 
legal  one.  Thus,  in  \ew  York  it  is  said,  in  the  caao  of  Tnt.'i{rf.< 
of  I'liion  CnJIcffr  v.  WhrrJrr  rl  nJ..  HI  X.  Y.  SS.  that  "a  mortgage 
if"  a  mere  chose  in  action.  Tt  gives  no  legal  estate  in  the  land,  but 
is  simply  a  lien  thereon,  the  mortgaeor  renuiinini:  both  the  legal 
and  equitable  owner  of  the  fee."  Following  this  doctrine  to  it< 
logical  results,  it  is  held  by  the  courts  of  that  State  that  ejectment 


040  ASSIGNMENT    OF    .MOUTliA(,;K.  [c'll.U'.  iv. 

under  the  code  will  not  lie,  at  the  suit  of  the  mortgagee,  against 
the  owner  of  the  equity  of  redemption.  {Murraij  v.  ^Yall•er,  31 
IST.  Y.  399.)  In  strict  conformity  with  the  theory  tliat  the  mort- 
gagee has  no  estate  in  the  land,  but  a  mere  lien  as  security  for  hi< 
debt,  the  courts  of  New  York,  and  others  taking  the  same  view,  hold 
that  a  conveyance  by  the  mortgagee,  before  foreclosure,  without  an 
assignment  of  the  debt  is,  in  law,  a  nullity.  {Jachson  v.  CurlU, 
19  Johns.  ."525;  ^Vilson  v.  Trovii,  2  Cow.  231  ;  Jaclson  v.  Willard, 
4  Johns.  41.)  And  this  court  seems  to  have  recognized  the  same 
rule  as  obtaining  in  this  State,  in  Delano  v.  Bennett,  90  111.  533.- 

The  New  York  cases  just  cited,  and  all  others  taking  the  same 
view,  are  clearly  inconsistent  with  the  whole  current  of  our  de- 
cisions on  the  subject,  as  is  abundantly  shown  by  the  authorities 
already  cited.     The  doctrine  would  seem  to  be  fundamental,  that 
if  one  sul  juris,  having  the  legal  title  to  land,  intentionally  delivers 
to  another  a  deed  therefor  containing  apt  words  of  conveyance,  the 
title,  at  law,  at  least,  will  pass  to  the  grantee;  but  for  what  pur- 
poses or  uses  the  grantee  will  hold  it,  or  to  what  extent  he  will  be 
able  to  enforce  it,  will  depend  upon  circumstances.     If  the  mort- 
gagee conveys  the  land  without  assigning  the  debt  to  the  grantee, 
the  latter  w^ould  hold  the  legal  title  as  trustee  for  the  liolder  of  tln' 
mortgage  debt.      (Sanger  v.  Bancroft,  12  Gray,  307 ;  Barnard  v. 
Eaton,  2  Cush.  304;  Jackson  v.  Willard,  4  Johns.  40.)      It  is  true, 
the  interest  which  passes  is  of  no  appreciable  value  to  the  grantee. 
Thus,  in  the  case  last  cited,  Chancellor  Kent,  in  speaking  of  it, 
says :   "  The  mortgage  interest,  as  distinct  from  the  debt,  is  not  a 
fit   subject   of  assignment.     It  has  no   determinate   value.     If  it 
should  be  assigned,  the  assignee  must  hold  the  interest  at  the  will 
and  disposal  of  the  creditor  who  holds  the  bond."     In  4  Wait's  Ac- 
tions and  Defences,  page  5G5,  the  rule  is  thus  stated :  "  By  the  com- 
mon law,  a  mortgagee  in  fee  of  land  is  considered  as  absolutely 
entitled  to  the  estate,  which  he  may  devise  or  transmit  by  descent  to 
his  heirs."     In  conformity  with  this  view,  Pomeroy,  in  his  work 
on  Equity  Jurisprudence  (vol.  3,  page  150),  in  treating  of  this  sub- 
ject, says :  "  In  law,  the  mortgagee  may  convey  the  land  itself  by 
deed,  or  devise  it  by  will,  and  on  his  death,  intestate,  it  will  de- 
scend to  his  heirs.     In  equity,  his  interest  is  a  mere  thing  in  action. 
assignable  as  such,  and  a  deed  by  him  would  operate  merely  as  an 
assignment  of  the  mortgage:  and  in  administering  the  estate  of  a 
deceased  mortgagee,  a  court  of  equity  treats  the  mortgage  as  per- 
sonal assets,  to  be  dealt  with  by  the  executor  or  administrator." 

We  have  already  seen,  that  under  the  decisions  of  this  court,  and 
by  the  general  current  of  authority,  a  mortgage  is  not  assignable  at 
law  by  mere  indorsement,  as  in  the  case  of  commercial  paper;  but. 


«C.  I.]  BAHUKTT  f.   IIINCKLKY.  611 

on  (he  other  hnud,  the  estate  ami  iiiifn-st  <»f  tin-  mortgagee  may  be 
convcyef]  to  the  lioUler  of  the  iiulehlfdiie-s,  or  I'ven  to  a  tliird  party, 
hy  deed,  with  a]»t  words  of  coiivi-yaiKe,  ami  the  fad  that  it  i.s,  in 
form,  ail  assignment,  will  make  no  diilerenee.  ('i  Washburn  on 
ll(?al  Prop.  113,  11(1.)  Sueh  an  assignee,  if  owner  of  the  mortgage 
indebtedness,  might,  no  doubt,  maintain  ejeetment  in  his  own 
name,  for  his  vwn  use;  or  the  aetion  might  be  brought  in  his  name, 
for  the  use  of  a  third  party  owning  the  indebtedness,  {hilyour  v. 
Gockleij,  83  HI.  lOi).)  So  in  this  case,  if  the  aetion  had  been 
brought  in  the  name  of  Kearns'  heirs,  for  the  use  of  Hinckley,  no 
reason  is  perceived  why  the  action  might  not  be  maintained. 

It  must  not  be  concluded,  from  what  we  have  said,  that  the  dual 
system  respecting  mortgage's,  as  above  explained,  exists  in  this 
State  precisely  as  it  did  in  England  prior  to  its  adoption  in  thi.» 
country,  for  such  is  not  the  case.  It  is  a  conceded  fact,  that  the 
(•(juitablc  theory  of  a  mortgage  has,  in  process  of  time,  made  in  this 
State,  as  in  others,  material  encroachments  upon  the  legal  theory, 
which  is  now  fully  recognized  in  courts  of  law.  Thus,  it  is  now 
the  settled  law  that  the  mortgagor  or  his  assignee  is  the  legal  owner 
of  the  mortgaged  estate,  as  against  all  persons  I'xci'pt  the  mortgagee 
or  his  assigns.  (Hull  v.  fjinic'.  'i'y  111.  ",?■)(),  "^TT  ;  Kinonj  v.  Kciij- 
han,  88  id.  482.)  As  a  result  of  this  doctrine,  it  follows  that  in 
ejectment  by  the  mortgagor,  against  a  third  party,  the  defendant 
can  not  defeat  the  aetion  by  showing  an  outstanding  title  in  the 
mortgagee.  {Ifoll  v.  Ldiicc,  supni.)  So,  too,  courts  of  law  now 
regard  the  title  of  a  mortgagee  in  fee,  in  the  nature  of  a  base  or 
determinable  fee.  The  term  of  its  existence  is  measured  by  that 
of  the  mortgage  del)t.  When  the  latter  is  paid  off,  or  l)eeomes 
barred  by  the  Statute  of  Limitations,  the  mortgagee's  title  is  extin- 
guish'd  by  operation  of  law.  {Pal lock-  v.  Mdlsaii,  11  111.  r>\i\\  Har- 
ris v.  Mills,  1>H  i,l.  11  ;  Gihson  v.  Rrcs.  ")()  id.  .18:5.)  Hence  the  rule 
is  as  well  established  at  law  as  it  is  in  eipiity,  that  the  debt  is  the 
[irineipal  thing,  and  (he  mortgage  an  incident.  So,  also,  while  it 
is  indisjx  usable  in  all  cases  to  a  recovery  in  ejectment,  that  the 
plaintilT  show  in  himself  the  legal  title  to  the  proj)erty.  as  set  forth 
in  the  declaration,  except  where  the  defendant  is  estopped  from 
denying  it,  yet  it  does  not  follow  that  because  one  has  sueh  title, 
lu'  may,  under  all  eireumstane(>s,  maintain  the  action. — and  thi>J 
is  particularlv  so  in  resjx'et  to  a  mortgage  title.  Sueh  title  exist-; 
for  the  benefit  of  the  holder  of  the  mortgage  indebtedness,  and  it 
can  only  W  enforced  by  an  action  in  furtherance  of  his  interests. — 
that  is,  as  a  means  of  coercini:  pavment.  If  the  mnrtgagtv,  there- 
fore, should,  for  a  valuable  considera(ion.  assign  (he  mor(gage  iii- 
debtedne-:-;  to  a   third   parfv.  and   the  latter,  after  default    in   pav- 


<j43  assigx:ment  of  :\ioutgage.  [chap.  iv. 

2nent,  should  take  possession  of  the  mortgaged  premises,  ejectment 
woukl  not  lie  against  him  at  the  suit  of  the  mortgagee,  although  the 
legal  title  would  be  in  the  latter,  for  the  reason  it  would  not  be  in 
the  interest  of  the  owner  of  the  indebtedness.  In  short,  it  is  a  well 
settled  principle,  that  one  having  a  mere  naked  legal  title  to  land  in 
which  he  has  no  beneficial  interest,  and  in  respect  to  which  he  has 
no  duty  to  perform,  can  not  maintain  ejectment  against  the  equita- 
ble owner,  or  any  one  having  an  equitable  interest  therein  with  a 
present  right  of  possession.  This  case,  with  a  slight  change  of  the 
circumstances,  would  afford  an  excellent  illustration  of  the  prin- 
ciple. Suppose  the  present  plaintiff  had  obtained  possession  under 
his  equitable  title  to  the  note  and  mortgage,  and  the  heirs  of 
Kearns,  who  hold  the  legal  title,  had  brought  ejectment  against 
him,  the  action  clearly  could  not  have  been  maintained,  for  the 
reasons  we  have  just  stated.  But  it  does  not  follow,  because  such 
an  action  would  not  lie  against  him,  that  he  could,  upon  a  mere 
equitable  title,  maintain  the  action  against  others.  (Cottrell  v. 
Adams,  2  Biss.  351;  9  Myers'  Fed.  Dec.  340.)  The  question  in 
that  case  was  almost  identical  with  the  question  in  this,  and  the 
court  reached  the  same  conclusion  we  have.  See,  also,  Speer  v. 
Iladduch,  31  111.  439. 

For  the  reasons  stated,  the  judgment  of  the  court  below  is  re- 
rersed,  and  the  cause  remanded  for  further  proceedings  not  incon- 
sistent with  this  opinion.^ 

Judgment  reversed. 

'See  Torrey  v.  Deavitt,  53  Vt.  331  (1881)  ;  Jordan  v.  Cheney,  74  Me.  359 
(1883). 


■'^«^-    "J  MATTIIKWS  C.  WAI.I.U  YN.  .643 


CllAl'TKi;    IV.    (ronh'nur,/.) 
Section   11.     Ki'fkct  of  Thansfkh. 

MA'I  Til  i:\VS  V.  \V.\LIAVV.\. 

Jll<;il    COCKT  OF  ClIANCKKV,   1 T08. 
(4  IVn.  lis.) 

Thomas  Mattlicw>.  beinjj:  tcniint  for  life  of  real  estate?,  applied 
to  Wallwyn  Slicplicanl,  wiio  was  his  ijoiicitor.  to  j)roeiire  him  the 
sum  of  :*00()/.  Shoplicard  accordingly  procured  .lohu  Baker  to  ad- 
Nance  that  sum  upon  the  mortgage  of  the  estates,  of  which  Mat- 
thews was  tenant  for  life,  and  an  assignment  of  a  policy  of  in- 
surance for  2000/.  made  by  Matthews  for  his  life  in  January,  1788. 
Tliat  mortgage  and  assignment,  dati'd  the  SOtli  of  May.  1788,  were 
'.  xtcutid  accordingly  to  Baker,  his  executors,  administrators  and 
assigns,  for  ninety-nine  years,  if  Matthews  should  so  long  live,  sub- 
ject to  redemption;  with  a  covenant,  that  Matthews  would  keep 
the  said  sum  of  2000/.  insured  for  his  life. 

Baker  having  beiMi  aftiTwards  paid  by  Shepheard.  Matthews  gave 
^iie]»heard  a  bond  for  -2000/.,  dated  the  'iMU  of  March,  17!>1.  and 
V  indentures  of  the  same  date  the  mortgage  and  the  jjolicy  of  in- 
^u^an(•e  were  assigned  to  Shepheard.  In  January,  171)**',  Shep- 
lu-ard  borrowed  from  llercy  and  Co.,  bankers,  the  sum  of  *^000/.; 
and  on  that  occasion  he  deposited  with  them  the  indentures  of  the 
50th  of  May,  1788,  and  the  2*)th  of  March,  1701,  and  the  bond 
and  the  policy  of  insurance,  and  a  note,  under  his  hand,  declaring 
that  the  said  instruments  were  de|)osited  as  a  security  for  that 
s\>m  with  interest.  In  March,  17'.'l.  llercy  and  f'o.  calling  for  re- 
l)ayment.  Shej)heard  applie<l  to  Wallwyn  and  Co..  bankers,  to  open 
an  account  with  him;  re(pu'sting  them  to  lend  him  2000/.,  and 
proposing  to  deposit  the  deeds  and  .securities  th«'n  in  the  hands  of 
llercy  and  Co.,  as  a  security,  and  representing  that  it  would  be  nec- 
essary to  have  part  of  such  moneys  for  the  j)urpose  of  redeeming 
them,  iK'fore  he  could  deliver  them  to  Wallwyn  and  Co.  They  eon- 
•Mited  to  open  an  account  with  him.  and  to  advance  or  give  him 
ledit  for  the  sum  of  2000/.  u|>on  the  projiosed  security  and  the 
fartlier  security  of  bis  note.  On  tlie  21st  of  March.  17<»i.  they  ad- 
vanced him  the  sum  of  1000/.  for  the  purj)ose  of  redeeming  the  se- 


G4i  ASSIGX:N[EXT    of    :MOIiTGAGE.  [CHAP.  IV. 

curities;  and  upon  the  24:th  of  ]\Iarcli  he  deposited  all  the  said 
securities  with  them,  and  gave  them  his  promissory  note  at  three 
jnonths  for  2000Z.  and  interest,  and  he  wrote  a  note  declaring  the 
purpose  of  the  deposit.  Afterwards,  before  the  24th  of  June, 
1794,  ho  drew  upon  them  to  the  amount  of  1431/.  9s.  4:d.  exclusive 
of  the  lOOOL  originally  advanced.  They  received  upon  his  account 
only  600/.,  and,  upon  the  24th  of  June,  1794,  when  his  note  became 
due,  the  balance  due  to  Wallwyn  and  Co.  was  1856/.  13s.  5(/.  In 
January,  1795,  Shepheard  became  a  bankrupt.  By  indentures^ 
dated  the  39th  of  September,  1797,  executed  in  pursuance  of  a  de- 
cree made  at  the  Bolls  upon  the  14th  of  June,  1797,  upon  a  bill  filed 
by  Wallwyn  and  Co.  in  December,  1794,  the  assignees  of  Shepheard 
assigned  all  the  said  securities  to  the  plaintiffs  in  that  cause.  Mat- 
thews was  made  a  defendant  in  that  suit;  but  before  the  hearing 
the  plaintiffs  had  the  bill  as  against  him  dismissed  with  costs. 

Shepheard,  as  the  attorney  and  solicitor  of  Matthews,  was  in  the- 
habit  of  receiving  and  paying  large  sums  of  money  upon  his  ac- 
count, and  the  premiums  upon  the  policy  of  insurance  were  paid 
by  him,  and  charged  in  account  with  Matthews.  Upon  the  bank- 
ruptcy of  Shepheard,  Wallwyn  and  Co.  paid  one  premium  upon 
that  policy,  which  became  due  in  January,  1795.  By  an  account 
settled  and  signed  by  Matthews  and  Shepheard  upon  the  11th  of. 
October,  1794,  a  balance  of  4100/.  appeared  due  to  Shepheard.^ 
Matthews  had  no  notice  of  Shepheard's  transactions  with  Hercy 
and  Co.  and  Wallwyn  and  Co.  as  to  the  securities  assigned  to  him 
by  Matthews,  till  the  bill  was  filed  against  him  in  December,  1794.. 

This  bill  ^^-as  filed  l)y  Matthews  against  Wallwyn  and  Co.  and. 
against  the  assignees  of  Shepheard,  who  was  dead,  praying  that 
the  assignees  of  Shepheard  may  be  decreed  to  come  to  a  fair  settle- 
ment of  accounts  depending  between  the  plaintiff  and  Shepheard  ; 
and  that  the  plaintiff  may  be  at  liberty  to  redeem  the  mortgaged 
premises,  if  any  thing  shall  appear  to  be  due  from  him  upon  the 
settlement  of  accounts  in  respect  of  the  said  mortgage;  and  that 
the  defendants  Wallwyn  and  Co.  may  re-convey  and  re-assign  to 
the  plaintiff  the  mortgaged  premises,  and  deliver  up  the  said  securi- 
ties to  be  cancelled;  and  that  they  may  bo  restrained  by  injunction 
from  proceeding  at  law— the  plaintiff  offering  to  ]iay  what,  if  any 
thing,  shall  appear  to  be  due  from  him  upon  the  aforesaid  settle- 
ment of  accounts  on  account  of  the  said  mortgage. 

The  bill  cliarged  that  the  plaintiff,  having  been  informed  by. 
some  of  Shephoa'rd's  friends  that  he  was  in  an  embarrassed  situa- 
tion, but  that,  if  the  i)laintiff  would  give  him  a  security  for  the. 
])ala'nce  then  due  to  him,  it  would  be  of  infinite  service  to  him^  in 
enabling  him  to  settle  with  his  creditors,  and  the  plaintiff  being" 


^^••-  "I  .M  \iriii;\\s  I .  w  Ai.i.w^  N.  GIO 

willing  In  a.-.-i.-i  Slit'iilifiird.  ami  iinn|,'inin^  liiin^clf  lo  be  inort-  in 
ih'bt  to  him  llian  ho  ivallv  was,  proiuisi-il  lo  cIk  m»,  when  the  account 
I'.oiiltl  III'  pidjK'iiv  iiiat-lc  out  and  settled.  In  a  few  hours  Shep- 
lieard  imtdiRrd  an  .urount,  and  retjuested  the  jdainiiir  to  .si{,Mi  it: 
and  the  |)laintitT  did  si^ii  it  at  his  earnest  solieitatit»n,  and  upon 
his  a;fre<'in,i;  to  permit  the  plaintiir  to  take  it  into  the  country  for 
the  purpose  of  examininij:  it  and  nniking  such  alterations  as  sliouhl 
he  jtroprr.  The  j)lainti(T  lia-  since  discovered  lliat  Shepheard 
previous  thereto  had  received  for  tlie  phiintilT's  u-f  divers  sums  of 
money,  for  which  he  had  not  iriven  tlie  phiintilT  credit  in  the  ac- 
"unt;  and  that  if  such  sums  to<^ether  with  several  sums  received 
!*y  liim  since  siijninfr  the  account  were  deducted,  a  considerable  bal- 
ance woiUd  be  due  to  the  plainlilT;  espi'cially  as  he  has  also  discov- 
rcd  that  several  sums,  with  which  he  was  charged  in  the  account 
.-  haviuLT  bei'U  paid  by  Shepheard.  were  not  paid  by  him. 

The  defendants  Wallwyn  and  Co.,  by  their  answer,  submitted  tiiat 
Shepheard  beinj,'  the  plaintilT's  attorney  was  sunicient  notice  to 
him,  and  that  they  are  entitled  to  a  specific  lien  upon  the  mort- 
aired  premises  and  securitic«:  in  re-;pect  of  the  sum  of  ISoil/.  13.s'. 
"'</.,  the  balance  due  to  them  from  Shepheard  nj>on  the  24th  of 
.hine,  17!)4.  whether  the  said  sum  of  •.*()(»(>/.  was  or  wa-  not  due 
from  the  ])laintin'  to  Sbej)beard  when  the  defrndant>  advanced  the 
-aid  '2000/.  upon  the  said  securities,  or  whether  the  same  was  or 
was  not  afterwards  sati-fied  or  ])aid  to  Shepheard  by  the  jdaintilT, 
or  by  reason  (>f  monies  received  by  She|)heard  upon  his  account ; 
and  that  they  ou<jht  not  to  bo  restrained  from  ])rooeedin«i  by  eject- 
ment to  recover  poss(>ssion. 

The  assi<;nees  of  Shophoard   by   their  an<wtr  submitted   to  ao- 
ount. 

The  cau.se  was  hoard  u]ion  bill  and  answer.  \\'iiin  it  was  first 
-poncd,  the  Lord  Chancellor  directed  it  to  stand  over,  that  it  mi^ht 
be  formally  ar<;ued  ;  considering'  the  ])oint  to  be  new,  and  of  threat 
importance,  as  it  mij,'ht  a(Tei(  the  <renfral  credit  of  mort;;a«;es. 

T.oiti)  Cii  WTF.IJ.OR  fTiOrnnnouorfiii]  :  In  this  cause  the 
juestion  was  only  whether  the  nssifjnoe  of  a  niorttrajje  had 
I  ri^'ht  to  bo  paid  acoordin<;  to  the  sum  that  appeared  duo 
upon  the  mortj:a<:<'  deed,  whatever  mii:ht  bo  the  state  of  the 
account  between  the  mortira;ior  and  inortfiajreo.  The  ciroumstanees 
had  nothin<;  in  them  so  particular  as  to  var}'  at  all  the  jjenoral  quos- 
li»)n.  Matthews  had  created  a  niorti:aj;e.  upon  whieh  Shophoard 
bad  advaiu'od  money;  and,  Shepheard  boinjr  his  attorney,  the  pur- 
pose of  Croat iuir  the  morlj^aiio  was  that  money  miuht  bo  raised  for 
the  u.-e  of  Matthews.  Slu^phoard  oufrht  not  to  have  made  any  \\<<> 
of  the  mortjiajro  but  f<ir  the  purpose  for  which  it  was  ercato<l.  viz.. 


G-16  ASSIGNMENT   OF   MORTGAGE.  [CHAI>.  iv_ 

to  raise  money  for  Matthews ;  but  he  thought  fit  to  assign  the  mort- 
gage without  the  privity  of  the  mortgagor,  and  the  assignee  now 
claims  to  hold  the  mortgage  to  the  full  extent  of  the  sum  appearing 
due  upon  the  face  of  the  deed. 

When  the  cause  came  on  before  me,  a  case  was  referred  to  in 
which,  it  was  supposed,  I^ord  Thurlow  had  entertained  an  idea,  but 
not  decided,  that  a  mortgagor  having  permitted  the  mortgage  deed 
without  any  indorsement  upon  it  to  be  in  the  possession  of  the  mort- 
gagee, an  assignee  taking  from  that  mortgagee  might  have  a  right 
to  hold  that  mortgage  to  tbe  full  extent  of  it  against  the  mortgagor 
who  permitted  the  mortgagee  to  deal  with  and  to  make  a  security 
upon  it.  It  was  also  supposed  that  in  practice  there  is  no  occasion 
to  make  the  mortgagor  a  party ;  and  in  some  cases  it  may  not  b? 
possible  to  make  him  a  party  to  the  assignment ;  and  that  to  hold 
that  the  assignee  of  a  mortgage  is  bound  to  settle  the  accounts  of 
the  person  from  whom  he  takes  the  assignment,  would  tend  to  em- 
barrass transfers  of  mortgages.  I  have  got  all  the  information  I 
could,  and  I  think  I  have  got  the  best.  The  result  is  that  persons 
most  conversant  in  conveyancing  hold  it  extremely  unfit  and  very 
rash,  and  a  very  indifferent  security,  to  take  an  assignment  of  a 
mortgage  without  the  privity  of  the  mortgagor  as  to  the  sum  really 
due;  that  in  fact  it  does  happen  that  assignments  of  mortgages 
are  taken  without  calling  upon  the  mortgagor ;  but  that  the  most 
usual  case  where  that  occurs  is  where  it  is  the  best  security  that 
can  be  got  for  a  debt  not  otherwise  well  secured,  and  it  is  not  in 
the  course  of  transferring  mortgages,  l)ut  of  raising  money  upon 
such  securities ;  but  no  conveyancer  of  established  practice  would 
recommend  it  as  a  good  title  to  take  an  assignment  of  a  mortgage 
without  making  the  mortgagor  a  party  and  being  satisfied  that  the 
money  was  really  due. 

With  regard  to  the  case  that  was  quoted,  I  believe  that  from  the 
circumstances  of  the  first  order  that  was  made,  there  might  have 
been  some  doubt  expressed  at  the  time  upon  the  point.  The  bill 
was  filed  by  Lnnn  and  others,  assignees  of  Lodge,  a  bankrupt, 
against  St."  John.  According  to  the  state  of  the  case  T  have 
had.  Lodge  made  a  mortgage  to  Pitman,  who,  being  indebted  to 
St.  John,  made  an  assignment  to  him  for  a  sum  less  in  fact  than  tbe 
sum  due  upon  the  mortgage.  It  was  stamped  and  signed,  but  not 
sealed.  Lodge  and  Pitman  both  became  bankrupts.  The  bill  was 
filed,  insisting  that  nothing  was  due  upon  the  account  botweon 
their  estates.  The  defendant  St.  John  insisted  that  the  plaintiflF- 
must  redeem  him,  who  was  a  fair  mortgasree,  and  had  notbincr  tr» 
do  with  the  account.  Lord  Thurlow  in  the  decree  gave  special  di- 
rections to  the  Master  to  inquire  what  was  due  at  the  time  of  the 


SEC.  11.]  .MATTIIKUS  C.  WAI.I.U  V\.  iJ  1  T 

iiiorlpi^'c,  what  was  (hii'  at  the  time  of  tlic  a<si<,'mii<'iit,  ami  what 
ri'iiiaiiu'd  diU' — saving  the  i)(»int,  huw  far  St.  .Inhn  woiihl  he  alTi-'cifd. 
till  after  the  report  upon  that  special  direction.  It  came  on  iijion 
the  report  before  the  Lords  Conunissioners,  the  Master  iiaving  re- 
ported that  Tit  man  was  indel)ted  to  Lodge  in  7(HM)/.  By  tiie  order 
made  upon  that  report  it  was  declared  tliat  the  assignments,  dated 
the  13tli  of  February,  IT')'),  and  May,  1T7<I,  made  \)\ 
Pitman  to  the  defendants  St.  John  and  Muilman  are  to  be  deemed 
null  and  void  against  the  estate  of  Lodge,  the  bankrupt,  and  are 
to  be  delivered  uj)  by  the  di-fendants  St.  John  and  Muilman  to  tho 
plaintitT,  the  surviving  assignee  of  Lodge,  to  be  cancelled;  that  all 
deeds  and  writings  relating  to  the  estate  of  Lodge  be  delivered  up 
ujion  oath;  and  tliat  the  defendants  join  in  reconveying  the  estate. 
The  final  result  therefore  was  that,  nothing  being  due  upon  the- 
origiiuil  mortgage,  the  two  assignees  of  it  took  no  benefit  by  tiie 
assignments.  Therefore^  that  case  is  a  direct  authority  in  favor  of 
Matthews. 

The  cases  decided,  and  long  deeided.  in  Precedents  in  Chaneery 
and  Vernon,  .seem  also  to  bear  very  much  u]ion  it;  where  it  was 
made  a  question,  now  jierfectly  settled,  that,  as  between  the  mort- 
gagee and  the  persons  claiming  under  him.  without  the  privity  of 
the  mortgagor  they  cannot  add  to  what  is  due,  settle  the  account, 
or  turn  interest  into  principal.  The  mortgagee  having  been  in 
possession,  the  assignee  is  l)ound  to  settle  the  account  of  the  rents 
and  profits  received  by  the  mortgagee,  from  whom  he  takes  the  as- 
signment. Considering  the  general  principles  upon  which  this 
Court  acts  with  regard  to  mortgages,  T  have  no  difficulty  in  de- 
ciding the  point.  It  is  true  there  is  a  legal  estate  or  term;  but  it 
must  be  ajiparent  u])on  the  face  of  the  tiil(>  that  it  is  not  an  ab-o- 
lute  conveyance  of  the  term  or  legal  estate,  but  as  a  security  for  a 
debt;  and  the  real  transaction  is  an  assignment  of  a  debt  fmm 
A.  to  B. — that  dei)t  collaterallv  secured  by  a  charge  ui)on  a  real  «'s- 
tate.  Th(>  debt  therefore  is  the  principal  thing;  and  it  is  obvious 
that  if  an  action  was  brought  upon  the  bond  in  thi>  nanu*  of  the 
mortgagee,  as  it  must  be.  the  mortgagor  shall  pay  no  more 
than  what  is  really  diic  u|ton  the  bond;  if  an  action  of  cov- 
enant was  brought  bv  the  covenantee,  the  account  must  be  settled 
in  that  action.  Tn  this  court  the  condition  of  the  assignee  cannot 
he  better  than  it  would  b(»  at  law  in  any  mode  he  coiild  take  to  re- 
cover what  was  due  uj)on  the  assignment. 

Th(>refore  the  plaintitT  must  be  at  liberty  to  redeiMu  iipon  p'lv- 
ment  of  what  the  blaster  shall  find  due  upon  the  original  inortgaL''" 
from  hiju  to  Shepbeard.  T  will  direct  the  account  exactly  in  tlii- 
same  wav  as  Lord  Thurlow  mad«'  the  direction  in  the  ca<c  T  ha\c 


C48  ASSIGNMENT    OF    MORTGAGE.  [CHAP.  IV. 

cited :  an  aceoimt  of  what  was  due  at  the  time  of  the  mortgage,  what 
was  due  at  the  time  of  the  assignment,  and  what  remains  due.^ 

The  account  in  that  case  was,  I  apprehend,  changed  by  transac- 
tions subsequent  to  the  mortgage ;  however,  I  do  not  know  that. 


PAEKEE  V.  CLAEKE. 
Chancery — The  Eolls  Court^  1861. 
(30  Beav.  5i.) 

William  Gray  Cruchley  was,  under  the  will  of  his  father,  entitled 
to  a  share  of  his  real  and  personal  estate. 

By  an  indenture  dated  the  5th  of  July,  1849,  William  George 
Cruchley  conveyed  and  assigned  to  Mr.  Thomas  all  his  estate  and 
interest  under  the  will  for  securing  95/.  This  mortgage  was  exe- 
cuted while  William  George  Cruchley  was  in  prison  for  debt,  and 
the  Court,  after  weighing  the  evidence,  came  to  the  conclusion  that 
it  was  given  without  consideration  and  under  a  promise  to  release 
the  mortgagor  from  prison,  which  was  never  performed. 

On  the  isth  July,  1849,  Thomas  transferred  this  mortgage  to 
the  defendant  Clarke,  who  had  notice  of  the  circumstances  under 
which  it  had  been  obtained,  and  in  July,  1860,  Clarke  deposited  the 
mortgage  and  transfer  with  Phillips  to  secure  the  payment  of 
moneys  due  and  to  become  due.  Phillips  had  no  notice  of  the  cir- 
cumstances under  which  the  mortgage  had  been  obtained. 

This  bill  was  filed  against  Clarke  and  Phillips  for  a  declaration 
that  the  mortgage  deed  was  void,  and  for  an  order  for  its  delivery 
up  to  be  cancelled. 

Mr.  FoUett  and  ]\[r.  Ellis,  for  the  plaintiff,  contended  that  the 
deed  was  void,  and  that  Phillips,  having-  a  mere  equitable  title  to 
what  might  be  due  on  the  mortgage,  could  only  claim  such  interest 
as  Clarke  was  entitled  to. 

Mr.  Bnqshav:c  and  Mr.  J.  Napier  TTiggins,  for  Clarke,  contended 

'"It  is  settled  that,  if  an  assignment  of  a  mortgage  is  taken  without  the 
intervention  of  the  mortgagor,  whatever  the  assignee  pays  he  can  claim 
nothing  under  the  assignment  but  what  is  actually  due  between  the  mort- 
gagor and  mortgagee;  and  I  think  that  rightly  settled.  I  would  not  say 
so!  but  that  T  know  Lord  Kenyon  entertained  a  doubt  of  Lord  Rosslyn's 
decision  upon  that  subject."— Prr  Lord  Eldon  in  Chambers  v.  Goldwin,  9 
VeH.  254,  2r>4  (1804).  The  reference  is  to  the  decision  of  Lord  T-ough- 
borough    (subsequentlv  created  Lord  Rosslyn)    in  the  principal  case. 


•'<'■•«■   "J  WlAiH   C.   COMMl.S."ilONLU8  OF   lIKItNi;   HAY.  <)l*« 

that  the  ovidciuv  failed  in  shewing  that  no  consideration  liad  l>t'rn 
^'ivrn  for  thi-  mortgage. 

Mr.  Lloyd  and  3/r.  Lorock  Webb,  for  Phillips,  argued  that  he 
was  a  purchaser  for  valuable  consideration  without  notice,  and  that 
he  was  entitled  to  hold  the  deed  until  he  had  been  paid  what  was 
due  to  him;  that  the  mortgagor,  having  enal)led  Clarke  to  obtain 
money  on  the  faith  of  this  deed,  could  not  st-t  it  aside  without 
jiaying  what  had  been  actually  advanced  on  it  by  Phillips. 

The  following  authorities  were  cited  in  the  course  of  the  argu- 
ment: Powell  on  Mortgages,  \o\.  2,  p.  580  ((1th  edit.)  ;  Walley  v. 
Witllcy.  1  \vvu.  4S4  ;  Tht'  Karl  of  Ahlborough  v.  Fri/r,  West's  Kep. 
'^•*l ;  T  CI.  &  Fin.  130;  George  v.  MUhanke,  <)  Yes.  lOO.  The  cases 
of  Rcynell  v.  ^pryc,  8  Hare,  222  :  1  De  G.,  "NL  &  G.  G60 ;  and  Cockell 
v.  Taylor,  1.5  Beav.  10:5,  were  also  referred  to. 

Tin-;  M.vsTKK  of  tiik  Hoi.ls  [Sir  Joir\  Homii.lv]  : 

I  am  of  oj)inion  in  this  ca.se,  that  the  deed  must  be  delivered  up. 
The  first  question  to  be  considered  is  whether  the  deed  is  not  void, 
l)cing  a  mortgage  deed  for  which  no  consideration  was  given,  and 
having  been  obtained  from  a  person  in  j>rison,  under  promises  to 
release  him,  which  were  never  realized. 

This,  I  am  of  opinion,  is  the  state  of  the  cai?e: — [His  Honor  here 
I'.xamined  the  evidence  and  proceeded:] — The  result  is  that  in  my 
'  pinion  it  is  proved  that  no  consideration  was  given  for  the  mort- 
_-age  deed  and,  as  against  Clarke,  it  must  be  delivered  up  to  be  can- 
.  riled. 

With  respect  to  Phillips,  T  am  of  opinion  he  could  only  take  what 
Clarke  could  give  him,  and  that  he  cannot  stand  in  a  better  situa- 
tion than  Clarke  himself.  Phillips  must  therefore  deliver  up  the 
dreds.  and  his  only  remedy  will  be  against  Clarke. 


WEBB  v.  CO:\[^rTS>:iOXKT:S  or  HKT^XE  B.\Y. 

Conrr  or  Qi'Kf^n'.s  Bkn'cii.  1S70, 

(L.  ir  r>  Q.  7?.  r,12.)' 

.\n  action  commenced  by  writ,  with  an  indorsement  that  the 
p1aintifT>^  intendrd  to  claim  ;i  writ  of  manihimus  to  command  the 
defrndants  to  apply  all  the  moiKn'  rai-;ed  or  to  he  raised  under  or 
l»y  virtue  of  '^  ;iiid    I  Wm.  TV.,  e.  ."».".  iji  the  mannr<r  prescribed  bv 

V\  short  stntoinonf  of  f.-icln  is  >.ultsf ilntci]  for  tlnit  ;;iv<'ii  in  tho  ropnrt. 


C50  ASSIGNMENT   OF   MORTGAGE.  [CHAP.  IV. 

s.  123  of  that  act.  At  the  trial  a  verdict  was  taken  for  the  plaintiffs, 
subject  to  a  case. 

The  defendants  are  a  body  corporate,  incorporated  by  the  said  act 
for  the  purpose  of  local  improvement,  and  empowered  by  the  act  to 
levy  rates  and  to  borrow  money  at  interest,  mortgaging  the  rates 
and  issuing  debentures  for  that  purpose.  The  form  of  the  de- 
bentures was  prescribed  by  the  act,  which  also  made  them  capable 
of  assignment  in  the  form  provided.  Further,  the  commissioners 
were  declared  incapable  of  taking  or  entering  into  any  bargain  or 
contract  under  the  act,  and  a  penalty  was  prescribed  for  so  doing. 
In  1835  the  defendants  bought  large  quantities  of  bricks  of  David 
Halket,  one  of  the  commissioners,  who  was  a  brick  and  tile  manu- 
facturer, and  in  payment  therefor  issued  to  him  certain  mortgage 
securities  of  £100  each,  in  the  form  prescribed  by  the  act,  and  which 
were  duly  registered.  The  mortgages  were  in  the  form  of  grants 
of  the  rates  levied  by  the  commissioners  to  David  Halket,  his  exec- 
utors, administrators  and  assigns.  No  money  was  actually  paid  by 
Halket  to  the  commissioners.  The  mortgages  so  granted  to  him 
were  duly  transferred  to  the  testator  of  the  plaintiffs,  who  had  no 
notice  of  the  circumstances  under  which  they  were  issued.  Xo 
part  of  the  principal  or  interest  of  the  mortgage  debt  has  ever  been 
paid.  Section  123  of  the  act  above  referred  to  authorizes  the  com- 
missioners to  apply  the  money  to  be  raised  by  them  in  discharging 
such  interest  and  principal. 

The  questions  for  the  opinion  of  the  Court  were : — 

1st.  Whether  the  plaintiffs  are  entitled  to  recover  in  this  action 
any  and,  if  so,  what  sum  as  damages  in  respect  of  arrears  of 
interest  on  the  six  mortgages  or  any  of  them. 

2nd.  Whether  the  plaintiffs  are  entitled  to  a  writ  of  mandamus  in 
the  form  endorsed  on  the  writ. 

CocKBURN,  C.  J.  By  3  &  4  Wm.  4  c.  cv.  a  local  Act,  which  pro- 
vided for  the  paving,  cleansing,  lighting,  and  improving  the  town 
of  Heme  Bay,  certain  commissioners  are  appointed:  and  by 
s.  110  the  commissioners  have  power  to  mortgage  the  rates  which 
they  are  empowered  to  levy  under  the  Act  for  the  purposes  which 
they  as  such  commissioners  are  to  execute;  and  the  present  plain- 
tiffs sue  upon  certain  debentures  which  were  issued  by  the  commis- 
sioners under  that  section ;  and  they  also  claim  a  writ  of  mandamus 
requiring  the  commissioners  to  apply  the  money  raised  or  to  b(' 
raised  under  the  Act  to  the  purposes  of  the  Act.  In  order  to 
construct  certain  buildings  necessary  for  the  purposes  of  the  Act» 
the  commissioners  required  a  quantity  of  bricks,  and  Halket, 
to  whom  the  debentures  were  originally  given,  supplied  the  bricks  in 
question,  and  instead  of  being  paid  in  cash  he  was  paid  by  deben- 


^F^*^'-  "•]  \\i;iuj  c.  COM  \ii>>iu\i;i;>  oi'  iii;km;  iiav.  i'>')\ 

tuns.  It  is  said  that  tlif  traiisatiidii  in  rrsprci  (»!"  wliicli  tin-  dr- 
lu'iituns  were  issiu'd  was  illci^al  under  s.  Id  <»f  tlir  local  Act, 
inasnimh  as  hy  that  scrtion  any  jRTson  uctin;^'  as  a  coinMiissiontT 
is  prohihitt'd  from  I'lilcrin^f  into  any  contract  with  the  coniniis- 
-ioncrs;  and  that,  thcrcfon',  tht'  sale  of  the  hricks  hy  Ihdkct  to  the 
coniinissioners,  he  himself  Ix-in^'  a  commissioner,  was  an  illegal 
transaction.  It  may  he  that  the  clTcct  of  this  section  was  to 
render  the  transaction  illejj;al  as  repirds  the  contract  hetween  the 
lommissioners  and  Ilalket.  lUit  as  the  commissioners  have  had 
the  heneflt  of  the  contract,  the  <niestion  would  he  whether  or  not 
Halket  eoidd  recover  in  indehitatus  assum|»sit  for  {joods  sold.  I 
<lo  not  think  it  necessary  to  decide  that  (juestion.  I  proceed 
entirely  upon  the  /jround  that  the  defendants  arc  estopped  from 
disi)utin;;  the  validity  of  the  dehentures  in  question.  It  is  true 
the  commissionei's  have  power  under  s.  11!»  only  to  borrow  money, 
iiid  it  may  he  that  under  the  power  to  i)orrow  they  were  not 
,<uthorizi'd  to  give  del_K'ntures  for  the  purpose  of  paying  for  goods 
ind  materials  suj)plied  to  them  for  the  j)urposes  of  the  town.  But 
the  commissioners  gave  to  Ilalket,  in  respect  of  tlie  hricks  which 
ihey  got  from  him,  dehentures,  in  the  form  jirescrilu'd  hy  the  Act, 
which  purport  upon  the  face  of  them  to  he  dehentures  given  for 
money  advanced  to  them.  Ilalket.  (o  whom  the  debentures  witc 
originally  given,  has  parted  with  tliem  for  a  valuable  considera- 
tion to  the  testator  of  the  jtreseiit  plaintitf-:.  who  are  in  the  position 
of  assignees  of  the  original  holder,  and  we  must  take  it  as  a  fact 
that  the  assignees  were  perfectly  ignorant  of  any  illegality  in  the 
original  transaction  either  as  regards  Ilalket  being  a  commissioner, 
and  therefore  prohibited  from  entering  into  such  a  c(Uitract  with 
the  commissioners,  or  as  to  the  fact  of  their  being  delu'ntures 
given  for  goods  supj)lied  instead  of  for  money  advanced.  I'nder 
those  circumstances,  it  is  clear  the  j)rin(iple  laid  down  in  I'irkiivf 
V.  i^ears.  G  A.  i^'  E.  4()I),  and  Frcrniiin  v.  Coofrr,  '2  Ex.  <»'>4,  is  im- 
mediately a|tpliiable  to  the  ])resent  case,  as  well  al<o  as  the  doe- 
trine  laid  (h>wn  in  the  judgment  of  this  Court  in  the 
•  asc  to  which  my  Brother  Blackburn  referred.'  //»■  lUihin  ninl 
S^H  Francisro  Uij.  Co..  L.  Ic  :?  (>.  B.  .*>SI.  In  that  ca^- 
a  railwav  company  had  been  deceived  into  registering  shan's 
and  granting  certificates  of  registration,  whereby  innocent  persons 
were  induced  to  purchas*'  those  shares  under  the  l)elief  that  the 
vendors  were  registered  shareholders,  and  it  was  held  that  the 
company  were  estopjx'd  by  their  <nvn  act  from  denying  the  right 
of  the  innocent  transfer(>e<  of  tht>  shares  to  be  registered  as  share- 
liolders.  T  think  the  principle  of  all  those  ens»'s  Is  strictly 
'I'pon  llio  jirf^iiDcnt,  Hir  report   of  which  is  omittol  hero. 


Go2  ASSIGNMENT    OF    MORTGAGE.  [CIIAP.  IV. 

applicable  to  this.  I  Low  is  a  person  who  takes  for  a  valuable  con- 
sideration such  debentures  as  these  upon  an  assignment,  regular 
in  form,  to  know  under  what  circumstances  they  were  issued? 
Tlie  commissioners  might  be  wrong  in  allowing  these  debentures 
to  go  forth,  knowing  that  they  might  come  into  the  hands  of  an 
innocent  holder  for  value,  but  according  to  the  principle  of  the 
cases  cited,  they  are  estopped  from  alleging  that  the  debentures 
were  illegally  issued.  The  debentures  on  their  face  import  a  legal 
consideration,  namely,  the  advance  of  money.  The  defendants 
issued  the  debentures  with  the  knowledge  that  they  were  capable  of 
l)eing  transferred,  and- would  very  likely  be  transferred  to  a  holder 
for  value;  how  can  it  lie  in  their  mouths  to  say  that  the  transaction 
in  respect  of  which  they  gave  these  debentures  was  illegal?  I 
think  on  the  sound  principle  of  the  doctrine  laid  down  in  the  cases 
which  I  have  cited,  such  a  defence  cannot  be  made  available. 

I  confess  I  cannot  see  any  difficulty  in  the  other  points  made, 
namely,  that  the  first  purpose  to  which  moneys  raised  by  the  com- 
missioners is  to  be  applied  is  that  of  paying  the  costs  and  charges 
of  getting  the  Act.  It  is  true  these  expenses  have  been  met  partly 
by  debentitres  which  are  still  unpaid;  but  that  is  no  answer  to  an 
application  for  payment  on  the  part  of  the  present  holder  of  these 
debentures. 

It  was  further  contended  that  the  mandamus  claimed  by  the 
plaintiffs  will  not  lie,  because  it  is  possible  that  rates  may 
not  hereafter  be  raised,  and  the  form  of  the  mandamus  ought  to 
have  been  to  levy  rates  out  of  which  to  pay  the  interest  on  the  de- 
bentures; but  it  appears  that  up  to  the  present  time  rates  have 
from  time  to  time  been  levied,  and  if  the  rates  l)e  levied,  inasmuch 
as  the  commissioners  are  bound  ttnder  the  Act  to  pay  interest  upon 
the  debentures  which  they  have  issued,  the  mandamus  will  operate 
and  compel  payment  of  the  amounts  claimed  in  this  action.  If, 
owing  to  the  form  which  this  mandamus  assumes,  the  commis- 
sioners desist  from  levying  the  rates,  the  consequence  will  be  that 
a  further  mandamus  will  bo  rcqttired,  commanding  the  commis- 
sioners to  levy  a  rate  for  the  express  purpose  of  paying  the  interest ; 
])ut  I  think  we  are  fairly  entitled  to  presume  that  that  which 
has  been  done,  and  which  is  a  part  of  the  duty  of  the  commis- 
sioners to  do  under  the  provisions  of  the  Act,  will  continue  to  be 
done. 

Blackburn,  J.  I  am  of  tlie  same  opinion.  The  plaintifPs  claim 
in  the  present  action  a  writ  of  ]nandamus  commanding  the  defend- 
ants to  pay  any  money  raised  or  to  bo  raised  under  and  by  virtuo 
of  3  &  4  Wm..  4  c.  cv.,  in  the  manner  proscribed  by  s.  123  of  that 
Act.     Tliat   is  the  dutv  thov  nMiuiro  the  commissioners  to  fulfil 


HKC.   II.]  WEUB  l\  C0:\[MISSI()M:IIS  ol    lli;i;\l    KAV.  ij'>'\ 

stating  that  the  plainlilTs  arc  iicrsonallv  iiilfrcstcd  in  tlu'  fulfiliin  in 
of  it.  Wht-n  we  turn  to  s.  I'^'.i  w.'  fiinl  it  rciiuiri's  tlic  ik'fi-ndants  t<» 
apply  so  nuuh  money  as  may  In-  rai.-td  umltT  thr  Act,  in  the  first 
phicc  in  defraying  its  cnim-mscs,  in  the  next  phicc  in  paying  Ihi' 
interest  ujxin  the  l)nnds  and  (U'l)entures,  and  afterwards  in  paying 
for  the  works  and  purposes  of  the  Act.  The  jihuntilTs  are  person- 
ally interested  in  having  the  money  ap|)lied  as  provided  by  the 
Act ;  and  if  the  commissioners  have  departed  from  their  duty  of 
propi'rlv  applying  the  money  and  canning  the  interest  to  be  paid, 
the  plaintills  are  entitled  to  a  mandamus. 

It  is  said  that  the  commissioners  will  not  raise  any  money  in 
future;  and  if  the  plaintifTs  had  anticipated  that,  they  might  have 
come  to  the  Court  for  a  mandamus  not  only  to  command  the  com- 
missioners to  apply  the  money,  but  to  levy  rates  to  raise  it;  but  I 
see  no  objection  to  granting  a  mandamus  in  the  limited  form  in 
which  it  is  asked  for,  though  probably  the  ])laintilTs  may  be  entitled 
to  demand  another  in  a  ditferent  form  at  some  future  time. 

The  next  question  ie\  are  the  ])laintifl's  personally  interested  in 
the  fulfilment  of  the  duty  created  by  the  statute;  nr,  in  other 
words,  are  they  the  holders  of  the  six  debentures  in  such  a 
manner  as  to  have  the  right  to  have  them  enforced  against  the 
defendants?  By  s.  110  the  commissioners  are  authorized  to  borrow 
and  take  up  at  interest  any  sum  of  money  upon  the  credit  of  the 
rates  authorized  to  be  raised  under  the  Act,  but  so  that  there  shall 
not  be  owing  upon  the  securities  at  any  one  time  more  than  500(V.. 
and  (otics  qin^lics,  to  pay  off  and  renew  the  loans,  and  the  form 
of  mortgage  is  given  in  the  .\et.  .\nd  that  form  commences  with 
the  statement  on  the  face  of  it  that  the  commissioners  have 
borrowed  a  particular  sum  of  money  of  a  particular  individual  upon 
the  credit  of  the  rates.  Section  120  jirovides  the  mode  in  which  a 
person  who  has  the  mortgage  may  assign  and  transfer  it;  s.  r.M 
enacts  that  there  shall  be  no  preference  by  reason  of  i)riority  of  the 
date  of  the  mortgages.  S.  122  requires  that  a  book  shall  be  pro- 
vided in  which  copies  of  the  mortgages,  securities,  and  transfers 
shall  be  entered  and  registered,  to  be  op(Mi  to  ins])eetion;  and  then 
it  enacts  that,  after  such  entry,  every  such  transfer  "shall 
entitle  the  person  to  whom  the  same  shall  1h^  made,  and  liis  exec- 
utors, administratfirs.  and  assigns  to  the  benefit  of  the  security 
thereby  made  or  transferred."  So  that  the  efTect  of  the  statute 
is  this,  the  commissioners  may  borrow  money  and  give  a  form  of 
mortgage  which,  on  the  face  of  it,  states  expressly  that  they  ha<e 
borrowed  a  particular  -um  of  money;  the  mortgage  may  be  trans- 
ferred, and  wh(m  it  is  entennl  in  the  reirister  which  they  are 
bound    to   keep,   the    transferee   shall    have    the   benefit    of    that 


(]o.{  ASSIGXMEXT   OF   MORTGAGE.  [cilAr.  iv. 

security.  The  plaintifY's  testator  has  bond  fide  taken  a  transfer  of 
six  mortgages,  on  the  face  of  which  it  is  expressly  stated  that  the 
commissioners  have  borrowed  from  Halket  (who  is  the  person 
named  in  the  mortgage)  six  sums  of  lOQ/.  each.  The  commis- 
sioners knew  from  the  Act  that  these  mortgages  when  so  granted 
might  be  transferred  to  a  person  on  the  faith  of  the  matters  stated 
in  "them.  They  knew  from  the  Act  that  such  transfer  might  be 
made  and  might  be  entered  on  tlio  register,  and,  when  registered, 
the  security  might  be  transferred.  That  being  the  state  of  things, 
the  plaintiffs,  who  are  the  houa  fide  holders  of  the  mortgages,  de- 
mand the  payment  of  the  interest  on  the  mortgages,  and  the 
commissioners  deny  their  liability  to  pay  on  the  ground  that  the 
matters  stated  on  the  face  of  the  mortgages  are  incorrect  and 
untrue.  The  law  laid  down  in  Freeman  v.  Cool-e,  G  A.  k 
E.  469,  and  In  re  Bahin  and  San  Francisco  Piij.  Co.,  L.  R. 
3  Q.  B.  583,  is  very  clear,  that  when  a  person  has  made 
a  statement  similar  to  the  present,  he  is  precluded  as  against 
another  person  who  has  hona  fide  acted  upon  it  from  denying 
the  truth  of  the  statement,  and  consequently  I  hold  that 
the  commissioners,  who  have  stated  on  the  face  of  the  mortgages 
that  Halket  had  advanced  and  lent  the  money  on  the  credit  and 
for  the  purposes  of  the  commmissioners,  are  precluded  as  against 
his  bond  fide  transferees  from  denying  the  truth  of  that  statement. 

Our  decision  on  this  point  disposes  of  the  case.  I  do  not  think  it: 
necessary  to  enter  into  the  other  questions.  One  is  that,  inasmuch 
as  the  mortgages  were  given  in  payment  of  a  debt  for  bricks  sold, 
they  could  not  have  been  given  for  money  borrowed.  Aly  own  im- 
pression is — and  it  is  a  very  strong  impression — that  the  legal 
effect  of  such  a  transaction  is  the  same  as  if  the  commissioners  had 
borrowed  the  cash  and  then  applied  it  in  payment  of  the  debt  for 
bricks;  and  as  if  the  creditor  had  lent  the  money  upon  the  security 
of  the  debenture,  and  then  received  back  the  identical  coin  in  pay- 
ment of  his  own  debt  for  the  bricks.  I  see  no  objection  to  this 
view  of  the  transaction,  which  I  incline  to  think  valid. 

A  further  objection  was  raised.  It  was  founded  on  s.  10  of  the 
local  Act,  which  provides  that  where  any  commissioner  is  either 
directly  or  indirectly  interested  in  any  bargain  or  contract,  he  shall 
be  disqualified,  and  further  that  no  person  during  the  time  he  shall 
be  such  commissioner  shall  be  capable  of  taking  or  entering  into 
any  such  bargain  or  contract,  nor  shall  any  commissioner  act  in 
any  matter  in  which  he  shall  be  personally  interested.  And  s.  H 
imposes  a  penalty  of  50/.  upon  every  commissioner  who  acts  being 
disqualified.  Tt  was  contended  that  Halket,  who  had  furnished 
il)('  bricks  to  the  commissioners,  being  himself  a  commissioner  at 


*^^-*'-  "1  UKitii  c.  (  <»M  \i  is^|()m;i;s  or  iii:i;ni:  kav.  (I.")."; 

till'  liiiU',  tlic  foiitrjicl  ua-^  illt-^ial  aiitl  void.  It  is  not  nccossarv  to 
(Itridc  this  ([iK'stinii.  iiiiil  I  wish  to^^uanl  myself  from  being  thou;;hl 
tt>  L'ive  any  jntl,uMiient  on  that  |)<)iiit. 

Mki.i.oI!.  .J.  I  wish  to  rest  my  jinl^rmeiit  in  this  ease  on  the 
^•^■•iieial  (lociriiie  (tl'  e<ti>|»|if!.  I  (ainiitl  (listin<;uish  it  in  principle 
Iriim  III  re  Huh  in  niitl  S<in  /''rfinciscd  /!i/.  Cii..  L.  I{.  •'{  (). 
r>.  .'tS;').  which  is  founded  im  the  very  sahitary  decision  of 
Frrcimui  v.  Coohc.  '2  Iv\.  ii">l.  The  local  Act  contemplates 
the  horro\vin<j:  of  the  money  foi-  tlic  pur|)oses  of  the  works 
of  the  town  of  Heine  Bay,  and  it  gives  a  form  of  mort- 
gage uj»on  which  the  money  is  to  he  horrowetl.  The  form  states 
that  in  consideration  of  the  sum  of  money  advanced  and  lent  upon 
the  credit  of  llie  rates  for  the  purposes  of  the  Act,  and  paid  to  tho 
treasurer  of  the  commissioners,  they  thereby  grant  and  assign  a 
due  proportion  of  the  rates.  That  was  tho  form  of  the  mortgage 
in  this  case.  In  addition  to  that  the  Act,  which  enables  the  com- 
missioners to  I'aise  money  upon  mortgage  in  that  form,  also  enables 
the  holder  to  assign  the  mortgages.  He  may,  hy  a  writing  under 
his  hand,  transfer  the  same  to  any  person,  and  it  gives  the  form  of 
endorsement  hy  which  the  transfer  nniy  be  nntde.  There  is  a  pro- 
vision for  registering  the  transfer,  and  when  that  is  completed  any 
jii-rson  who  is  an  innocent  holder  has  a  complete  title.  The  com- 
missioners, who  have  borrowed  the  money  and  enabled  the  transfer 
of  the  mortgage  to  he  etfected,  cannot  afterwards  deny  tlieir  lia- 
bility on  the  ground  that  the  mortgage  was  given,  not  for  money 
lent,  but  for  some  j)ur|tose  which  they  allege  to  be  illegal.  On  that 
ground  1  hold  the  plaintiffs  are  entitled  to  the  remedy  they  seek. 

Ll'sh,  J.  I  also  think  it  is  unnecessary  to  expre.ss  any  opinion 
on  the  (juestion  whether,  if  this  action  had  bei>n  brought  by  tlie 
original  mortgagee,  the  eommissioiu'rs  could  have  set  up  any  di'- 
fence  against  the  claim  ;  becau.«!o  the  defence,  namely,  his  incapacity 
to  contract  at  the  time  by  reason  of  his  filling  the  olHce  of  eommis- 
-ioner,  cannot  be  set  up  against  the  j)laintifTs,  his  transferees.  Th»> 
mortgage  security  itself  makes  the  money  jjayable  to  Halket  or 
his  assigns.  Tiie  Act  of  Parliament  says  that  any  person  entitled 
to  any  .security  nniy  transfer  it  in  the  terms  specifi'd  in  the  .\et, 
and  further  that  when  that  transfer  has  been  made  and  registere<l 
in  the  book  of  the  commissioners — and  this  has  been  registered — 
every  such  transfer  shall  entitle  the  jierson  to  whom  the  sam(>  shall 
be  made  to  the  benefit  of  the  security  therebv  t ransfi'rred.  Xow 
the  effect  of  those  sections,  I  think,  is  to  make  tht\se  mortgage-? 
negociable  securili(>s  and  to  attach  to  them  the  incidents  of  ne- 
gociable  scnnrities;  one  of  which  is  that  an  innocent  holder  for 
value,  as  it  is  admitted  the  i>lainti(Ts  are,  accpiins  a  title  of  hi^  own. 


G56  ASSIGXMEXT    OF    MORTGAGE.  [CIIAP.  IV. 

unaffected  by  any  infirmity  to  which  the  title  of  his  assignor  might 
have  been  subject.  Upon  that  ground,  I  think  tlie  plaintiffs  arc 
entitled  to  judgment. 

Then  as  to  the  alleged  defect  in  the  prayer  of  the  mandamus, 
I  think  it  is  quite  enough  to  say  that  the  complaint  against  the 
commissioners  is  not  that  they  do  not  make  rates,  but  that  thoy 
apply  the  proceeds  in  a  different  way  than  that  directed  by  the 
Act  of  Parliament.  It  is  to  be  assumed  they  will  go  on  making 
the  rates  as  they  have  done.  The  mandamus  is  directed  to  the 
misappropriation.  If  it  turns  out  to  be  needful  to  compel  them 
to  do  what  they  have  hitherto  done — to  make  the  rates — then  a 
mandamus  may  be  applied  for  for  that  purpose. 

Judgment  for  the  plaintiffs. 


BICKERTON  v.  WALKER. 

Supreme  Court  of  Judicature — Chancery  Division,  1885. 
(L.  R.  31  Ch.  D.  151.) 

Elizabeth  Goulston,  who  died  in  18')2,  bequeatlicd  to  trustees  a 
sum  of  £1000  upon  trust  to  invest  it  and  pay  the  income  to  Eliz- 
abeth Bickerton,  the  wife  of  John  Bickerton,  for  life,  and  after 
her  death  upon  trust  for  such  children  of  hers  as  should  be  living 
at  her  decease,  and  being  sons  should  attain  twenty-one,  or  being 
daughters  should  attain  that  age  or  marry,  and  for  such  issue  of 
any  children  dying  in  Mrs.  Bickerton's  lifetime  as  should  be  living 
at  Mrs.  Bickerton's  death,  such  children  to  take  their  parent's 
share.  T'he  legacy  was  invested  in  £975  New  £3  per  Cent.  Annu- 
ities. 

In  1879  Mrs.  Bickerton  was  a  widow  with  three  children,  all  of 
whom  had  attained  twenty-one.  Emily  Bickerton,  spinster  (here- 
inafter called  Miss  Bickerton),  w^as  one  of  them. 

On  the  10th  of  February,  1879,  Mrs.  and  Miss  Bickerton  exe- 
cuted a  mortgage  deed  by  which,  in  consideration  of  the  sum  of 
£250  therein  expressed  to  be  paid  to  them  by  Ebenezer  Bates,  "  the 
receipt  and  payment  of  which  said  sum  of  £250  they,  the 
.'iaid  E.  Bickerton  and  E.  Bickerton  the  younger,  do  hereby  ac- 
knowledge, and  from  the  same  and  every  part  thereof  do  hereby 
release  the  said  E.  Bates,  his  executors,  administrators,  and  as- 
signs," they  jointly  and  severally  covenanted  with  Bates  for  the 


II.J 


JlK'KlilM'nN     r.    WAI.KKU.  (;.*i; 


]);iyiiR'iit  to  him  of  £'.':»0  uilh  iiitrn'st  at  C7  per  cent,  on  the  10th 
of  August  thill  next.  Mrs.  Bickcrton  then  u.ssigned  to  Bates  licr 
life  interest  in  the  £975  stock  and  a  policy  of  assurance  for  £100 
elTeeted  by  her  on  her  own  life,  and  Miss  Biekerton  assigned  to 
Bates  her  reversionary  share  in  the  i':iT.">  stock  and  a  polii.y  of 
assurance  for  .i;;500  ell'cctcd  hy  her  on  her  own  life,  sul)je<:t,  a< 
regards  all  the  interests  assigned,  to  redeiiijition  on  payment  of 
£250  with  interest  at  £7  per  cent,  on  the  10th  of  August  tlieii 
next.  Indorsed  on  (he  deed  was  a  r('cei])t  in  the  usual  form,  signed 
hy  Mrs.  and  Miss  Biekerton,  acknowledging  the  receipt  of  £'■*:}(). 

Astley  acted  as  solicitor  for  hoth  parties  in  this  transaction,  and 
the  deed  was  left  in  his  hands.  On  the  11th  of  March,  1870,  the 
mortgage  was  transferred  hy  Bates  to  Hunter,  who  acted  bv  his 
own  solicitor.  Walker,  and  gave  full  value  for  the  mortgage  as  a 
mortgage  for  £250,  without  making  any  imjuiry  from  the  mort- 
gagors. 

This  action  was  commenced  by  Mrs.  and  Miss  Biekerton  again-t 
Walker,  Bates,  Astley,  and  Hunter,  alleging  that  the  plaintiffs  had 
only  received  sums  amounting  to  £i)l  IT.s-.  (](/.  instead  of  £250. 
that  Bates  was  the  nominee  and  trustee  of  and  for  Walker,  and 
that  Bates  and  Astley  acted  under  his  directions,  and  that  Hunter 
liad  notice  of  the  above  facts  when  he  took  his  transfer.  Th.- 
])laintifrs  asked  that  the  mortgage  might  be  caneelled.  they 
offering  to  pay  the  sum  really  advanced  and  the  interest  thereon, 
and  that  the  transfer  might  be  declared  void  against  the  plain- 
tiffs, or  in  the  alternative  that  the  mortgage  might  stand  as  a 
security  for  what  had  been  really  ailvaiieed  and  interest,  and  that 
the  plaintiffs  might  have  redemption  on  that  footing,  or  as  another 
alternative,  that  they  might  have  redemj)!ion  on  the  mortgage  deed 
as  it  stood. 

It  was  clearly  slu'wii  that  Walker  was  not  inteie-ted  in  the 
mortgage,  and  had  simply  acted  as  Hunter's  solicitor,  and  no 
ground  was  shewn  for  affecting  either  of  them  with  notice  that 
the  plaintiffs  had  not  received  the  whole  £250.  Vice-Chancellor 
Bacon  considered  the  plaint ilf's  case  not  to  be  proved,  and  gave  a 
judgment  dismissing  the  action  with  costs  as  against  Walker,  and 
dismissing  it  with  costs  as  against  Hunter,  except  so  far  as  it  sought 
the  ordinary  judg-ment  for  redemption.  The  usual  order  in  a  re- 
demption suit  was  made  against  Hunter,  with  a  direction  that  the 
account  was  to  be  taken  on  the  footing  of  £250  liaving  been  ad- 
vanced to  the  plaint ilTs. 

The  plaintiffs  appealed,  and  the  appeal  was  heard  on  the  ICth 
and  17th  of  Xovember,  IR'^5.  The  evidence  ns  to  the  cirium- 
stanccs  under  which  the  mortgage  was  executed  was  gone  into,  and 


G58  ASSIGNMEXT    OF    MORTGAGE.  rcHAP.  TV. 

ill  the  opinion  of  the  Court  of  Appeal  was  such  as  would,  if  there 
had  been  no  transfer,  have  made  it  proper  to  decree  redemption  on 
payment  only  of  what  should  be  shewn  to  have  been  actually  ad- 
vanced. Astley  was  abroad  and  Bates  did  not  appear,  so  the 
material  question  was  whether  a  decree  of  that  nature  could  be 
made  against  Hunter. 

Seward  Brice,  for  the  appellants: — I  contend  that  a  mortgage 
can  only  be  enforced  by  a  transferee  to  the  same  extent  as  it  might 
be  enforced  by  the  original  mortgagee.  {Parker  v.  Clarice,  30 
Beav.  54.)  The  transferee  takes  subject  to  the  equities  which 
affect  the  original  mortgagee.     {Norrish  v.  Marshall,  5  Madd.  475.) 

[Fry,  L.  J. : — That  case  only  deals  with  subsequent  transactions 
between  the  mortgagor  and  mortgagee,  the  mortgagor  not  knowing 
of  the  transfer.] 

The  principle  is  illustrated  by  MaWictvs  \.  Wallwyn,  4  Ves.  118, 
wliich  decides  that  a  transferee  takes  subject  to  the  account  between 
the  mortgagor  and  mortgagee.  The  principal  thing  in  the  transac- 
tion is  the  assignment  of  the  debt,  as  said  by  Lord  Eldon  in  that 
case.  The  debt,  until  the  recent  change  in  the  law,  was  only 
assignable  in  equity;  the  assignment  is  subject  therefore  to  equita- 
ble principles,  and  passes  nothing  but  what  is  justly  due  on  the 
instrument.  Williams  v.  Sorrell,  4  Yes.  389,  follows  the  same  prin- 
ciple. The  true  view  is  that  the  transferee  is  bound  by  all  equities 
affecting  the  mortgage  transaction,  not  merely  by  the  state  of  the 
account.  Stnith  v.  Paries,  16  Beav.  115,  shews  that  the  assignee  of 
a  debt  takes  subject  to  all  equities. 

[BowEX^  L.  J. : — Are  you  not  estopped  by  the  deed  and  the  re- 
ceipt upon  it  from  saying  that  the  whole  sum  was  not  advanced? 
(Goodwill  V.  Poharts,  1  App.  Cas.  476.)] 

That  was  the  case  of  a  document  which  by  custom  is  a  negotiable 
instrument.  The  present  is  the  case  of  a  mortgage  which  is  not 
given  with  a  view  of  its  passing  from  hand  to  hand. 

[BowEX,  L.  J.,  referred  to  In  re  Agra  and  Masterman's  Bank,  L. 
R.  2  Ch.  391.] 

The  present  case  is  more  like  Jn  re  Natal  Investment  Company, 
L.  E.  3  Ch.  355,  in  which  the  Agra  Bank  Case  was  referred  to,  and 
which  is  a  strong  authority  in  my  favour.  There  is  no  estoppel 
from  a  recital  in  a  security  unless  it  is  shewn  that  the  recital  is  in- 
tended to  be  shewn  to  third  parties  to  induce  them  to  act  upon  it; 
and  the  fact  that  no  prudent  person  takes  a  transfer  of  a  mortgage 
without  an  inquiry  from  the  mortgagor,  shews  that  the  recital  is 
not  intended  to  be  acted  on.  (Roll  v.  White,  31  Beav.  520,  and 
A  fheno'nm  Life  Assurance  Socidy  v.  Pooley,  3  "De  G.  &  J.  294,  sup- 
port my  contention.     I  say  then  that  the  mortgage  ought  to  be  cut 


•**»-'•  "•]  niticrnxoN-  r.  wat.ki-ii.  G.'jO 

down  as  against  IIuiiUt.  No  i»ru(lc'nl  transferee  of  a  mortgage 
over  takes  liis  transfer  witliout  intjuiring  from  the  mortgagcjr,  and 
it  is  negligenee  to  do  so.  The  case  is  quite  dilTerent  from  that  of 
an  absolute  sale,  because  there  an  in(|uiry  would  not  l)e  made  of  the 
original  vendor  unless  there  was  sonu-thing  to  raise  suspicion. 

Millar.  {).  ('..  and  Lainy,  for  Walker  and  Hunter: — As 
iigainst  Walker  there  is  no  ease:  he  ought  never  to  have  been 
nuule  a  party,  and  the  dismissal  as  against  him  must  stand.  As 
regards  llunti-r,  assuming  that  the  whole  ii2M)  was  not  advanced, 
we  say  that  he  is  not  alfecled  hy  that.  If  a  person  takes 
a  transfer  of  a  mortgage  without  inquiring  riom  the  mortgagor, 
lie  does  so  at  his  own  risk  as  regards  tlu'  stati'  of  the  account, 
hut  the  mortgagor  is  estopjjed  from  saying  that  any  statement 
made  by  himself  is  untrue.  The  transferee  has  a  right  to  act  on 
any  such  statement.  l\veryb(»dy  knows  that  the  sum  due  on  a 
mortgage  may  have  been  reduei-d  by  \):\r{  jiayment,  and  if  a 
transferee  makes  no  incpiiry  from  the  mortgagor  tlu-  mortgagor 
gets  the  benefit  of  jjrevious  ])art  ])ayments  as  against  him.  By 
saying  tliat  a  less  sum  than  tlie  original  principal  is  now  due  he 
is  not  contradicting  anything  in  the  mortgage  deed,  but  here  tlie 
mortgagor  is  alleging  as  against  a  honCi  fide  purchaser  without 
notice  tiiat  the  statement  in  the  mortgage  deed  as  to  the  sum 
advanced  is  not  true.  That  cannot  be  allowed,  lluider  v.  11'^//- 
ttrs,  L.  K.  7  Ch.  To;  H'c*/  v.  Jones.  1  Sim  (  x.  s. )  20r» ;  /'»Vc  v. 
liice.  2  Drew.  73.  Tn  Shroii-ihirr  Union  liailirdi/s  and  Canal  Com- 
fiany  v.  The  Qiirrn.  L.  1{.  7  II.  L.  U)(),  ')()!),  Lord  Cairns  refers  to 
liice  V.  Rice  with  approbation.  The  |)rinci|)le  is  not  contined  to  cases 
where  A.  makes  a  written  representation  to  B.  with  the  intention 
that  it  shall  be  shewn  In  ('..  for  bi)tli  Lord  Cairns  in  the  last-men- 
tioned case,  and  Lord  Ilatherley  in  Ihinhr  v.  Wallers,  lay  it  down 
broadly  that  a  receipt  for  money  estops  the  party  giving  it,  as  be- 
tween him  and  a  third  jier.son  who  has  ai-ted  on  the  faith  of  it. 

I  FiiY.  L.  J.: — .\n  assignment  of  a  chose  in  action  is  subject  to 
all  equities.  Do  you  say  that  the  receipt  is  an  assertion  that 
there  are  no  such  ecpiilies?] 

1  say  that  at  all  events  it  makes  the  e(|uitie-.  une(pial ;  a  person 
who  has  given  a  receipt  stating  that  lie  has  nxviveil  money,  an»l  then 
<lis[)utes  its  truth,  cannot  have  as  gotxl  an  ecpiity  as  a  jierson  who 
ncted  on  the  faith  of  the  receipt. 

[BoWKV,  L.  .).:-  AVhat  do  you  say  to  In  lir  Xatil  Inreslnirnf 
Companj/,  L.  K.  •">  Ch.  :?.").")?] 

In  that  ease  there  was  no  receipt,  and  no  one  buying  n  deben- 
ture in  th(>  market  buys  it  on  the  faith  of  the  whole  of  the  money 
having  been  advanced,  it  biMug  notorious  that  debentures  are  often 


OGO  ASSIGNMENT    OF    MORTGAGE.  [(  It.vr.  IV. 

issued  below  par.  In  none  of  the  cases  cited  against  us  was  there 
any  indorsed  receipt.  White  v.  Wakefield,  7  Sim.  401,  is  strong  in 
our  favour. 

The  judgment  of  the  Court  (Sir  James  Hannen,  and  Bowen  and 
Fry,  L.  J  J.)  was  delivered  by 

Fry,  L.  J. :— In  the  year  1879  a  sum  of  £975  Xew  3  per  Cent.  An- 
nuities was  standing  in  the  name  of  a  trustee  under  the  will  of  a 
Mrs.  Goulston,  upon  trust  for  the  plaintitf,  Mrs.  Bickerton,  for  life, 
with  remainder  in  equal  shares  to  her  children  living  at  her  death 
and  the  issue  of  children  then  deceased.  She  had  three  children, 
of  whom  the  plaintifP,  Miss  Bickerton,  is  one. 

By  an  indenture  bearing  date  the  10th  of  February,  1879,  the 
plaintiffs  assigned  to  the  defendant  Bates  their  interests  in  these 
annuities  to  secure  a  sum  of  £'350  and  interest  at  7  per  cent,  pay- 
able on  the  10th  of  August,  1879.  On  this  mortgage  there  was 
indorsed  the  usiuil  receipt  for  the  sum  of  £250,  which  was  signed 
by  both  plaintiffs. 

The  plaintiff's  allege  that  svims  amounting  to  £91  17.§.  6d.,  and 
no  more,  were  paid  to  them  in  respect  of  the  £350;  and  though 
the  evidence  adduced  by  the  plaintiffs  is  far  from  satisfactory,  we 
are  of  opinion  that  as  against  the  defendant  Bates  the  plaintiffs 
have  established  by  evidence  a  case  for  reducing  the  mortgage;  or, 
in  other  words,  that  as  against  Bates  the  plaintiffs  w-ould  be  entitled 
to  a  declaration  of  their  right  to  redeem  on  payment  of  what  should 
be  found  to  have  been  actually  advanced  on  the  mortgage,  with 
interest. 

On  the  11th  of  March,  1879,  the  defendant  Bates  assigned  this 
mortgage  security  to  the  defendant  Hunter,  and  it  is  not  disputed 
by  the  plaintiffs  but  that  this  defendant  has  shewn  that  he  paid 
the  full  consideration  of  £250  for  the  assignment,  and  that  he  took 
the  assignment  without  actual  notice  of  any  equity  subsisting  be- 
tween the  plaintiffs  and  Bates  except  the  equity  of  redemption 
according  to  the  form  of  the  mortgage  deed. 

The  plaintiffs,  however,  contend  that  inasmuch  as  the  assign- 
ment of  their  interests  in  the  legacy  was  an  assignment  of  a  chose 
in  action,  the  defendant  Hunter  is  now  liable  to  all  the  equities 
which  the  plaintiffs  had  at  the  date  of  the  aspis^nment  against  his 
assignor,  Bates.     This  the  defendant  Hunter  denies. 

As  the  legal  interest  in  the  legacy  was  and  is  vested  in  the 
trustee  of  Mrs.  Goulston's  will,  it  is  evident  that  the  interests  botli 
of  the  plaintiffs  and  of  the  defendant  Hunter  are  equitable  inter- 
ests only,  and  the  real  question  for  our  decision  is,  what  are  the 
relative  merits  of  these  persons  havinsr  adverse  equitable  intorests? 
If  the  merits  of  the  one  are  greater  than  those  of  the  other,  the 


Hf:.\  II.]  !U(  Ki:i!T<>N    ;•.   WAiKi:i:.  O'^'l 

Court  will  givf  the  jtriority  to  tlic  greater  merits;  if  and  only  if  llic 
merits  are  e(iual,  it  will  give  the  priority  of  right  to  the  one  who  is 
prior  in  point  of  time. 

The  plaintitlV  execiiled  a  deed  wliicli  rcciti'd  that  they  had 
received  the  whole  sum  of  £2.")0,  and  which  stipulated  that  their 
right  of  ri'demption  .should  be  on  payment  of  the  sum  of  £250  and 
interest,  they  signed  a  receipt  on  the  hack  of  the  deed  stating 
that  they  had  in  fact  received  this  sum  of  £2')(\  and  they  permitted 
Bates,  or  Astley,  who  was  acting  with  or  for  him,  to  have  pos- 
session of  the  deed  containing  these  false  statements.  That  the 
plaintifTs  were  in  a  moral  point  of  view  excusable  for  these  acts  is 
beyond  doubt,  and  that  they  were  deceived  l)y  those  whom  they 
trusted,  and  as  such  are  objects  of  sympathy,  is  eipially  clear.  But 
they  were  inexact  and  careless,  and  placed  in  the  hands  of  Bates  or 
Astley  the  means  of  deceiving  other  persons,  and  these  are  in  the 
view  of  a  Court  of  Erpiity  demerits. 

Was  Ilunti'r  guilty  of  negligence  or  want  of  care  in  his  part  of 
tlie  transaction?  He  must,  on  the  evidence  before  us,  be  taken 
lo  have  advanced  his  money  on  tlie  faith  of  the  production  of  the 
mortgage  deed  and  receipt  signed  by  the  plaintifTs;  and  if  the 
a>signment  by  the  plaintiffs  had  been,  not  a  mortgage  but  an  ab- 
.Milute  conveyance,  it  would,  we  think,  have  been  clear  that  there 
would  have  been  no  negligence  whatever  on  the  part  of  the  de- 
fendant TTunt'-r  in  not  inquiring  of  the  plaintifTs  as  to  their  rights 
111-  claims.  But  it  has  been  argued  before  us  that  there  is  a  wide 
dilTerence  in  this  respect  between  a  mortgage  and  an  ab.solute  con- 
veyance, because  it  is  said,  and  said  truly,  that  in  the  ordinary 
c^nirse  of  business  a  prudent  assignee  of  a  mortgage,  before  paying 
his  money,  requires  either  the  concurrence  of  the  mortgagor  in  the 
assignment,  or  some  infornuition  from  him  as  to  the  state  of  ac- 
counts between  mortgagor  and  mortgagee.  The  reason  of  this 
course  of  conduct  is  however,  in  our  opinion,  to  be  found  in  the  fact 
that  an  a.ssignet^  of  a  mortgage  is  afTeeted  by  all  transactions  which 
may  have  taken  place  between  mortgagor  and  mortgagee  sul)se- 
«|Uently  to  the  mortgage,  and  the  assignee  is  bound  to  give  credit 
for  all  moneys  received  by  his  assignor  before  he  has  given  notice 
of  the  assignment  to  the  mortgagor.  But  in  the  present  ca.se  the 
assignment  was  mi\(\o  very  soon  after  the  execution  of  the  mort- 
gage, and  before  the  time  for  pavment  had  arrived;  so  that,  whilst 
it  was  possible,  it  was  not  probable,  that  any  payment  would  have 
l>oen  made  either  of  principal  or  interest;  and  we  are  of  opinion 
that  if  an  assign  is  willing  to  lake  the  risk  of  any  pavment  having 
been  made  afttT  the  date  of  the  mortgage  he  is  not  guilty  of  care- 
l^snesR  or  negligence  if,  in  tlie  ab.sence  of  any  circumstances  to 


C)G2  ASSIGNMENT    OF   MORTGAGE.  [CHAP.  IV, 

arouse  suspicion,  he  relies  upon  the  solemn  assurance  under  thi^ 
hand  and  seal  of  the  mortgagor  as  to  the  real  bargain  carried  into 
etTect  by  the  mortgage  deed,  upon  the  })Ossession  of  that  deed 
by  the  mortgagee,  and  upon  the  receipt  for  the  full  amount  of  the 
:nortgage  money  under  the  hand  of  the  mortgagor. 

The  presence  of  a  receipt  indorsed  upon  a  deed  for  the  full 
amount  of  the  consideration  money  has  always  been  considered  a 
highly  important  circumstance.  The  importance  attached  to  this 
circumstance  seems  at  first  sight  a  little  remarkable  when  it  is 
remembered  that  the  deed  almost  always  contains  a  receipt,  and 
often  a  release,  under  the  hand  and  seal  of  the  parties  entitled  to 
the  money.  But  there  are  circumstances  which  seem  to  justify 
the  view  which  has  prevailed  as  to  its  importance.  A  deed  may 
be  delivered  as  an  escrow,  but  there  is  no  reason  for  giving  a  re- 
ceipt till  the  money  is  actually  received,  unless  it  be  to  enable 
the  person  taking  the  receipt  to  produce  faith  by  it.  A  deed  is 
Qot  always,  perhaps  rarely,  understood  by  the  parties  to  it,  but  a 
receipt  is  an  instrument  level  with  the  ordinary  intelligence  of 
men  and  women  who  transact  business  in  this  country,  and  which 
he  who  runs  may  read  and  understand. 

Our  decision  follows,  as  will  be  obvious  to  those  who  are  familiar 
with  this  branch  of  law,  the  general  lines  laid  down  by  Kindersley,. 
V.  C,  in  Bice  v.  Rice^  2  Drew.  73.  For  the  solution  of  the  particular 
question  which  distinguishes  this  case  from  that,  viz.,  whether  there 
is  for  this  purpose  any  difference  between  a  mortgage  and  an  abso- 
lute conveyance,  we  have  not  been  aided  by  any  authority  cited  to  us 
at  the  bar. 

For  the  reasons  already  given  we  dismiss  this  appeal  Avith  costs. 


OLDS  V.  CUMMINGS. 

Supreme  Court  of  Illinois,  1863. 

(317ZZ.  188.) 

Writ  of  error  to  the  Circuit  Court  of  Bureau  county;  the  Hon. 
M.  E.  Hollister,  Judge,  presiding. 

This  was  a  bill  in  chancery  exhibited  in  the  Circuit  Court  by 
Justin  H.  Olds  against  Preston  Cummings,  Cynthia  Cummings, 
his  wife,  and  others,  asking  the  foreclosure  of  a  mortgage. 

It  appears  that  on  the  21st  of  November,  1857,  Preston  Cum- 


KKC.   11.1  OLDS    V.    (  r.MMlN'GS.  M'-\ 

min<^s  cxcfutfd  to  the  order  of  Charlfs  L.  Kflscy  liis  two  cortaiii 
promissory  notes,  both  payable  sonic  mnnths  iheroafter.  On  tlw 
same  (lay  on  wliicli  the  notes  were  executed,  Treston  Cuminin^^s, 
with  his  wife,  Cynthia  Ciinuiiin^'s,  to  secure  the  payment  of  tiiesc 
notes,  executed  and  delivered  to  Kelsey  a  niortjia^e  upon  real  es- 
tate. The  notes  were  assigned  to  Olds,  the  eom|)lainant,  by  Kelsey, 
the  payee,  as  the  bill  alle*;es,  before  their  maturity.  Olds,  the  as- 
signs sou^'ht  by  this  bill  to  foreclose  the  mortiiape  mentioned. 
Cummin<js,  in  his  answer,  admits  the  execution  of  the  notes  and 
mortgage  described  in  the  bill,  but  interposes  the  defense  of  usury. 
It  is  also  alleged  in  the  answer,  that  the  assignment  of  the  notes 
by  Kelsey  to  Olds  was  made  (if  at  all)  long  after  their  maturity; 
but  that,  in  fact,  the  matter  of  the  assignment  was  only  colorable, 
not  made  bona  fide  for  a  valuable  consideration,  and  only  to  j>re- 
vent  the  defendants  setting  up  the  defense  before  mentioned. 

The  record  contains  voluminous  proofs  upon  these  contested  ques- 
tions of  fact ;  but  it  is  not  important  to  consider  the  evidence,  as  the 
point  determined  arises  out  of  the  facts  as  insisted  upon  by  the 
complainant  himself. 

The  Circuit  Court  held  that  the  (>quity  of  the  case  was  with  the 
defendant,  Preston  Cummings,  and  that  there  was  usury  iu  the 
notes  sued  upon,  of  which  usury  the  comjtlainant  had  notice,  and 
that  he  was  not  entitled  to  recover  the  same,  but  only  the  principal 
and  interest  in  the  notes,  after  deducting  the  usury  which  they  con- 
tained:  and  a  decree  was  rendered  accordingly.  Olds,  the  com- 
])lainant  below,  then  sued  out  this  writ  of  error,  and  questions  the 
correctness  of  that  decree,  because,  among  other  grounds,  the  Cir- 
cuit Court  sustained  the  defense  of  usury  as  against  him. 

Mr.  Chief  Ji'stick  C.vtox  delivered  the  opinion  of  the  court : 
We  do  not  find  it  necessary  to  determine  the  (pu'stion  whether 
Olds  was  a  bona  f\ih  purcha'ser  of  this  mortgage  or  not.  In  a  case 
submitted  subse(|uent  to  this  one  we  have  been  called  upon  to  ex- 
amine the  question  as  to  how  far  the  rights  of  the  assignee  of  a 
mortgage,  purchased  for  a  valuable  consideration  before  due.  and 
in  ignorance  of  any  ecpiities  or  defense,  shall  l)e  affected  by  >\\c\\ 
defense;  and,  as  this  record  also  presents  the  question,  and  as  the 
conclusion  at  whidi  we  have  arrived  decides  the  case,  we  shall  here 
consider  this  question  and  none  other. 

By  the  common  law  choses  in  action  were  not  assignable,  l-'or 
the  convenience  of  commerce,  by  tlie  statute  of  Anne,  in  England, 
certain  cho.ses  in  action  were  made  assignable,  .so  as  to  vest  in  the 
assignee  the  legal  title,  as  promissorv  notes  and  bills  of  exchange 
We  have  a  stat\ite,  al.so,  making  certain  choses  in  action  assignable. 
prescribing  a  particular  mode  in  which  th<>y  sliall  be  assigned.     Our 


(JG4  ASSIGNMENT    OF    MORTGAGE.  [CIIAP.  fV. 

statute  provides  that  any  promissory  note,  bond,  bill,  or  other  in- 
strument in  writing,  whereby  one  person  promises  to  pay  to  another 
any  sum  of  money  or  article  of  personal  property,  or  sum 
of  money  in  personal  property,  shall  be  assignable  by  in- 
dorsement thereon.  iSTow,  the  mortgage,  to  foreclose  which  this  bill 
was  filed,  was  given  to  secure  the  payment  of  two  promissory  notes 
which  were  assigned  by  the  payee  and  mortgagee  to  the  complain- 
ants. This  was,  in  equity,  an  assignment  of  the  mortgage.  The 
notes  were  assignable  by  the  statute,  but  the  mortgage  is  not,  nor 
is  it  assignable  by  the  common  law.  Tbe  assignee  of  a  mortgage 
has  no  remedy  upon  it  by  law,  except  it  be  treated  as  an  absolute 
conveyance,  and  the  mortgagee  convey  the  premises  to  the  assignee 
bv  deed;  and  upon  the  question  whether  this  can  be  done,  the  au- 
tiiorities  are  conflicting.  Even  our  statute,  autborizing  foreclos- 
ures of  mortgages  by  scire  facias,  has  carefully  confined  the  right 
to  the  mortgagee,  and  does  not  authorize  this  to  be  done  by  as- 
signees. But  it  is  said  that  tlie  assiiiument  of  the  notes  carries  with 
it  the  mortgage,  which  is  but  an  incident  to  the  principal  debt. 
That  is  true  in  equity,  and  only  in  equity.  Courts  of  equity  will 
not  Ije  confined  to  legal  forms  and  legal  titles,  but  look  beyond 
thc-^c  to  the  substantial,  equitable  rights  of  parties,  and  allow  par- 
tics  who  have  equitable  rights  to  enforce  those  rights  in  their  own 
names,  without  regard  to  legal  titles.  The  assignee  of  a  judgment, 
ovi'U,  may,  in  his  own  name,  enforce  it  in  equity.  But  while  courts 
of  equity  thus  enforce  equitable  rights,  they  do  it  with  a  scrupu- 
lous regard  to  the  equitable  rights  of  others.  Thus,  if  the  assignee 
of  a  judgment  attempt  to  enforce  it  in  equity,  no  matter  how  much 
he  paid  for  it,  or  how  ignorant  he  might  have  been  that  it  had  been 
paid,  or  that  there  was  other  reason  why  it  should  not  be  collected, 
tlie  court  of  equity  will  look  into  all  the  circumstances,  and  will  not 
enforce  it  in  his  favor,  if  it  ought  not  to  be  enforced  in  the  hands  of 
the  assignor.  He  who  buys  that  which  is  not  assignable  at  law, 
relying  upon  a  court  of  chancery  to  protect  and  enforce  his  rights, 
takes  it  subject  to  all  infirmities  to  Avhich  it  is  liable  in  the  hands 
of  the  assignor;  and  the  reason  is,  that  equity  will  not  lend  itself 
to  deprive  a  party  of  a  right  which  the  law  has  secured  him,  if  such 
right  is  intrinsically  just  of  itself. 

We  have  not  met  with  a  single  case  where  remedy  has  been 
sought  in  a  court  of  chancery,  upon  a  mortgage,  by  an  assignee,  in 
which  every  defense  has  not  been  allowed  which  the  mortgagor  or 
his  representatives  could  have  made  against  the  mortgagee  himself, 
unless  there  has  been  an  express  statute  authorizing  the  assign- 
ment of  the  mortgage  itself.  There  are  many  cases  in  which  the 
assignees  have  been  protected  against  latent  equities  of  third  per- 


>'►-'■•  "1  (H.D-    r.    riMM  INCS.  (I<j"> 

.«»iiH,  wIioM'  li^flils,  or  cvi'i)  iiaiiR's,  do  iiul  iijn»r;ir  on  the  i.icf  oi  me 
iiiorl^M.^c.  And  (111-  ri'iison  is,  that  il  is  the  duty  of  the  purcliasi-r 
of  a  miiit;4a^ui'  (o  iiKiuiri'  of  [\\v  inort;,M_ir(ir  if  tlieri'  l)t'  any  reason 
why  il  .-lioulil  not  he  paid;  hiit  he  shoukl  not  he  reciuired  to  infjuirL' 
of  the  wliole  woild,  (o  sic  if  some  one  has  not  a  latent  equity  which 
nii^'ht  he  inti'ifere<l  with  hy  his  ]im"ehase  of  Ihi-  niort^aire,  ;u>,  for 
instance,  a  ifslui  ijur  Inisl. 

We  shall  refer  lo  a  few  of  the  many  ease.s  to  he  met  with  on  thi.s 
^uhje<•t.  In  Miiinni  \.  LijUiuni.  'I  J.  C.  H.  441,  the  (juestion  arosi; 
upon  a  hill  to  foreclose  a  mortgaj^e  hy  the  assignee,  and  riiancellor 
Kent  said  :  ''  Tt  is  a  general  and  well-settled  principle,  ttat  the 
iissignee  of  a  chose  in  action  takes  it  sni)ject  to  the  same  equitii-s  it 
was  suhject  to  in  the  hands  of  the  assignor.  Rut  this  rule  is  gcn- 
<'rnlly  understood  to  mean  th"  ecpiity  residing  in  the  original 
ohligor,  and  not  an  eijuity  residing  in  some  third  person,  against 
the  assignor."  .\nd  for  tliis  distinction  he  assigns  the  reason  al)Ove 
stated.  Again,  he  says,  in  the  satne  ease:  ''  But  honds  and  mort- 
gages are  not  the  subjects  of  ordinary  eommeree."  Here  is  ex- 
)>ressed  the  very  essence  of  the  reason  of  the  law.  ^fortgages  are 
not  commercial  i)aper.  Tt  is  not  convenient  to  pass  them  from 
hand  to  hand.  ]»erforming  the  real  ofTice  of  money  in  commercial 
transactions,  as  notes,  hills  and  the  like.  When  one  takes  an  ol)li- 
gation  secured  hy  a  mortgage,  relying  upon  the  mortgage  as  the 
.-ecurity,  he  must  do  it  deliherately,  and  take  time  to  inquire  if 
any  reason  e\ist<  why  it  should  not  he  enforced  ;  while  he  mav  take 
I  lie  mer<'  pronii.<e  to  pay  the  money,  as  commercial  ]>aper,  and  di'- 
|n  nd  upon  the  personal  securitv  of  the  parties  to  it.  It  may  ho 
-aid  to  he  a  distinguishing  characteristic  of  commercial  paper,  that 
if  relies  ujion  jtersonal  security,  and  is  l)ased  upon  per.<onal  credit. 
It  is  a  part  of  the  credit  system,  which  is  said  to  he  the  life  of  com- 
merce, which  recpiires  commercial  instruments  to  pass  rapidly  from 
hand  to  liand.  ^fortgage  securities  are  too  cumbersome  to  answer 
these  ends.  The  note  its(>lf,  though  seeun^l  hy  a  mortgage,  is  still 
<i>nimcrcial  paper:  and  when  the  remedy  is  sought  upon  that,  all 
the  rights  incident  to  eonimercial  j)aper  will  Ik*  enforced  in  the 
«'onrts  of  law.  But  when  the  remedy  i.s  sought  through  the  me- 
<lium  of  the  mortgage:  when  that  is  the  foundation  of  the  suit, 
and  the  note  is  merely  used  as  an  incident,  to  ascertain  the  amount 
diK"  on  the  mortgage,  then  the  courts  of  e(]uity.  to  which  resort  is 
had,  must  pause,  and  look  d(>eper  into  the  transaction,  and  see  if 
there  he  any  equitable  reason  why  it  should  not  he  (^nforced.  He 
who  Imlds  a  note,  and  also  a  mortgage,  holds  in  fact  two  instruments 
for  th(>  security  of  flu'  debt  :  first,  the  note  with  its  personal  securitv. 
which  i<  comm(>rcial  j)aj)er,  and,  as  such,  may  he  enforced  in  the 


<}C()  ASSIGNMENT    OF    MORTGAGE.  [CHAP.  IT, 

courts  of  law,  with  all  the  rights  incident  to  such  paper;  and  the 
other,  the  mortgage,  with  security  on  land,  which  may  be  enforced 
in  the  courts  of  equity,  and  is  subject  to  the  equities  existing  be- 
tween the  parties.  The  right  of  an  assignee  to  set  at  defiance  a 
defense  which  could  be  made  against  the  assignor  is  an  arbitrary 
statutory  right,  created  for  the  convenience  of  commerce  alone,  and 
must  rely  upon  the  statute  for  its  support,  and  is  not  fostered 
and  encouraged  by  courts  of  equity. 

In  Westfall  v.  Joties,  23  Barb.  10,  the  Court  said :  "  Does  the 
plaintiff,  being  a  bona  fide  purchaser  and  assignee  of  the  bond  and 
mortgage,  stand  in  any  better  condition  than  the  person  from  whom 
he  derived  his  title?  It  is  a  well-settled  principle  that  the  as- 
signee of  a  chose  in  action  takes  it  subject  to  all  the  equities  which 
existed  against  it  in  the  hands  of  the  assignor."  In  this  case  thr 
defense  to  the  foreclosure  was  that  the  mortgage  was  given  without 
consideration,  and  to  defraud  creditors,  and  the  Court  refused  to- 
enforce  it,  but  left  the  assignee,  as  it  would  have  left  the  mortgagee, 
where  their  contract  left  them.  The  case  thus  decides  that  the 
term  equities,  as  here  used,  means  defenses.  The  opinion  of  the 
Court  proceeds :  "  But  I  am  prepared  to  hold  that  the  plaintiff  has 
no  other  or  greater  rights  in  relation  to  this  bond  and  mortgage, 
and  stands  in  no  better  position,  than  Parsons,  the  mortgagee." 

So,  in  Pennsylvania  the  same  rule  was  held.  In  Mott  v.  Clarke 
9  State  E.  399,  the  Court  said:  "He  (the  assignee)  takes  it  (the 
mortgage)  subject  to  all  the  equities  of  the  mortgagor,  but  not  to 
the  latent  equities  of  a  third  person;"  holding  the  same  rule  pre- 
cisely as  the  case  first  referred  to,  as  decided  by  Chancellor  Kent ; 
and  such  also  was  the  case  of  Prior  v.  Wood,  31  Pa.  State  E.,  where 
the  Court  protected  the  assignee  of  the  mortgagee  against  the  latent 
equities  of  third  persons  against  the  assignor.  And  this  is  as  far 
as  any  Court  has  gone  in  the  protection  of  a  bona  fide  assignee  of  a 
mortgage,  when  the  proceeding  was  on  the  mortgage  itself,  and  in 
the  absence  of  any  express  statutory  provision  authorizing  the  as- 
signment of  the  mortgage. 

We  find  the  law  to  be,  both  upon  principle  and  authority,  that 
the  assignee  of  the  mortgage  in  this  case  took  it  subject  to  the  de- 
fense which  the  mortgagor  had  against  it  in  the  hands  of  the  as- 
signor. Of  the  sufficiency  of  that  defense,  to  the  extent  admitted 
by  the  Circuit  Court,  no  question  was  made. 
The  decree  must  be  affirmed. 


sKc.  II.]  iiAiLV  r.  SMITH.  6G7 

liAILV  V.  SMI  ril. 

Sri'itKMi:  Coil!!"  <»r  oiiio.  ISCM. 

(14  Oil.  SI.  :5'.»r,.) 

Error  to  llio  District  Court  of  Lorain  county. 

The  case  is  stated  in  the  ojiinion  of  the  court. 

It.WNHY,  J.  On  the  Hth  day  of  October,  \H').],  the  plaintifT  gave 
to  the  defendant,  Charles  11.  liolles,  his  negotiahh'  iiromissory  note 
for  the  sum  of  $5:370,  and  ])ayahk'  two  years  after  date,  with  in- 
terest. Prior  to  tlie  1-lth  of  Dcccinhcr.  in  the  same  year,  sundry 
payments  had  been  made  and  iiidor-cd  thi-reon,  leavinj?  then  due 
the  sum  of  $•^^*^(>() ;  and  on  that  day  tiie  jjUiintilf  executccl  and  deliv- 
ered a  niortgai^e  upon  real  estate  situated  in  Lorain  county  to 
secure  this  balance.  ( )n  the  I'lh  of  dune,  1850,  he  filed  his  amended 
jK'tition  ajjainst  BoUes,  the  original  payee  of  the  note,  Kendall  and 
Lucas,  through  \\hose  hands  the  note  and  mortgage  had  passed  by 
assignment,  and  Smith,  the  then  holder,  to  compel  the  delivery 
and  cancellation  of  the><e  instruments:  alleging  that  the  note  wa.s 
given  for  a  pretended  patent  right  for  a  machine  which  was  utterly 
worthless,  whether  pati-nted  or  not  ;  that  l)oth  the  note  and  mort- 
gag(>  were  oI)laine(l  by  fraud,  and  that  every  subseiiuent  holder 
thereof  took  them  with  lull  notice  of  the  fraud  and  want  of  con- 
sideration. 

Smith  alone  answered  the  iirtition.  and  claimed  to  have  pur- 
chased the  note  and  mortgage  from  L\icas  shortly  before  they  fell 
due,  without  notice  of  any  fraud  or  want  of  consideration,  ami  to 
1k'  a  bona  fiilc  holder  thereof  for  value,  and  eiititlecl  to  be  protected 
as  such. 

Xo  bill  of  e\ce|itions  embodying  tile  evidem-e  having  been  taken 
upini  the  trial  in  the  court  below.  w<'  have  oidy  to  consider  whether 
the  facts  found  by  the  court  ju-tilicd  the  judgment  which  was  ri'U- 
dered.  If  any  state  of  the  evidence,  consistent  with  the  pleadings, 
would  justify  the  findings  of  fact  which  the  court  nuide.  we  are 
bound  to  pnsume,  in  support  of  the  judgment,  that  such  evident 
was  given,     {hlr  v.  Cliiinliill.  tiiilr.  p.  37^*.) 

The  plaintilT  obtained  the  relief  demande«l  in  his  petition  for 
ever^-thing  beyond  the  amount  paid  by  Smith  for  the  note  an<l 
mortgage,  with  interest  thereon,  and  for  that  amount  an  affirmative 
judgment  for  the  sale  of  the  mortgaged  premises  was  rendered  in 
favor  of  Smith,  and  the  plaintilT  was  ordered  to  pay  the  costs  of  the 
action. 

This  judgujenf   was   founded   u])on  a   finding  bv  the  court   that 


6G8  ASSIGNMENT    OF    MORTGAGE.  [CIIAP.  IV. 

tlic  note  was  obtained  by  fraud,  and  without  consideration,  of  which 
the  intermediate  parties,  Kendall  and  Lucas,  had  notice,  and  that, 
as  against  them  and  Bolles,  the  plaintiff  was  entitled  to  the  relief 
prayed  for  in  his  petition;  hut  the  court  further  find  that  Smith 
purchased  the  note  and  mortgage  from  Lucas  in  September,  1855, 
and  paid  therefor  $1250,  without  knowledge  of  the  fraud  and  want 
of  consideration  existing  between  the  original  parties,  and  is  en- 
titled to  hold  the  mortgage  for  the  sum  so  paid  with  interest,  and 
to  recover  thereon  for  that  amount.  Passing  by,  without  any  re- 
mark, the  objection  that  this  affirmative  judgment  in  favor  of 
Smith  could  not  have  been  rendered  without  a  distinct  counter- 
claim interposed  by  him,  and  coming  at  once  to  the  merits  of  the 
controversy,  it  is  evident  that  the  judgment  can  only  be  supported 
u])on  the  establishment  of  the  two  propositions:  first,  that  upon 
the  facts  found  by  the  court,  taken  in  connection  with  his  answer 
asserting  his  title,  the  defendant,  Smith,  in  the  sense  of  the  com- 
mercial rule,  was  a  bona  fide  holder  of  the  note,  without  notice  of 
the  equities  existing  between  the  original  parties;  and,  second,  that 
the  immunity  belonging  to  the  note  in  the  hands  of  such  a  holder,  in 
virtue  of  this  rule,  is  extended  to  the  mortgage  by  which  it  wa> 
originally  secured,  and  equally  entitles  the  holder  to  recover  upon 
thai 

A  sum  of  money  due  upon  the  note,  from  Baily  to  Smith,  is  an 
indispensable  predicate  upon  which  to  found  a  judgment  npon  the 
mortgage;  and  as  no  personal  judgment  w^as  rendered  or  attempted, 
and  as  both  note  and  mortgage,  until  they  came  to  the  hands  ot 
Smith,  are  found  to  have  been  fraudulent  and  void,  it  is  equally 
evident  that  he  can  sustain  his  judgment  only  upon  the  assumption 
that  the  attributes  of  negotiability  belonged  to  the  mortgage  as 
well  as  the  note,  and  if  this  can  not  be  done,  that  the  finding  upon 
the  note  falls  with  the  judgment  rendered  upon  the  mortgage. 
Without  such  finding,  there  can  be  no  such  judgment;  and  with  tho 
finding,  there  still  can  be  no  judgment,  if  Smith  only  succeedec't 
to  the  rights  of  his  assignor  in  the  mortgage. 

[The  learned  judge  here  considers  at  length  the  objections  urged 
by  plaintiff's  counsel,  in  opposition  to  the  finding  of  the  court  below 
that  Smith  was  a  bond  fide  holder  of  the  note  and  mortgage  for 
value,  and  comes  to  the  conclusion  that  there  was  no  error  in  the 
finding.] 

The  remaining  question  is  one  of  much  importance,  and  for  the 
first  time  presented  in  this  court.  As  it  was  supposed  to  be  in- 
volved  in  other  eases  upon  our  docket,  we  have  given  opportunity 
to  counsel  in  those  cases  to  be  heard,  and  after  full  argument,  we 
have  bestowed  upon  it  very  careful  attention.     Does  the  fact  that  a 


^i:<-  II.]  iiAii.Y  r.  s.Mrni.  <>'•  ' 

note,  obtained  by  fraud,  lias  j^asscd  into  the  hands  <if  a  bono  full- 
indorsee,  entitle  him  to  enforce  a  innrt^iajje  <^iven  to  the  original 
holder  to  secure  its  payment?  Or  may  the  mortpigor  still  insist 
\ij)on  the  fraud,  as  a  defense  to  an  action  hn)U<.dit  t<»  foreclose  it? 
On  the  one  hand,  the  (piestion  is  in  no  way  alTectcd  Ity  the  further 
question  whether  a  mortgagee  ac<|uires  siuh  an  intere.-t  in  the  land 
as  to  enable  his  grantee,  being  also  assignee  of  the  note,  by  dei-d 
duly  executed,  to  claim  the  beneUt  of  tin-  rule  which  protects  bona 
fide  jiurchasers  of  real  estate — there  being  no  claim  that  any  such 
deed  was  nuide?  And  on  the  other,  we  assume,  as  undoul)ted,  that, 
whether  a  written  assignment  was  made  or  not,  the  assignee  of  the 
note  acquired  all  the  rights  and  interests  of  the  assignor  in  tin- 
mortgage.  Vt-ry  little  aid  is  to  be  derived,  either  from  adjudged 
eases  or  the  elementary  books,  in  the  solution  of  the  jjrecise  (jue>- 
tion  now  before  us.  This  is  not  because  the  purchase  and  assign- 
ment of  mortgages  is  a  new  thing.  On  the  contrary,  scarcely  any 
business  transaction  has  ber-n  more  common  and  familiar,  or  has 
uftener  engaged  the  attention  of  the  courts.  Nor  has  the  nature 
of  this  instrument,  and  the  rights  of  jiarties  growing  out  of  its 
assignment,  either  alone  or  in  connection  with  a  non-negotiable 
security,  escaped  attention,  or  failed  to  reccMve  very  full  ami  accu- 
rate illustration.  In  such  case,  the  universally  acknowledged  doe- 
trine  from  the  case  of  Pnvics  r.  Austen.  1  Vi-s.  217,  to  Hush  v. 
Lathrop,  22  Xew  York  H.  ."i.')"),  has  been,  that  it  is  to  be  regarded 
as  a  chose  in  action,  and,  as  expressed  Iiy  Lord  Thurlow.  *'  the  pur- 
chaser must  abide  by  the  case  of  the  person  from  wliom  he  buys:** 
but  during  all  that  long  jierioil.  neither  in  Knglaiid  nor  in  any  of 
the  old  states  of  the  Tnion,  dm's  the  (piestion  seiin  to  have  been 
])rcscnted,  whether  it  might  not  have  a  dilTen-nt  elTect  upon  its 
assignment  when  made  to  secure  a  negotiable  instrument.  This 
may  be  accouiite<l  for,  in  part,  undoubtedly  by  the  general  practice 
of  taking  a  non-negotiable  bond  with  a  mortgage;  but  it  can  not 
be  doubted  that  mortgages  hav(>  nuiny  times  Iwen  taken  to  secure 
negotiable  bills  and  notes,  fraudulently  transfi-rri'd.  and  if  such  a 
distinction  was  thought  to  exist,  it  seems  very  singular  that  the 
holders  should  never  have  made  the  attemj)t  to  avail  them.selve': 
of  such  securities.  Tn  Xew  York  the  attempt  has  been  frecpiently 
made  to  confine  the  principle  that  the  jnirehaser  nnist  abide  by  the 
case  of  the  seller,  to  the  original  debtor,  allowing  him  to  make  the 
same  defense  against  the  assignee  that  he  could  against  the  as- 
signor, but  ]>rotecting  the  assigiu'(>  without  notice  from  what  have 
been  denominated  latent  equities,  or  interi»sts  in  third  person^,  not 
in  tlie  apparent  chain  of  title.  .\nd  tliis  for  the  very  plaiisible  rea- 
son that  one  proposing  to  purvhase  such  an  instrument  might   in- 


G:0  ASSIGXMEXT    of    mortgage.  [chap.  IV. 

quire  of  the  debtor  whether  he  pretended  to  any  defense,  and  make 
his  answer  estop  him  from  afterward  asserting  any,  but  that  no 
amount  of  diligence  would  enable  him  to  protect  himself  from  such 
latent  equities.  But,  after  some  vacillation  in  judicial  opinion,  the 
Court  of  Appeals,  in  Bush  v.  Lathrop,  repudiated  the  distinction, 
and  held  that  the  purchaser  in  such  cases  must  rely  upon  the  good 
faith  of  the  seller,  that  he  could  "  take  only  such  title  as  the  seller 
had  and  no  other,"  and  that  if  mortgages  were  "  to  l)e  further  assim- 
ilated to  commercial  paper,  the  legislature  must  so  provide." 

But  the  direct  question  arising  upon  mortgages  given  to  secure 
negotiable  paper  has  arisen  in  two  of  the  new  states  of  the  west, 
whose  courts  are  entitled  to  high  respect  for  their  learning  and 
al)ility,  and  it  has  there  been  held  that  the  quality  of  negotiability 
is  so  far  imparted  to  such  mortgages  as  to  make  them  available  in 
the  hands  of  a  bona  fide  indorser  of  the  paper,  without  any  regard 
to  the  equitable  rights  of  the  original  parties.  {Reeves  v.  Scully, 
Walker's  Ch.  Rep.  248;  Dutton  v.  Ives,  5  Michigan  Rep.  515; 
Fisher  v.  Otis,  3  Chand.  Rep.  83;  Martineau  v.  McCoIlum,  4  Id. 
153 ;  Croft  v.  Bunster,  9  Wisconsin  Rep.-  503.)  In  the  first  of  these 
cases,  decided  by  the  Chancellor  of  Michigan  in  1843,  no  reasons 
are  assigned  or  authorities  cited;  and  in  Dutton  v.  Ives,  decided 
by  the  Supreme  Court  in  1858,  the  doctrine  is  again  advanced 
upon  the  authority  of  Beeves  v.  Scully,  and  the  two  Wisconsin  eases, 
reported  in  3  and  4  Chandler.  On  referring  to  the  first  case  de- 
cided in  that  state  {Fisher  \.  Otis),  we  find  it  professedly  based  on 
authority,  and  it  serves  to  show  upon  what  a  slender  foundation  a 
line  of  decisions  may  be  made  to  rest.  The  court  say :  "  This  doc- 
trine is  sustained  by  respectable  authorities,  and  by  the  reason  and 
sound  policy  which  have  long  ruled  in  relation  to  commercial  pa- 
])er;"  and  Powell  on  Mortgages,  908,  and  note  are  cited.  Mr. 
Powell  certainly  did  suggest  the  question  whether  such  a  distinc- 
tion might  not  be  made.  ITis  exact  position  is  thus  stated  by  Mr. 
Coventry  in  the  note :  "  When  it  is  said  that  a  debt  is  not  assignable 
at  law,  "it  must  be  understood  with  this  restriction,  that  if  it  be 
secured  by  a  negotiable  instrument,  such  as  a  bill  of  exchange,  the 
legal  interest  will  pass  by  indorsement,  and  this  has  induced  the 
learned  author,  in  the  next  paragraph  of  the  text,  to  suggest 
whether,  in  such  a  case,  the  rule  as  to  the  mortgagee's  liability 
would  apply."'  The  rule  here  referred  to  is  that  announced  by 
Lord  Loughborough  in  the  leading  case  of  Matthews  v.  Walhryn, 
4  Yes.  120,  that  the  assignee  of  a  mortgage  takes  it  subject  to  all 
equities  which  could  be  asserted  against  his  assignor.  Xow,  it  may 
l>e  fairly  assumed  that  Mr.  Powell  supposed  that  such  a  distinction 
could  be  judiciously  made:  but  it  must  be  admitted  that  he  had 


SEC.   II.]  UAILY    i.    SMITH.  ^IT 1 

tlu'ii  iio  autliority  to  base  it  upon,  that  neither  the  judicial  record- 
of  Knj,'hiii(l,  nor  in  any  of  the  old  States,  furnish  any  cvich-nec  that 
it  has  ever  l)een  a(h>j)led,  and  that  it  was  first  aetcd  ujton,  nearly 
lialf  a  century  aftiT  the  suggestion  was  made,  hy  a  new  State  upon 
another  continent,  lender  such  circumstances,  it  can  not  he  rea- 
somihly  claimed  that  we  are  at  liberty  to  re<!:ard  it  as  an  eslal)lished 
principle,  and  we  can  only  adopt  it  when  we  are  convinced  that  it 
is  correct  in  ))rinciple,  and  consistent  with  the  analogies  of  the  law. 
The  reasons  for  sujiposing  it  to  be  so  are  well  stated  in  the  case  of 
Croft  V.  liunater,  i)  Wis.  Rep.  510.  The  reason  assigned,  it  is  said, 
why  the  assignee  can  recover  no  more  in  equity  than  is  actually 
<lne  from  the  mortgagor  to  the  mortgagee,  is,  that  he  could  recover 
no  more  at  law^  on  the  bond  or  covenant,  and  the  reason  ceasing 
as  to  negotiable  securities,  the  rule  also  cea.ses  to  have  application; 
that  the  debt  is  the  ])rincipal  thing,  and  the  mortgage  the  nu're 
incident,  following  tlie  debt  wherever  it  goes,  and  deriving  its  char- 
acter from  the  instrument  which  evidences  the  debt.  To  wliich 
n»ay  be  added  the  consideration  pressed  upon  our  attention  in  argu- 
ment, that,  if  a  recovery  may  be  had  for  the  debt,  the  mortgagor 
<'an  have  no  interest  in  withdrawing  the  mortgaged  proj)erty  from 
liability  to  satisfy  it.  This  last  position  is  easily  disposed  of.  If 
it  were  true,  it  would  furnish  no  authority  for  changing  the  legal 
<-haraeter  and  incidents  of  the  mortgage  deed,  and  it  is  evident 
that  other  lien-holders  would  often  have  a  deep  interest  i  tlie  ques- 
tion. Rut  it  is  not  true  as  to  the  mortgagor.  Tlie  right  to  dispose 
of  property  at  the  will  of  the  owner,  and  to  pay  honest  debts  instead 
of  those  tainted  with  fraud,  are  valuable  privileges,  of  which  he 
should  not  be  deprived  without  a  necessity  exists;  and  a  decree 
\ipon  the  mortgage  would  very  often  deprive  him  of  the  benefits 
of  the  honu^stead  law,  which  could  not  be  etfected  by  a  judgnu^nt 
upon  the  fraudulent  note.  It  is  ver}-  evident  also  that  the  wife  of 
the  mortgagor,  in  a  large  majority  of  cases,  might  have  a  deep 
interest  in  the  solution  of  this  question.  Wholly  incapable  of  l)e- 
«oming  a  party  to  any  cotnmeiTial  contract  whatever,  she  may  nev- 
<'rtheles'«  convey  her  estate,  or  release  her  dower,  by  way  of  mort- 
gage for  the  security  of  her  husband's  negotiable  paper.  If  the 
mortgage  is  to  \m}  deemed  n(\<rotiable  in  the  hands  of  an  assignee 
of  the  paper,  we  see  no  escajie  from  the  conclusion  that  the  mort- 
gage must  he  enforced  against  her,  lunvevc^r  gross  and  palpable 
l!ie  fraud  mav  be  by  which  it  was  obtained. 

In  a  general  sense,  it  may  be  very  well  and  vt>rv  correct  to  speak 
of  a  mortgage  as  an  incident  t»^  th(>  (^ebt  it  is  created  to  secure;  but 
the  importance  of  this  niere  term  nuiv  he  easily  overrated.  It 
<'ertainlv  is  not  one  of  the  incidental  cfTccts  of  the  cn\ition  of  the 


G73  ASSIGNMENT    OF    MORTGAGE.  [CIIAP.  IV. 

debt  itself,  and  it  can  only  1)C  made  to  have  relation  to  the  deht  by 
the  force  of  the  contract  contained  in  the  mortgage;  and  is  inci- 
dent to  the  debt  only  in  the  same  sense  that  every  independent 
contract,  having  for  its  object  the  payment  or  bettor  security  of 
Ihe  debt,  is  incidental  to  it.  The  existence  of  the  debt  is  the  occa- 
bion  out  of  which  they  arise,  and  the  subject  of  their  various  pro- 
visions; but  they  embrace  all  the  elements  of  a  perfect  contract 
in  themselves,  and  are  enforced  by  appropriate  remedies,  according 
to  their  own  stipulations.  At  law,  a  mortgage  effects  the  conveyance 
of  an  estate  upon  condition ;  but  in  -the  view  of  a.  court  of  equity, 
where  alone  the  rights  of  an  assignee  can  be  enforced,  it  is  a  chose 
in  action,  having  no  negotiable  quality,  and  not  diflt'ering  in  char- 
acter from  collateral  personal  agreements,  designed  to  effect  the 
same  object.  Any  of  these  collateral  agreements  may  be  entered 
into  for  the  purpose  of  securing  a  debt,  evidenced  hy  a  negotiable 
instrument ;  and  if  they  are  not  obtained  by  fraud,  and  rest  upon 
a  sufficient  consideration,  in  the  absence  of  any  agreement  to  the 
contrary',  they  undoubtedly  enure  in  equity  to  the  l)enefit  of  any 
owner  of  the  debt.  But  the  question  here  is,  whether  one  of  these 
collateral  agreements,  made  to  secure  a  negotiable  note,  loses  its 
character  of  a  mere  chose  in  action,  and  has  imparted  to  it  the 
qualities  of  negotiability,  so  that  upon  the  transfer  of  the  note  it 
may  be  enforced,  although  obtained  by  fraud?  This  question  has 
been  repeatedly  answered,  in  respect  to  a  class  of  collateral  agree- 
ments, much  more  intimately  connected  with  the  negotiable  instru- 
ment than  is  the  mortgage  deed.  We  refer  to  guarantees  indorsed 
upon  the  note  itself.  Passing  by  those  which  have  been  claime<l 
to  be  such,  but  held  by  the  courts  to  be  mere  indorsements,  or  orig- 
inal contracts,  with  apt  words  of  negotiability  incorporated  in  them, 
the  universal  doctrine  has  been  that  the  legal  title  does  not  pas- 
upon  the  transfer  of  the  note;  that  they  are  mere  non-negotiable 
choses  in  action,  and  to  be  treated  in  every  respect  as  such. 
(Lamorieiix  v.  Hetvit,  5  Wend.  307;  McLaren  v.  Watson's  Execu- 
tors, 26  Wend.  425;  Miller  v.  Gaston,  2  Hill,  188.)  In  the  first 
of  these  cases  Chief  Justice  Savage  says :  "  Promissory  notes  arc 
negotiable  only  by  virtue  of  the  statute,  but  this  negotiable  quality 
is  not  extended  to  any  other  instrument  relating  to  the  note;"  and 
Bronson,  J.,  in  the  last,  in  support  of  the  same  position,  says : 
"  But  the  guarantee  itself  is  not  a  negotiable  instrument,  and  can 
not  be  transferred  to  a  third  person  so  as  to  give  him  a  legal  title 
to  proceed  in  his  own  name  against  the  guarantor.  As  in  the  case 
of  other  contracts  which  are  not  in  their  own  nature  assignable,  thr 
remedy  upon  a  guarantee  is  confined  to  the  original  parties  to  tho 
instrument."     We  have  said  that  these  instruments  are  much  more 


SEC.    11. J  H.MI.^     C.    SMITH.  GT3 

intimately  coniu'ctcd  with  the  ii<»ic  iliaii  is  a  mortpafjp  deed.  Tlii.s 
will  l)e  a])i)areiit  when  it  i>  reinemluTed  that  the  one  ordinarily 
guarantee.^  the  partieiilar  instnmient  si)eeilie(l  in  it,  and  docs  not 
survive  a  renewal  or  other  ehange  of  the  evidence  of  indebtedness; 
while  the  other  secures  the  debt,  whatever  changes  may  intervene, 
until  it  is  paid  ;  and,  even  a  positive  statiitory  bar  which  j)recludes 
a  recovery  uj)Oji  the  note,  it  has  been  held,  does  not  j)revent  tiie  en- 
forcement of  the  mortgage.  {Fisln'r  v.  Moftsnidii.  11  Ohio  St. 
Rep.  42.) 

In  order  to  sustain  the  judgiiinit  rendered  in  this  case,  it  is 
indisj)ensably  necessary  to  athrm — eitlier  that  the  mortgage,  when 
made  to  secure  a  negotiable  note,  contrary  to  its  general  na- 
ture and  qualities,  becomes  a  negotiable  instrument  or  that  the 
transfer  of  such  a  note,  without  the  aid  of  any  statute,  or  of  any 
judicial  decision,  except  those  of  very  recent  date,  has  an  cfTect 
beyond  the  note  itself,  and  draws  after  it,  and  witiiin,  one  of  the 
most  ijuportant  incidents  of  negotialiiiity,  a  collateral  contract  hav- 
ing relation  to  the  same  debt.  A  vi-ry  careful  consideration  of 
tlie  whole  .<ubject  has  convinced  us  that  we  liavi'  no  power  to  do 
either,  and  that  neither  justice  nor  j)ublic  policy  would  be  pro- 
moted by  making  the  attempt.  It  certainly  has  never  been  thought 
to  be  within  the  province  of  a  court  to  determine  what  instruments 
should  be  taken  from  the  list  of  mere  choses  in  action,  and  clothed 
with  the  attributes  of  negotiability.  Bills,  foreign  and  inland, 
assunu'd  this  jiosition  upon  the  immemorial  custom  of  merchants, 
and  were  adopted  into  the  law  upon  the  reasons  which  avail  to 
make  up  the  great  body  of  the  common  law.  But  the  statute,  third 
and  fourth  .\iine.  was  found  necessary  to  place  promissory  notes 
uj)on  the  same  footing;  and  from  that  day  to  thi<.  neither  in  Eng- 
land nor  in  this  country  has  an  instrument  been  added  without 
express  legislative  sanction.  Indeed,  this  could  not  well  be  other- 
wise. The  necessities  of  commerce,  and  the  instruments  best  cal- 
culated to  answer  its  j)urpo.ses,  must  all  be  considi'red  before  any 
intelligent  decision  could  i)e  made.  These  are  legislative  func- 
tions, requiring  exjierienec  and  extensive  information,  and  calling 
for  the  exercise  of  a  discretion  wholly  incomj)atible  with  the  fixed 
certainty  of  judicial  decision.  But  if  it  were  otherwise,  and  the 
discretion  rested  with  us,  we  could  not  introduce  the  mortgage  de»'d 
into  the  list  of  negotiable  instruments  without  disregarding  the 
very  foundation  principles  upon  which  such  paper  has  alwavs  been 
supposed  to  rest.  From  the  ca.'sc  of  Miller  v.  Rare.  1  Burr.  B.  15?. 
to  tlie  very  latest  casr  in  our  own  reports,  the  language  of  tlie 
courts  has  been  uniform,  that  such  pa|>er  is  oidy  allowed  in  tlv 
interests  of  conmitTce.  and  "  pos.'«cs«ing  some  of  the  attributes  of 


1374  ASSIGNMEXT    OF    MORTGAGE.  [ciIAP.  IV. 

money/'  to  answer  the  purposes  of  currency.  Lord  Mansfield,  in 
answer  to  the  "  ingenious"  argument  of  Sir  Richard  Lloyd  that  the 
plaintiff  could  take  nothing  by  assignment  from  a  thief  who  had 
stolen  paper,  said  the  fallacy  of  the  argument  consisted  in  com- 
paring bank  notes  to  what  they  did  not  resemble.  "  They  are  not 
goods,"  he  said,  "  not  securities,  nor  documents  for  debt  nor  are 
so  esteemed ;  but  are  treated  as  money,  as  cash,  in  the  ordinary 
course  and  transaction  of  business,  by  the  general  consent  of  man- 
kind ;■"  "  the  course  of  trade  creates  a  property  in  the  assignee  or 
l)earer,"  and  they  can  not  be  recovered  "  after  they  have  been  paid 
away  in  currency,  in  the  usual  course  of  business."  This  was  said, 
it  is  true,  of  bank  notes;  but  the  same  principles,  and  for  the  same 
reasons,  were  afterward  applied  by  the  same  learned  judge  to  every 
description  of  negotiable  paper,  and  the  case  of  Miller  \.  Race  is 
still  the  leading  authority  upon  this  branch  of  commercial  law. 

Now,  mortgages  are  not  necessities  of  commerce ;  they  have  none 
of  the  "  attributes  of  money,"  they  do  not  pass  in  currency  in  the 
ordinary  course  of  business,  nor  do  any  of  the  prompt  and  decisive 
rules  of  the  laAV  merchant  apply  to  them.  They  are  "  securities," 
or  "  documents  for  debts,"  used  for  the  purposes  of  investment,  and 
unavoidably  requiring  from  those  who  would  take  them  with  pru- 
dence and  safety,  an  inquiry  into  the  value,  condition  and  title  of 
the  property  upon  which  they  rest ;  nor  have  we  the  least  apprehen- 
sion that  commerce  will  be  impeded  by  requiring  the  further  inquiry 
of  the  mortgagor,  whether  he  pretends^  to  any  defense,  before  a 
court  will  foreclose  his  right  to  defend  against  those  which  have 
been  obtained  by  force  or  fraud. 

Against  any  amount  of  mere  theory  advanced  to  sustain  the  posi- 
iion  that  commerce  requires  these  instruments  to  be  invested  with 
negotiable  qualities,  may  be  successfully  opposed  the  stubborn  fact, 
that  in  the  first  commercial  country  of  the  world,  as  well  as  in  the 
great  commercial  states  of  the  American  Union,  they  have  never 
been  used  for  such  purposes,  or  heard  of  in  such  a  connection.  It 
is  quite  immaterial  whether  this  has  arisen  from  the  cause  supposed 
— that  they  are  never  made  to  secure  negotiable  paper — or  not ; 
since  it  equally  shows  that  no  necessity  for  their  use  has  ever  been 
felt.  A  long  experience  has  demonstrated  that  they  are  not  neces- 
sary instruments  of  active  trade  and  business ;  and  we  but  follow 
in  the  footsteps  of  the  ablest  and  wisest  judges  when  we  say  that 
the  harsh  rule  which  excludes  equities,  and  often  does  injustice  for 
the  benefit  of  commerce,  should  not  be  applied  to  them.  This  re- 
mits them  to  the  position  they  have  so  long  occupied — that  of  mere 
choses  in  action  ;  and  whether  standing  alone  or  taken  to  secure 
negotiable  or  non-negotiable  paper,  they  are  only  available  for  what 


*=£<"•  "•]  CAHPKN'TKU  V.   LON(iAN'.  GT") 

was  honestly  duo  from  llu-  luortxa^ior  to  tlio  mort^Mjjjeo.  If  tliey 
ail'  assi^'iicd,  citlicr  cxpn'ssly  or  by  legal  implicalioii,  tlu'  assignee 
Takes  only  the  interest  which  his  assignor  had  in  the  instrument — 
aiquires  i)ut  an  e(|uity,  and,  upon  the  long-estahlished  doetrine  in 
courts  of  e<|nity,  is  hound  to  submit  to  the  assertion  of  the  prior 
e»|uitable  rights  of  third  persons.  To  hold  otherwise  is  to  engraft 
legal  incidents  upon  a  mere  equitable  title;  to  give  to  the  transfer 
(if  negotiable  ])aper  an  effect  beyond  what  it  imports,  or  is  neces- 
sary in  tlu'  a((oin))lishnient  of  its  legitimate  purposes;  and,  finally, 
to  invest  with  negotiable  qualities  a  class  of  instruments,  neither 
\ised  I'or  nor  adapted  to  the  trade  and  commerce  of  the  country, 
and  thereby  to  de])rive  the  mortgagor  of  the  just  right  of  defending 
against  fraud,  without  sub.serving  any  public  jwlicy  wliatever. 

These  views  necessarily  lead  to  the  conclusion  that,  upon  the 
facts  found  in  the  court  below,  the  plaintifT  was  entitled  to  have 
his  title  cleared  from  the  incumbrance  of  this  fraudulent  mortgage, 
and  that  the  court  erred  in  giving  the  affirmative  judgment  of  fore- 
i  losure  in  favor  of  Smith.  For  this  error  that  judgment  is  re- 
versed, and  the  cause  remanded  for  further  pi'Ocecdings. 

Peck,  C  J.,  and  Bkixckeiuioff,  Scott  and  Wildeu,  J.J,,  con- 
curred.^ 


CAKPEXTET?  v.  LOXOAX. 

Supreme  Court  of  thk  rxiTHn  Stati-s,  1872. 

(16  Wall.  271.) 

Appeal  from  the  Supreme  Court  of  Colorado  Territory, 
Mi{.  Justice  Swayxe  stated  the  case,  and  delivered  the  opinion 
•of  the  court. — On  the  ')th  of  March,  l.^(»7,  the  ap|)ellce,  Mahala  T^on- 
gan,  and  Jesse  B.  Longan,  executed  their  jiromi'^sory  note  to  Jacob 
B.  Carpenter,  or  order,  for  the  sum  of  $080,  payable  si.\  months 
after  date,  at  the  Colorado  National  Bank,  in  Denv(>r  City,  with 
interest  at  the  rate  of  three  and  a  half  j)er  cent.  ]ier  month  until 
]»aid.  At  the  same  time  ^fahala  Tiongan  executed  to  CarpentcT  a 
mortgage  upon  certain  real  estate  therein  described.  The  mortgage 
was  conditioned  for  the  payment  of  tlie  note  at  nuiturity,  according 
10  its  effect.  On  the  21th  of  July.  1807,  more  than  two  months  be- 
fore the  maturity  of  tlu^  note,  Jacob  B.  Cari)enter,  for  a  valuable 

'•/<)?i»i.<fo»i  V.  Cinpciitrr.  7  Minn.  ITT.  (1S(V2)  ;  Hoiilinnu  v.  Fortirr,  17  T.iu 
Ann.  121  (ISfi.")),  arronl.  .\ntl  sec  Jours  \.  Dulick,  .%.*»  Tac.  R«'i)..')22  (Khh. 
ISOS). 


676  AbSiUXMENT    OF    MOllTGAGE.  [cilAr.  IV, 

consideration,  assigned  the  note  and  mortgage  to  B.  Platte  Carpen- 
ter, the  appelhint.  The  note  not  being  paid  at  maturity,  the  appel- 
lant filed  this  bill  against  IMahala  Longan,  in  the  District  Court  of 
Jefferson  County,  Colorado  Territory,  to  foreclose  the  mortgage. 

She  answered  and  alleged  that  when  she  executed  the  mortgage 
to  Jacob  B.  Carpenter  she  also  delivered  to  him  certain  wheat  and 
flour,  which  he  promised  to  sell,  and  to  apply  the  proceeds  to  the 
payment  of  the  note;  that  at  the  maturity  of  the  note  she  had  ten- 
dered the  amount  due  upon  it,  and  had  demanded  the  return  of 
the  note  and  mortgage  and  of  the  wheat  and  flour,  all  which  was 
refused.  Subsequently  she  filed  an  amended  answer,  in  which  she 
charged  that  Jacob  B.  Carpenter  had  converted  the  wheat  and  flour 
to  his  own  use,  and  that  when  the  appellant  took  the  assignment 
of  the  note  and  mortgage,  he  had  full  knowledge  of  the  facts  touch- 
ing the  delivery  of  the  wheat  and  flour  to  his  assignor.  Testimony 
was  taken  upon  both  sides.  It  was  proved  that  the  wheat  and  flour 
were  in  the  hands  of  Miller  &  Williams,  warehousemen,  in  the  city 
of  Denver,  that  they  sold,  and  received  payment  for  a  part,  and 
that  the  money  thus  received  and  the  residue  of  the  wheat  and  flour 
were  lost  by  their  failure.  The  only  question  made  in  the  cas<^ 
w^as,  upon  whom  this  loss  should  fall,  whether  upon  the  appellant 
or  the  appellee.  The  view  which  we  have  taken  of  the  case  renders 
it  unnecessary  to  advert  more  fully  to  the  facts  relating  to  the  sub- 
ject. The  District  Court  decreed  in  favor  of  the  appellant  for  the 
full  amount  of  the  note  and  interest.  The  Supreme  Court  of  the 
Territory  reversed  the  decree,  holding  that  the  value  of  the  wheat 
and  flour  should  be  deducted.  The  complainant  thereupon  re- 
moved the  case  to  this  court  by  appeal. 

It  is  proved  and  not  controverted  tliat  the  note  and  mortgage 
were  assigned  to  the  appellant  for  a  valuable  consideration  before 
the  maturity  of  the  note.  Notice  of  anything  touching  the  wheat 
and  flour  is  not  brought  home  to  him. 

The  assignment  of  a  note  underdue  raises  the  presumption  of  the 
want  of  notice,  and  this  presumption  stands  until  it  is  overcome 
by  sufficient  proof.  The  case  is  a  different  one  from  what  it  would- 
be  if  the  mortgage  stood  alone,  or  the  note  was  non-negotiable,  or 
had  been  assigned  after  maturity.  The  question  presented  for  our 
determination  is,  whether  an  assignee,  under  the  circumstances  of 
this  case,  takes  the  mortgage  as  he  takes  the  note,  free  from  the 
objections  to  which  it  was  liable  in  the  hands  of  the  mortgagee.  We 
hold  the  affirmative.  (Powell  on  Mortgages,  908;  1  Hilliard  on 
Mortgages,  572 ;  Coote  on  Mortgages,  304 ;  Reeves  v.  Scully,  Wal- 
ker's Chancery,  '2-18 ;  Fisher  v.  Oti.<t,  3  Chandler,  83;  MarHneau  v. 
McCollvm,  4  7(1.  1-53 ;  Bloomer  v.  Henderson,  8  Mich.  395;  Potts  v. 


^^■'^-  "1  r.\niM:\'n:K  /•.  LON'iivs".  HTT 

lllackivill .  1  .l()iu'>,  "jN  ;  ('Intlh'  v.  fioi/nler.  'i  Midi.  iJM  ;  Pierre  v. 
J'litiine,  1*  Miiinc.  .">(>T  ;  Pnhner  v.  )'iiles.  '.]  SniKU'onl,  l.'{7;  Taylor 
\.  I'(t(/r.  (I  All.n,  Sd;  C/r^/  \.  I!<iiish  r,  !>  Wis.  :)(»:;:  Cornell  v.  //i7r/i- 
(//>-.  II  ///.  .).").■!.)  Tlic  colli  liict  iN  rc^'iinls  iIk'  uoW  \vji.-<  that 
llif  iiiakt  r  slioukl  pay  it  ;it  niatiirity  to  anv  bona  fide  indonsoo,  with- 
«mt  n-ri'i-cnci'  to  any  drrcnii's  to  wliidi  it  ini;:lit  liavf  been  liai)li'  in 
the  lian(l<  of  ilic  jiaycc.  The  niorl;;a,L'o  was  conditioned  to  socurc 
tiu-  I'liKilniciit  of  that  (oiitraci.  'W*  hi  in  such  a  tlcj'cncc  against 
~iuh  a  hoMcr  wouhl  In-  a  dear  dciiartiirc  fr()ni  the  agrcnnont  of  tho 
mortgagor  and  nun'tgagcc,  to  which  the  assignee  suhse(|uently, 
in  good  raitlu  l)ccanie  a  party.  If  the  mortgagor  desired  to  reserve 
sudi  an  advantage,  ii'  sliould  !iave  given  a  non-n<'got ial)le  instru- 
ment. If  one  of  two  iiiiKKcnt  person.;  nuist  snlfer  l)y  a  (h'ceil,  it  is 
more  eo!\sonant  to  reason  that  lie  who  '*  pnts  trust  an<l  eonfidenee 
in  the  deceiver  should  he  a  lo>;er  rather  than  a  stranger."  {Hern 
\.  \irli„ls.  I   >;alkd(l.  -.'Sli.) 

I  pttn  a  hill  of  rorcdosuce  tiled  hy  the  assignee,  an  aecount  must 
he  taken  to  ascertain  the  amomii  i\\\o  n))on  the  instrument  secured 
by  the  mortgage.  Here  the  amount  due  was  the  face  of  the  note 
and  interest,  and  that  eonld  have  been  recovered  in  an  action  at  law. 
Ivpiity  could  not  find  that  ]i'>s  was  due.  It  is  a  ea.-e  in  which 
♦•(piity  must  follow  the  law.  .\  decice  that  tln'  amount  due  shall 
Ik"  paid  within  a  s|)ci-iricd  time,  or  that  the  mortgaged  premi>(N 
shall  be  sold,  follows  necessarily.  Towdl,  cited  siipni,  .<ays :  "  But 
if  the  debt  were  on  a  ncfrotiable  security,  as  a  l)ill  of  exchange  col- 
laterally .secured  by  a  mortgage,  and  the  mortgagee,  after  payment 
of  i)art  of  it  by  the  mortgagor,  actually  negotiated  the  note  for 
the  value,  the  indorsee  or  assitMiee  woiiM,  it  seems,  in  all  events, 
Im' entitled  to  have  his  money  from  the  mortgagor  on  li(piidating  the 
account,  although  he  had  ])aid  it  before,  because  the  indorsee  or 
assignee  has  a  legal  right  to  the  note  and  a  legal  remedy  at  law. 
which  a  court  of  ctpiity  ought  not  to  take  from  him.  but  to  allow 
him  the  bendit  of  on  the  account." 

A  dilTenMit  doctriiu'  would  involve  strange  anomalies.  The  as- 
.-ignee  might  file  his  bill  and  the  court  dismiss  it.  He  could  then 
sue  at  law,  recover  judgment,  and  si-ll  the  mortgaged  j)remises  un- 
der e.vecution.  It  is  not  |»retendeil  that  e<piity  would  interpose 
against  him.  So,  if  the  aid  of  e(piitv  were  proju'rly  invoked  to 
give  cfTect  to  the  lien  of  the  judgment  upon  the  same  premises 
fi»r  the  full  atnount,  it  could  not  be  refused.  Surely  such  an  ex- 
tTCscence  ought  not  to  he  perniitt"d  to  disfigure  any  .system  of 
enlightened  jurisprudeiue.  It  is  th«>  poliev  of  the  law  to  avoiil 
circuity  of  action,  and  parties  ought  not  to  he  driven  from  one 
forum  to  obtain  a  remedv  whicli  cannot  he  denied  in  another. 


678  ASSIGNMENT    OF    MORTGAGE.  [CHAr.  IV. 

The  mortgaged  premises  are  pledged  as  security  for  the  debt. 
In  proportion  as  a  remedy  is  denied,  the  contract  is  violated,  and 
the  rights  of  the  assignee  are  set  at  naught.  In  other  words,  the 
mortgage  ceases  to  be  security  for  a  part  or  the  whole  of  the  debt, 
its  express  provisions  to  the  contrary  notwithstanding.  The  note 
and  mortgage  are  inseparable;  the  former  as  essential,  the  latter 
as  an  incident.  An  assignment  of  the  note  carries  the  mortgage 
with  it,  while  an  assignment  of  the  latter  alone  is  a  nullity.  {Jack- 
sou  V.  Blodgct,  5  Cowen.  305;  Jaclson  v.  WilJard,  4  Johnson,  43.) 

It  must  be  admitted  that  there  is  consideral)le  discrepancy  in  the 
authorities  upon  the  question  under  consideration.  In  Bailij  v. 
Smith  et  al.,  U  Ohio  State,  39G— a  case  marked  by  great  ability  and 
fulness  of  research — the  Supreme  Court  of  Ohio  came  to  a  conclu- 
sion different  from  that  at  which  we  have  arrived.  The  judgment 
was  put  chiefly  upon  the  ground  that  notes  negotiable  are  made 
so  by  statute,  while  there  is  no  such  statutory  provision  as  to  mort- 
gages, and  that  hence  the  assignee  takes  the  latter,  as  he  would  any 
other  chose  in  action,  subject  to  all  the  equities  which  subsisted 
against  it  while  in  the  hands  of  the  original  holder.  To  this  view 
of  the  subject  there  are  several  answers. 

The  transfer  of  the  note  carries  with  it  the  security,  without  any 
formal  assignment  or  delivery,  or  even  mention  of  the  latter.  If 
not  assignable  at  law,  it  is  clearly  so  in  equity.  When  the  amount 
due  on  the  note  is  ascertained  in  the  foreclosure  proceeding,  equity 
recognizes  it  as  conclusive,  and  decrees  accordingly.  Whether  the 
title  of  the  assignee  is  legal  or  equitable  is  immaterial.  The  result 
follows  irrespective  of  that  question.  The  process  is  only  a  mode 
of  enforcing  a  lien. 

All  the  authorities  agree  that  the  debt  is  the  principal  thing  and 
the  mortgage  an  accessory.  Equity  puts  the  principal  and  ac- 
cessory upon  a  footing  of  equality,  and  gives  to  the  assignee  of  the 
evidence  of  the  debt  the  same  rights  in  regard  to  both.  There  is  no 
departure  from  any  principle  of  law  or  equity  in  reaching  this 
conclusion.  There  is  no  analogy  between  this  case  and  one  where 
a  chose  in  action  standing  alone  is  sought  to  be  enforced. 
The  fallacy  which  lies  in  overlooking  this  distinction  has  misled 
many  able  minds,  and  is  the  source  of  all  the  confusion  that  exists. 
The  mortgage  can  have  no  separate  existence.  When  the  note  is 
])aid  the  mortgage  expires.  It  cannot  survive  for  a  moment  the 
debt  which  the  note  represents.  This  dependent  and  incidental 
relation  is  the  controlling  consideration,  and  takes  the  case  out 
of  the  rule  applied  to  choscs  in  action,  where  no  such  relation  of 
dependence  exists.  Accessorium  non  rlucit,  sequitur  principnle. 
In  Pierce  v.  Fainice,  47  Maine,  513,  the  court  say:  "  A  mortgage 


KKf.    11. 1  I'.M(;i:    C.    (11  Al'MAN.  <>^ '•> 

\i>  pro  Innlu  a  jjtircliasc,  aiul  a  hDiia  fulv  iii()rt;rafr«'0  is  ((luallv  cntilli-il 
to  protecliun  as  a  hoiiCi  fide  ^^rantt-c.  So  tlu'  assij^ncc  of  a  mortga^'i- 
is  on  the  same  footin<5  with  the  bond  fide  niort<?agee.  In  all  eases  the 
reliance  of  the  purchaser  is  upon  the  rei'onl,  and  wlien  that  discloses 
an  uiiini[>caclialilc  title  he  receives  the  protection  of  the  law  a:^ 
a<^ainst  luikiioun  aiitl  latent  defects." 

Maillicu's  V.  Wtilhrifii.  \  Ve<cv,  I'^'ii.  is  usually  niuch  relied  upun 
hy  those  who  maintain  the  iiilinuity  of  the  assif^nce's  title.  In  tiiai 
case  the  niort<,M<;e  was  «rivcn  to  secure  the  payment  of  a  non-ne^'otia- 
l)le  hond.  The  inort<^fagee  assij^ned  the  hond  and  ni<)rt<,'a<re  fraudu- 
lently and  thereafter  received  large  sums  which  should  have  hcen 
credited  upon  the  dcht.  The  assignee  sought  to  enforce  the  mort- 
gage for  the  full  aiiiouut  specified  in  the  hond.  The  Lord  Chancellor 
was  at  first  troubled  hy  the  consich-ration  that  the  mortgage  deed 
purported  to  convey  the  legal  title,  and  seemed  inclined  to  think  that 
might  take  the  case  out  of  the  rule  of  liability  which  would  Im' 
applied  to  the  l)ond  if  standing  alone.  He  finally  came  to  a  ditTer- 
ent  conclusion,  hohling  the  mortgage  to  he  a  mere  security.  He 
said,  finally:  "  The  debt,  therefore,  is  the  ])riiicipal  thing;  and  it  i< 
obvious  that  if  an  action  was  brought  on  the  bond  in  the  name  of 
the  mortgagee,  as  it  must  l)e,  the  mortgagor  shall  j>ay  no  more  than 
what  is  really  due  uj)on  the  bond;  if  an  action  of  covenant  was 
brought  l)y  the  covenantee,  the  account  must  he  settled  in  that 
action.  In  this  court  tlu-  condition  of  the  assignee  cannot  be  better 
than  it  would  be  at  law  in  any  mode  he  could  take  to  recover  what 
was  due  upon  the  assignment."  The  principle  is  distinctly  recog- 
nized that  the  measure  of  liability  upon  th(>  instrument  secured  is 
the  measure  of  the  liability  chargeable  upon  the  security.  The  con- 
dition of  the  assignee  cannot  be  better  in  law  than  it  is  in  equity. 
So  neither  can  it  h(^  wor^e.  T'jion  this  ground  W(>  place  our  judg- 
ment. Wc  think  the  doctrine  wc  have  laid  down  is  sustained  by 
reason,  princijilc,  and  ihc  greater  weight  of  authority. 

Decree  reversed. 


?.\Tr;E  V.  ni  ATM  AN'. 

SrT'RrMi:  roiKT  nr    \i;\v    1 1  \  M  I'SIl  I  WK.   1878. 

(r.s  .V.  //.  xu.) 

Wkit  ok  I'ATUY.  on  a  mortgaire  inach'  fo  sivure  the  defendant's 
note,  endorsed  and  deliv(>r(Ml  with  the  mortgage,  by  tlie  payee,  to  the 


G80  ASSIGNMENT   OF   MORTGAGE.  [cilAP.  ly. 

Ijlaintiff,  before  maturity,  as  collateral  security.  The  plaintiff  re- 
ceived the  note  and  mortgage  in  good  faith  in  the  ordinary  course 
of  business,  and  with  no  notice  of  any  equities  between  the  mort- 
o-ao-ee  and  the  defendant.  The  question  whether  the  defence  of 
want  of  consideration,  and  that  the  note  and  mortgage  were  ob- 
tained from  the  mortgagor  by  fraudulent  representations,  can  be 
made,  is  reserved. 

Allen,  J.  Negotiable  paper,  received  for  value,  before  ma- 
turity, in  the  ordinary  course  of  business,  without  notice  of  in- 
firmity, is,  in  the  hands  of  a  purchaser,  freed  from  defences  by  the 
maker.  The  same  is  true  when  the  paper  is  received  and  held  as 
collateral  security.  {Tucker  v.  Savings  Banh,  ante,  83.)  A  mort- 
iraofe  is  incident  to  the  debt  secured  by  it,  and  a  transfer  of  the  note 
or  other  evidence  of  debt  carries  the  mortgage  with  it.  {Wheeler 
V.  Emerson,  45  X.  H.  527.)  Any  defences,  open  to  the  maker  in 
a  suit  071  the  note,  may  be  made  use  of  in  an  action  on  the  mort- 
gage. {Northy  v.  Northu,  45  jST.  IE.  141.)  The  mortgage  follows 
the  debt  as  a  shadow  does  its  object,  and  cannot  exist  without  it. 
Whoever  holds  the  evidence  of  debt  holds  the  mortgage  security, 
and  payment  of  the  debt  extinguishes  the  mortgage.  The  debt  is 
the  principal  thing,  and  imparts  its  character  to  the  mortgage,  and 
the  legal  rights  and  remedies  upon  the  debt  become  fixed  upon  its 
incident,  the  mortgage.  Defences  which  cannot  be  made  against 
the  note,  because  it  has  travelled  away  from  them,  cannot  be  made 
against  the  mortgage  which  has  kept  company  with  the  note.  The 
freedom  from  infirmity,  which  the  innocent  purchaser  and  holder 
of  the  note  enjoys,  cannot  be  destroyed  or  made  less  by  taking  with 
the  note  a  mortgage  made  and  intended  as  security.  The  plaintiff 
received  the  note  and  mortgage  in  good  faith,  before  the  debt  had 
matured,  and  with  no  notice  of  defect  or  defence.  The  defence 
sought  to  be  set  up  cannot  be  made.  (Oarpenter  v.  Lonaa^i.  IH 
Wall.  271. ;  Taylor  v.  Page,  6  Allen,  86 ;  Sprague  v.  Graham.  29 
Mp.  160;  Pierce  v.  Faunce,  47  Me.  507;  Gould  v.  Marsh,  1  Hun 
(N.  Y.)  566;  Jones  on  Mort.  834,  835,  840.)^ 

Case  discharged. 

Bingham,  J.,  did  not  sit. 


^Fisher  v.  Otis,  3  Chand.  (Mich.)  83  (1850),  Dnfton  v.  Tvcn,  5  Mich.  515 
(1858),  Oroft  V.  Bunstcr,  9  Wis.  503  (1859),  Gould  v.  Marsh,  1  Hun. 
(N.  Y.),  560  (1874),  Duncan  v.  Louisville,  13  Bush  (Ky.)  378  (1877), 
Basselt  v.  Daniels,  136  Mass.  547  (1884).  accord.  But  see  Franklin  v. 
Tvofjood,  18  Towa,  515   (1865). 


"•]        TursTKKs  or  rsroN-  roi.i,i:(ir.  i.   w  111.1:1. kk.  G81 


TKISTKKS  OF  IMON  L'OLLECiK  v.  W  1I1':KLEK. 
Commission  of  Appeals  of  New  Yobk,  1874. 

(Gl  N.  y.  88.)^ 

Appeal  from  so  much  of  the  judgiiicnt  of  the  General  Tenn  of 
I  lie  Supreme  Court,  in  the  fourth  judicial  department,  as  aflirms 
in  part  a  judgment  di^smissin«r  the  jdaintifT's  eomj)laiiit,  entered  on 
the  report  of  the  refenn'.  (Kcjjorted  helow  5  Lan.s.  KJO ;  .')♦)  Barh. 
.585.) 

This  action  was  hrought  to  foreclose  a  mortgage  executed  by 
I'hilo  StevciLs  to  Benjamin  Xott,  to  secure  the  payment  of  $2,800. 
It  l)ears  date  July  ]81h,  1833,  and  was  recorded  August  8th,  1833. 
It  covered,  when  given,  four  pieces  of  land,  viz.:  three  in  the  then 
\  illage  of  Oswego  and  a  large  tract  in  the  town  Scriba.  The 
mortgage  was  assigned  by  Xott  to  the  plaintiff  by  an  assignment 
bearing  date  the  1st  day  of  July,  1834,  which  was  recorded  on  tlie 
•?r)th  day  of  December,  1852. 

The  complaint,  after  stating  the  above  facts,  further  states  that 
a  portion  of  the  mortgaged  premises,  being  two  of  the  parcels  of 
land  in  Oswego,  had  been  released  from  the  lien  of  the  mortgage, 
and  as  to  them  tlu-  i)]aintin*  made  no  claim,  but  alleged  that  the 
residue  remained  subject  tliereto. 

Several  of  the  defendants  answered  and  set  up  that  they  were 
owniTs  of  different  portions  of  the  lands  lying  in  Scriba,  which  they 
claimed  were  not  subject  to  the  lien  of  the  plaintilT's  mortgage, 
having  been  discliarg<'(l  by  the  transactions  referred  to  in  the  oj)in- 
ions.  The  issues  were  referred  to  a  referee,  who  dismissed  the  plain- 
lifT's  comj)laint. 

The  CJcmeral  Term  on  a])peal  revers(>d  the  judgment,  so  far  as 
it  related  to  mo.^t  of  the  mortgaged  premises,  but  afVirmed  it  as  to 
the  residue.  The  further  facts  are  set  forth  at  length  in  the  opin- 
ions. 

DwKUiT.  C.  TIk;  facts  of  Ibis  case  show  tli;it  on  October  1st, 
1828,  one  ^fellen  conveyed  a  large  trad  of  land,  incluiling  the  j)rem- 
i.ses  in  question,  to  Chauncey  B.  .\spiinvall.  The  consideration  for 
the  land  was  jiaid  by  .\spinwall,  I'hilo  Stevens  and  Benjamin  Xott, 
in  equal  portions,  and  each  wer(>  equally  interested  in  the  property. 

Aspinwall,  by  deed  bearing  (Lite  January  2(1,  1830,  conveved  an 
undivided  two-third-;  part  of  the  prop(M'tv  to  Stevens,  for  the  con- 
sideration of  $2,000  While  .\spinwall  held  the  property 
he  executed  contracts  of  -ale  of  portions  of  the  land  to  a  number  of 

'Tlie  ippoit  of  tlii-*  case  is  nnicti  ii))1iroviiit(Ml.  tlio  opinion  of  T.otl. 
rii.(\.  :ni<l  considfinl)!*'  portions  of  tlie  opinions  of  Dwifjlit,  C.  twin;; 
onii(t«(t. 


682  ASSIGNMENT    OF    MORTGAGE.  [cilAi'.  n'. 

distinct  purchasers,  in  liis  own  name,  for  the  benefit  of  himself  and 
Stevens  and  ISTott,  to  whom  he  accounted  from  time  to  time  for  the 
proceeds  of  sales.  After  the  conveyance  to  Stevens  sales  were  made 
of  other  portions,  the  contracts  being  executed  by  Aspinwall  and 
Stevens,  and  the  proceeds  being  accounted  for  to  Nott,  as  before. 

While  matters  stood  in  this  condition,  Nott,  by  a  quit-claim  deed 
dated  July  18,  1833,  in  consideration  of  one  dollar,  conveyed  to 
Stevens  all  the  lands  described  in  the  deed  from  Mellen  to  Aspin- 
wall,»,and  also  village  lots  in  Oswego,  of  which  two-thirds  belonged 
to  Nott  and  one-third  to  Stevens.  Stevens,  by  mortgage  bearing- 
date  the  same  day  with  the  last  mentioned  deed,  mortgaged  to  Nott 
the  property  conveyed  to  Aspinwall  by  Mellen,  whether  under  con- 
tract or  not,  and  also  the  village  property  above  referred  to,  to 
secure  the  payment  of  $2,800,  with  interest  semi-annually.  The 
mortgage  was  payable  in  five  years  from  date,  was  accompanied  by 
Stevens'  bond,  and  duly  recorded  August  8,  1833. 

The  bond  and  mortgage  were  assigned  to  the  plaintiff  July  1, 
1834,  for  the  sum  of  $2,790.87,  which  was  then  paid  to  Nott.  The 
execution  of  the  assignment  was  proved  by  a  subscribing  witness, 
December  17,  1853,  and  the  assignment  recorded  on  the  twentieth 
of  the  same  month  and  year.  While  the  mortgage,  in  form,  covered 
the  entire  property  sold  to  Aspinwall,  yet  it  was  conceded,  on  the 
trial,  that  some  portions  of  it  had  been  actually  conveyed  before  the 
execution  of  the  mortgage,  and  to  this  no  claim  was  made  by  the 
plaintiff. 

It  will  be  observed,  from  the  facts  already  detailed,  that  upward 
of  nineteen  years  elapsed  between  the  execution  of  the  assignment 
and  its  record.  Within  this  period,  on  March  38,  183G,  Nott,  still 
assuming  to  be  the  owner  of  the  mortgage,  released  to  Stevens  some 
of  the  village  lots  embraced  in  the  mortgage,  who  conveyed  them  to 
purchasers  about  the  time  that  the  releases  were  executed.  It 
appeared  that  the  lots  so  released  were  more  than  sufficient  in  value, 
at  that  time,  to  pay  the  mortgage.  The  purchasers  under  Stevens 
had  no  notice  of  the  assignment  to  the  plaintifP. 

There  is  still  due  and  unpaid  on  the  mortgage  the  principal  sum 
of  $2,800,  with  interest  from  January  1st,  18G4,  amounting  on 
December  3d,  1870,  to  $4,157.28. 

The  questions  raised  on  the  present  appeal,  under  this  state  of 
facts  are :  First.  Whether  the  lien  of  the  mortgage  is  superior  to 
the  claims  of  the  purchasers  under  the  contracts.  Second.  If  the 
plaintiff  is  bound  by  the  contracts,  whether  it  is  not  entitled  to  the 
purchase-money  unpaid  upon  them.  Third.  Whether  the  release  of 
the  village  lots  by  Nott  does  not,  as  between  the  purchasers  and  the 
plaintiff,  discharge  their  lots  from  the  lion  of  the  mortgage? 

1.  In  considering  the  first  question  it  will  be  necessary,  at  the 


8KC.  M.j         TUi.sTLKs  oi-    iMii\   (  111  i,i:i;i:   r.   \viii;i:Li:it.  G8.5 

( 
(tutscl,  to  t'.\amim'  the  iflations  1mi\v(<ii  Aspiinvall  nn<l  XoH,  a^  well 
as  k'tween  the  latter  and  Stevens.  Wlien  Aspiiiwall  tdok  the  title, 
ihe  conunon  hiw  of  trusts  was  in  full  (i]»erali<»ii ;  he  nntlnul)teilly 
held  the  i)ropeity  as  a  trustee,  both  for  Nott  antl  Stevens.  In  other 
words,  the  payment  t)f  a  portion  of  the  eonsideration  hy  eaeh  of 
these  parties  eaused  a  trust  jn'o  (niih)  to  resvdt  in  their  favor.  This 
could  bi'  proved  by  parol  evidence.  ("J  \\a>hlnirn  on  IJeal  i'roperty, 
1T(J,  par.  17,  and  cases  cited.)  When  Aspinwall  conveyed  to  Stevens 
he  transferred  an  estate  to  him  ehar<;ed  with  a  valid  existing  tru.st, 
of  which  Stevens  had  full  knowledge.  Stevens,  aeeording  to  ele- 
jnentary  rules,  became  himself  a  trustee  for  Nott  to  tlu;  extent  of 
the  interest  conveyed  to  him.  ( 1  Spence's  K(\.  dur.  'yl^;  Willis  on 
Trustees,  Gi;  2  Washb.  178,  par.  'Jl.) 

During  the  whole  period  from  Oetoljer  1,  18"J8,  to  the  time  of  the 
execution  of  the  mortgage,  the  relation  of  trustee  and  ccKiui  ijue 
tni^t  existed  between  Aspinwall  and  Nott,  or  Stevens  and  Xott. 
These  trustees  were  aceountable  to  Xott  in  a  court  of  cipiity.  They 
had  the  management  of  the  estate,  had  the  legal  power  to  sell,  and 
iheir  acts  were  acquiesced  in  by  tlu'  rfsfiii  (jiic  fnit:l  and  ratified  by 
the  accountings  held  from  time  to  time.  Tiider  these  circum- 
stances the  purchasers  under  the  contracts  had  an  eipiity  superior 
to  that  of  Xott.  At  the  moment  when  he  conveyed  to  Stevens,  they 
could  have  enforced  the  agreements  against  him,  on  payment  of  the 
residue  of  the  purchase-money,  and  against  Stevens,  his  successor 
in  interest.  Xott  and  Stevens  held  the  legal  title,  as  trustees  for 
the  purchasers  under  the  contracts. 

The  sale  by  Xott  to  Stevens  and  the  execution  of  the  mortgag** 
to  the  former  worked  no  change  in  this  state  of  things.  At  the 
moment  of  sale  he  was  a  trustee  for  the  ))urchasers  und<>r  the  con- 
tract. By  a  familiar  ride  in  the  law  of  trusts  he  could  not  buy  or 
sell  to  the  prejudice  of  the  crsfuis  (/iir  trusts.  ]]\<  sab-  to  Stevens, 
and  taking  back  a  mortgage  for  the  j)urchase-money,  left  him  pre- 
cisely when^  ho  was  before  the  tran>aetion  was  entered  into — still 
charged  with  the  execution  of  the  trust  in  favor  of  the  jturchasers 
under  the  contracts.  It  was,  therefore,  quite  immaterial,  as  far 
as  Xott  was  concerned,  to  sliow  that  he  had  constructive  notice 
of  the  contracts  by  tlie  possession  of  the  purchasers.  His  duty 
toward  them  did  not  depend  upon  notice,  but  upon  the  inherent 
equities  of  the  case.  Suj)pose  that  after  he  had  sold  to  Stevens 
he  had  immediately  repurchased  from  him;  would  he  not  have  been 
subject  to  the  same  equities  as  lie  was  liable  to  l)efore  tlie  sale? 
The  authorities  are  distinct  that  he  would. 

.\  mortgage  coubl  give  him  no  m<ire  rights  than  an  ab-olute 
]>urchasr.      It  i>  thus  clear  that  if  Xott  bad  remained  owner  of  the 


684  ASSIGNMENT    OF    MORTGAGE.  [CHA^    IV. 

mortgage  of  Jul}-  IS,  1833,  and  had  sought  to  foreclose  it,  he  would 
have  been  bound  by  the  same  equities  as  before  his  sale  of  that  date, 
and  would  have  been  required  to  allow  the  claims  of  the  purchasers 
under  the  contract. 

Does  the  plaintiff  occupy  the  position  of  Xott,  or  can  it  urge  that 
it  is  a  purchaser  in  good  faith,  and  for  value,  and  thus  shut  out  the 
equities  between  the  contractees  and  Nott,  or  is  it  governed  by  the 
rule  that  the  assignee  of  a  mortgage  takes  subject  to  the  equities 
between  the  original  parties?  According  to  the  reasoning  thus 
far,  this  is  a  case  of  an  inherent  equity  as  between  a  person  having 
nn  interest  in  the  equity  of  redemption  and  the  mortgage.  The 
mortgage,  in  form,  covers  the  property  claimed  by  the  contractees ; 
if  they  do  not  fulfill  the  contract,  it  certainly  embraces  it  in  full. 
What  they  say  to  the  mortgagee  is  this :  "  Owing  to  certain  equities 
between  us  and  you,  it  is  inequitable  to  enforce  the  mortgage  against 
property  which,  as  a  matter  of  law,  is  actually  covered  l)y  it,  except 
you  respect  our  rights." 

Is,  then,  the  plaintilf  in  any  better  position  than  Nott,  the  mort- 
gagee? It  is  well  settled  that  an  assignee  of  a  mortgage  must  take 
it  subject  to  the  equities  attending  the  original  transaction.  If  the 
mortgagee  cannot  himself  enforce  it,  the  assignee  has  no  greater 
rights.  The  true  test  is  to  inquire  what  can  the  mortgagee  do  by 
Avay  of  enforcement  of  it  against  the  property  mortgaged ;  what  he 
can  do  the  assignee  can  do,  and  no  more.  In  Clute  v.  Bohison,  2 
J.  R.  612,  the  rule,  as  stated  by  Kent,  Ch.  J.,  is,  that  a  mortgage  is 
liable  to  the  same  equity  in  the  hands  of  the  assignee  that  existed 
against  it  in  the  hands  of  the  obligee.  (2  Vern.  692,  765;  1  Yesey, 
122.)  The  rule  is  not  simply  that  the  assignee  takes  subject  to  the 
equities  between  the  original  parties,  though  that  is  sound  law.  (7«- 
(jrahnm  v.  Dishorough,  47  N.  Y.  421.)  It  goes  further  than  this, 
and  declares  that  the  purchaser  of  a  chose  in  action  must  always 
abide  by  the  case  of  the  person  from  whom  he  buys.  (Per  Lord 
Thurlow,  in  Davies  v.  Anste7i,  1  Yesey,  Jr.,  247.)  The  reason 
of  the  rule  is,  that  the  holder  of  a  chose  in  action  cannot  alienate 
anything  but  the  beneficial  interest  he  possesses.  It  is  a  question 
of  power  or  capacity  to  transfer  to  another,  and  that  capacity  is 
to  be  exactly  measured  by  his  own  rights.  (Beehe  v.  Banl-  of  New 
Yorl\  1  J.  E.  552,  per  Spencer,  J.,  and  549,  per  Tompkins,  J.) 
Kent,  Ch.  J.,  in  a  dissenting  opinion  in  the  same  case,  would  have 
confined  the  rule  to  the  equities  between  the  original  parties  to  the 
contract.  {Id.  573.)  The  opinions  of  Spencer  and  Tompkins,  JJ., 
were,  however,  recognized  as  the  correct  ex])nsition  of  the  law  in 
Bn^h  v.  LnfJrrop,  22  X.  Y.  535.  A  cnnsidera])]e  numl)er  of  author- 
ities are  cited  by  the  plaintiff  as  tending  to  show  that  the  assignee 


''*■•    "•]  TlilSTKKS    OF    r.VIOV    (  (H.I.KC.K    r.    \V  1 1 1.F.I.KIl.  0S.> 

>f  a  ilio.^o  in  action  is  only  suhjoct  to  tlio  equities  W'twecn  the  con- 
tractor (assi;iiior)  and  the  dchtor,  and  not  to  the  so  eallcd  latent 
<'(|uities  of  third  persons.  Such  cases  as  James  v.  Morey,  2  f'owen, 
".'lis,  opinion  of  Suthcrhind,  .1.;  Hlimiiirr  v.  Ilvmhrsou,  S  Midi. 
10',':  Matt  V.  Clfirk-r.  !»  liarr,  lot,  and  others  of  the  same  ehiss,  were 
reviewed  a<  to  tlieir  principle  or  specifically  in  Hush  v.  Lalhroii, 
Tl  X.  "^^  ")3."),  and  repudiated.  'I'he  doctrine  of  Lord  Thurlow,  in 
Kn^daiid.  and  of  Spencer  and  Tompkins.  .F.F..  already  con.>idere(l, 
was  tlius  adopted  rather  than  that  of  Kent.  Cli.  J.  The  hiw  of 
some  of  the  other  States  unchmhtetlly  coincide^  with  tlie  vit'ws  of 
Kent,  hut,  since  the  decision  in  Ihish  \.  LdtJirop.  must  be  regardetl 
as  without  authority  lierc. 

The  correct  theory  is  well  stated  in  'I  Story  on  Ivpiiiy  .luri  — 
prudence,  section  1040:  "  l-'very  assij^Miment  of  a  chose  in  action 
is  considered  in  equity  as  in  its  nature  amountinjr  to  a  declaration 
of  trust  and  to  an  agreement  to  permit  the  a-signee  to  make  u-^e 
of  the  name  of  the  assignor  in  order  to  riH-over  the  del)t  or  to  n'duce 
the  property  intti  possession."  Tliis  theory  would  lead  to  the  con- 
<  lusion  that  the  action  hy  the  assignee  must  be  precisely  commen- 
surate with,  that  of  the  assignor,  as  it  must  be  in  his  name  and 
on  the  supposition  that,  for  the  purjxjsi's  of  the  action,  he  is  still 
owner.  The  case  of  DiUdi/r  v.  CoDinirrci'aJ  Bauk  of  Whitrlmll,  '*] 
X.  Y.  3-15,  is  not  opposed  to  this  view,  as  the  (piestion  in  that  ca>i' 
was  not  one  of  the  enforcement  of  a  mortgage,  hut  conei'rned  the 
title  of  the  two  claimants  to  the  ownership  of  the  mortgage  itself 
The  point  was.  whether  one  who  held  a  mortgage  in  trust,  with  an 
apparently  unrestricted  power  of  disposition,  could  transfer  it  fre(» 
from  the  claims  of  the  cestui  que  tru.st  to  a  j)urehaser  in  good  faith. 
It  M'as  held  that  Vie  could.  This  case  has  no  tendency  to  establish 
any  right  on  th'.  part  of  the  assignee  in  enforcing  the  mortgage 
beyond  that  ]^'>sscssed  by  his  assignor. 

The  plairfifT  cites,  to  support  his  view,  authorities  to  the  efTi-ci 
/luit  an  a-s\i:nee  is  a  purchaser,  and  to  the  efTect  that  "a  mortgage 
IS  in  i',r\n  a  conveyance  of  the  land  and  an  assignment  of  it  is 
on'ft'ier  conveyance  of  the  sanu'  land."  Thesi*  ea.ses.  which  are 
vers-  numerous  in  the  law  book<,  refer  only  to  thi'  position  of  u 
mortgagee  or  assignee  in  a  court  of  law,  and  were  decided  in  Eng- 
land and  in  States  of  the  T^nion  where  more  technical  views  of  the 
rights  of  a  mortgage(>  in  a  court  of  law  prevail  than  in  this  State. 
They  are  of  no  force  in  a  cojirt  of  eipiity.  in  which  the  ea.-je  at  bar 
is  assumed  to  be  pending,  for  in  such  a  tribunal  a  mortgage  is  b\ir 
a  eho.«5e  in  action  and  security  for  a  debt.  Reference  is  also  made 
to  a  class  of  eases  appearing  in  the  law  rejmrts  of  a  number  of  the 
States,  hoi. ling,  in  substanc*'.  that   when  a   mortgage  i<  given  to 


686  ASSIGNMENT    Or    MORTGAGE.  [CIIAP.  IV. 

peeuro  a  negotiable  note,  which  is  itself  transferred  before  maturity 
for  value,  it  is  taken  by  the  assignee  free  from  all  equities.  It  is 
argued  that  these  authorities  tend  to  show  that  the  mortgage  par- 
takes of  the  nature  of  the  debt,  in  such  a  sense  that  only  the  direct 
equities  between  the  debtor  and  the  creditor  can  be  set  up  as  against 
the  assignee.  These  cases  have  not  yet  become  established  law 
in  this  State.  {Carpenter  v.  Loiu/an,  IG  Wall.  [U.  S.]  271 ;  Keni- 
cott  V.  Supervisors,  id.  452 ;  Tajjlnr  v.  Page,  G  Allen,  '^Q ;  Croft  v. 
Bunster,  9  Wis.  510.)  If  sound,  tliey  must  be  made  to  rest  on 
rules  of  law  attending  the  transfer  of  negotiable  paper,  and  cannot 
be  held  by  indirection  to  overthrow  a  rule  concerning  the  ordinary 
bond  and  mortgage  which  luis  become  fixed  in  our  jurisprudence. 

The  result  is  that  the  plaintiff'  in  the  present  case  takes  subject 
to  the  rights  of  the  purchasers  under  the  contracts,  by  reason  of  the 
equities  between  them  and  Nott  and  without  reference  to  any  actual 
or  even  constructive  notice  of  such  equities  as  between  such  pur- 
chasers and  the  mortgagee 

The  judgment  of  the  court  below  sliould  l)e  affirmed. 

All  concur. 

A  motion  having  been  made  for  reargument,  the  following  opin- 
ion was  given,  on  denying  the  motion. 

DwiGiTT^  C.  The  plaintiff  in  this  cause  moves  for  a  reargument 
on  three  grounds  :  First.  That  this  court  erred  in  holding  that  the 
plaintiff  took  the  same  position  in  respect  to  tlie  mortgage  which  was 
the  subject  of  foreclosure  in  the  present  action  as  its  assignor,  Xott, 
the  mortgagee.  Second.  That  the  court  should  have  held  that,  where 
the  contracts  owned  by  the  respondents  were  assigned  subsequent 
to  the  record  of  the  mortgage,  the  plaintiff  has  a  lien  for  the  pur- 
chase-money unpaid  at  the  time  of  such  assignment.  Third.  That 
the  court  committed  another  error  in  holding  that  after  Nott  had 
made  the  assignment  and  continued  the  apparent  owner,  the  assign- 
ment being  unrecorded,  and  the  respondents  having  no  notice  of 
such  assignment,  his  release  from  the  lien  of  the  mortgage  of  cer- 
tain portions  of  the  premises  which  were  primarily  liable  to  pay 
the  debt,  was  binding  on  the  plaintiff  and  so  discharged  the  re- 
spondents. 

Before  considering  the  first  proposition,  it  will  be  well  to  recall 
the  exact  relations  of  the  parties.  Nott  held  a  mortgage  upon  cer- 
tain lands  to  which  the  mortgagor  held  the  legal  title,  but  which 
in  part  had  been  sold  by  a  valid  contract  to  some  of  the  defendants. 
The  validity  of  the  contract  is  undisputed,  as  is  also  the  fact  that 
Nott,  the  mortgagee,  had  full  notice  of  the  equities  of  those  de- 
fendants, and  was  bound  in  equity  to  recognize  them. 


sKc.  II. I         Tiiis'Ji;i:s  OF  IMON  coi.i.Kci:  r.   \viii;i:i,i;i{.  GH7 

Siiiriin;;  with  this  jiroposition,  the  counsel  for  the  plaintiff  main- 
tain.s  that  the  i)hiinliir,  if  considored  as  a  purchaser  of  a  chose  in 
action  without  notice,  i>  not  ixiund  to  reco>,Miize  the  etpiities  to 
which  Nott  would  have  heeii  sidjject ;  and  again,  that  it  is  a  pur- 
vhaser  of  tiie  Ic^mI  title  to  the  land,  and  that  it  can  invoke  the  rule 
that  till'  honest  purchaser  of  land  for  a  valuahle  consi(h,'ration  can 
shut  out  any  i'(piities  wliicli  iiii;,dit  have  existed  hetweeii  the  iiiort- 
ga<^or,  as  well  tlio>e  wlioiii  lie  represented,  and  the  niort«^a<,'ee. 

In  uriring  the  lir>t  hraiieli  of  this  proposition,  he  calls  our  atten- 
tion to  the  sup])oseil  fact  that  the  case  of  flush  v.  Lutliroj),  '^'i  X.  Y. 
')oo,  and  cited  as  auth(>ritv  in  one  of  the  opinions  disposin^jj  of  this 
rause,  has  hi-en  overruled,  and  with  it.  that  tlu'  doctrine  on  which 
we  relied  has  fallen.  Tlii-.  Imwcver.  is  an  incorrect  a.ssuinption, 
for  that  ca.se  has  not  heeii  oveiiiileil  a<  a  whole,  hut  only  as  to  one 
proposition  maintained  in  it.  See  Mmir,'  v.  MctropoJil'in  HI,-.,  ")•"» 
X.  Y.  41.  It  is  there  stated  that  several  pro]utsitions  in  Jiiish 
V.  Ldihrop  were  deciih'd  "'Wilh  perfect  accuracy."  The  special 
point  in  respect  to  which  there  is  a  conniet  hetween  the  two  cases 
is,  whether  an  as«;i«inor  of  a  eho.se  in  action  can  set  up  any  ecpiities 
atTeeting  the  title  Itetween  himself  and  his  assi<;nci',  in  an  action 
hrought  hy  a  second  assi<rnee.  There  was  no  (pu-stion  whatever  a.-; 
to  the  equities  <;rowini;  out  of  the  chose  in  action  it.self,  a.s  hetween 
the  original  ])arties  to  it  or  an  assignee  of  the  creditor.  On  that 
point  the  court  was  cain-ful  to  avoid  all  misconstruction  in  using 
the  following  language:  '*  "^riie  counsel"  (for  the  defendant)  '*  fur- 
ther insists  that  to  api)ly  the  same  rule"  (of  esto|)pel)  "to  non- 
negotiahle  choses  in  action,  will  in  effect  make  them  negotiahle. 
Xot  at  all.  X'o  one  ])retends  hut  that  the  purchaser  will  take  the 
former,  sid)ject  to  all  defences,  valid  as  to  the  original  parties,  nor 
that  the  mere  possession  is  any  more  evidence  of  title  in  the  pos- 
sessor than  is  that  of  a  horse.  In  hoth  nspects,  the  dilTc'rence  be- 
tween the.se  and  negotiahle  instruments  is  vital."  (P.  4S.)  The 
•court  is  also  careful,  on  jiages  4i).  50  of  the  rep«n-t,  to  preserve  the 
force  of  the  eases,  decided  liy  the  present  Court  of  .\p|)eals,  which 
have  followed  Hush  v.  Lullirnii  in  the  respect  referretl  to — cases  of 
which  Srhnfrr  v.  licilh/,  "lO  \.  Y.  (!1,  is  one,  and  hears  elo.sely  upon 
the  prerent  discussion.  The  point  in  Mnorr  v.  .yfitropoliltni  Unnl' 
is  siniply  whether  the  law  of  estoppel  i.^  applicahle  on  the  (juestion 
of  tjtie  as  hetween  a  first  assignee  and  a  remote  purchaser  of  a  non- 
negotiahle  eho.se  in  action.  Tt  is  held  that  it  is.  The  ride  that  the 
<'hose  in  action  itself  is  open  to  all  defences  growing  out  of  the  orig- 
inal transaction,  in  the  hands  of  any  assigned',  no  matter  how  re- 
mot»\  remains  unshaken,  and  must  continue  so  until  elementary 
rules  of  law  are  overthrown. 


(JSS  ASSIGNMENT    01'    MOKTGAGr..  [CHAP.  IV. 

The  rule  laid  down  by  us  in  the  ease  at  bar  is  distinctly  stated 
and  affirmed  in  Schafer  v.  Reilhj,  50  N.  Y.  61,  It  is  there  said 
tliat  one  who  takes  an  assignment  of  a  mortgage  takes  it  subject 
not  only  to  any  latent  equities  that  exist  in  favor  of  the  mortgagor, 
but  also  subject  to  the  like  equities  in  favor  of  third  persons.  This 
i-ase  emphatically  approves  of  Bush  v.  Lathrop,  so  far  as  it  holds 
this  point,  and  declares  its  doctrine  to  be  settled  law.  None  of  the 
eases,  we  repeat,  in  which  the  present  Court  of  Appeals  have  fol- 
lowed that  case,  are  to  be  regarded  as  overruled  by  Moore  v.  Mct- 
ropoUtan  Bank,  supra.  It  must  accordingly  be  held  to  be  still  the 
law  of  this  State,  that  the  ^Durchaser  of  a  non-negotiable  chose  in 
action,  secured  by  a  mortgage,  takes  it  subject  to  the  latent  equities 
not  only  of  the  mortgagor  but  of  third  persons. 

The  counsel  of  the  plaintiff,  however,  maintains  that  if  it  be 
conceded  that  this  doctrine  applies  to  the  debt  it  does  not  apply 
to  the  mortgage.  His  argument  is,  that  the  mortgage  itself  cre- 
ates a  legal  estate  in  the  land,  and  that  so  far  as  the  land  is  con- 
cerned, an  assignee  of  a  mortgage  is  a  purchaser  of  the  legal  estate 
for  a  valuable  consideration,  and  entitled  to  exclude  the  equities. 
There  is  thus,  according  to  this  proposition,  one  rule  for  the  land 
and  another  for  the  debt.  If  the  debt  were  collected  by  action  for 
its  amount  the  equities  would  be  let  in ;  if  it  were  collected  by  fore- 
closure of  the  mortgage  they  wonld  be  shut  out.  This,  if  true,  is 
certainly  an  extraordinary  proposition.  It  is  very  comprehensive 
in  its  nature,  for  it  would  exclude  the  equities  of  the  mortgagor 
as  well  as  the  latent  equities  of  third  persons.  Under  our  com- 
pound system  of  foreclosure  and  of  obtaining  a  personal  judgment 
for  the  deficiency,  there  would  be  one  rule  for  the  first  branch  of 
the  case  and  an  entirely  different  one  for  the  last. 

None  of  the  cases  cited  by  the  counsel,  on  this  motion  for  re- 
argument,  sustain  his  proposition  as  being  part  of  our  law.  They 
liave  all  been  examined,  and  it  is  unnecessary  to  consider  them  in 
detail.  The  point  is  really  decided  against  him  in  Schafer  v. 
Tiellly,  supra.  The  contest  in  that  case  concerned  the  right  to 
surplus  moneys  after  a  foreclosure,  and  was  in  substance  a  question 
as  to  the  title  to  land,  the  money  standing,  under  the  doctrine  of 
equitable  conversion,  in  the  place  of  land.  It  appeared  that  there 
was  a  second  mortgage,  of  a  fictitious  nature,  made  by  one  John 
"Reillv  to  Peter  Eeilly,  on  which  nothing  had  been  advanced,  and 
which  M'as  of  course  incapa1)le  of  enforcement  by  Peter.  This  was 
assigned  to  one  Catherine  M.  Burchard,  who  paid  a  valuable  con- 
sideration, acting  in  good  faith,  and  upon  an  affidavit  by  the  mort- 
gagor that  Peter  Eeilly  had  advanced  to  him  the  whole  amount 
of  the  principal  without  abatement,  that  the  whole  sum  remaincrl 


SEC.  II.]        rnr.'^Trr^;  of  rviov  roT.i.mr:  ;•.  WKrELnn.  '.>;> 

imj)ai«l,  and  thai  tlicic  was  no  olT-sct,  (h'fciicc  or  coiiiitcr-elaini  to 
the  inortpit,M'.  Tin"  inorti,'n<,'('  was  dated  and  executed  anterior  ti> 
the  claim  of  one  (irillin,  wlio  had  acquired,  subsequently,  a  mechan- 
ic's lien  upon  the  land,  hut  hel'ore  Mrs.  Rurchard  hecanu'  assij^nee. 
Of  his  ri<,dits  at  that  time  she  was  i^rnorant.  The  question  was. 
who  had,  under  these  circumstances,  the  hetter  ri<,dit  to  the  surplus 
moneys,  considered  as  land.  The  court  held  that,  notwithstindin;: 
the  niortgatre  was,  on  its  face,  executed  |irior  to  the  mechanic's  lien, 
it  mii^ht  he  shcnvn  hy  riritlin  that  his  lien  was  in  existence  when 
^Irs.  Rurchard  advanced  her  money,  and  that  his  ri<,'ht  could  not 
bo  affected  hy  the  mortpisje.  The  court  there  broadly  applied  th«' 
rule,  that  if  flrifTin's  claim  was  an  equitaV)le  one  and  latent,  it 
could  still  be  set  up  bv  him  ajrainst  the  assi<jnee.  The  estoppel 
against  John  ]?eilly.  caused  by  his  affidavit,  had  no  effect  upon  tln' 
rights  of  riritTin.  The  court  rested  this  decision  on  the  ground 
that  though  CriHin's  right  might  be  a  latent  equity,  yet  the  assignee 
must  take  the  mortgage  considered  as  an  interest  in  the  land,  and 
not  merely  the  di-bt,  subject  to  the  e«|uity.  The  same  class  of  cases 
that  were  relied  upon  by  the  plaintiff's  coun.sel  in  the  argument 
of  the  present  motion  were  cited  to  the  court,  as  showing  that  tin* 
assignee  of  the  mortgage  was  a  purchaser  for  value.  Their  ap- 
])lication  to  the  sid)ject  in  hand  was  denied,  and  the  rule  of  T.,oril 
Thurlow,  in  Dnvi<'>i  v.  Aiisirn.  1  A'es.  247.  was  pronounced  to  be 
the  principle  governing  the  i'a.se.  ".\  purcha.ser  of  a  chose  in 
action  must  always  abide  by  the  case  of  the  person  from  whom  he 
buys."  (Srhnfrr  v.  Reillif'.  50  X.  Y.  fi7,  08.)  This  was  the  pre- 
cise ground  on  which  the  case  at  bar  was  rested. 

The  plaintiff  is  mistaken  in  the  sup])osition  that  the  present  ca.-e 
is  one  merely  of  notice  of  equitable  rights  on  the  part  of  third 
parties  to  Xott.  the  mortgagee,  and.  accordingly,  that  it  is  not 
bound  by  the  notice  under  the  ordinary  doctrines  applied  to  th" 
purchaser  in  good  faith,  ami  for  a  valuable  consideration,  ac<juir- 
ing  title  to  lands.  On  the  contrary,  the  ditViculty  is  that  Xott  took 
his  mortgage,  subject  to  the  older  and  better  title  of  the  contmct«H?.s. 
To  their  estate  his  mortgage  never  attached  in  cvpiity.  The  land 
belonged  to  them  in  equity,  and  the  most  that  Xott  could  accpiire 
under  any  circumstances,  as  against  them,  was  a  lien  for  the  un- 
paid purchase-money.  This  is  not  an  interest  in  the  land  but  only 
in  the  money,  and  to  be  obtained  bv  an  assi""noo  of  Xott  in  no 
manner,  except  by  due  notice  of  the  morttrage  and  assi'jnment  given 
to  the  contractees.  The  jtlaintiff  simplv  ai'()uired  Xott's  ri::ht-. 
and  stood  in  bis  place,  accordinir  to  >!rhnfrr  v.  Rrt'lli/,  supra.  (See 
also,  AiuJrvir.x  v.  Tnrrrif.  1  McCarter  fX.  J.]  3."..'i.)  The  cases  .>f 
Jackson  v.  Van    Vnlkrnhiirgh .  8  Cow.  200;  Jdrkson  v.  Ilcnni.  li> 


600  ASSIGNMENT    OF    MORTGAGE.  [CHAP.  IV. 

J.  E.  185;  Varich  v.  Briggs,  6  Paige,  323;  Fort  v.  Burcli,  5  Den. 
187,  and  others  cited  by  the  appellant,  have  no  application  to 
the  case  at  bar.  Those  and  others  of  the  same  nature  are  either 
cases  of  title  obtained  by  fraud,  or  involve  the  effect  of  notice 
under  the  recording  acts,  or  are  instances  of  mortgages  accompany- 
ing negotiable  notes,  and  declared  to  partake  of  the  character  of 
the  note.  They  are  noticed  and  distingiiished  in  Scliafer  v.  Reilly, 
supra,  and  it  is  unnecessary  to  spend  time  upon  them. 

It  should  be  added  that,  under  the  rules  of  equity  jurisprudence, 
it  is  essential  that  one  who  claims  to  exclude  an  earlier  equity  must 
show  that  he  is  not  only  a  purchaser,  but  has  acquired  the  legal  es- 
tate. What  evidence  was  there,  in  the  case  at  bar,  that  the  plaintiff 
had  acquired  the  legal  estate?  The  complaint  merely  alleges  an  as- 
signment of  the  debt  and  mortgage  in  writing.  The  referee  only 
finds  an  assignment  in  writing.  There  is  not  a  word  anywhere  con- 
cerning the  acquisition  of  the  mortgage  by  a  deed  or  other  instru- 
ment under  seal.  If  the  mortgagee  had  the  "  legal"  estate,  he  did  not 
transfer  it  by  such  an  instrument  as  the  law  requires  to  transfer  a 
freehold  estate  in  land.  The  plaintiff  was,  undoubtedly,  the  equita- 
l)le  owner,  by  force  of  the  assignment  of  the  bond  and  the  mort- 
gage accompanying  it,  but  that  was  not  enough.  The  legal  title 
must  pass.  {Peabody  v.  Fcnton,  3  Barb.  Ch.  451.)  The  authori- 
ties, to  the  effect  that  a  deed  or  other  mode  of  conveyance  is  neces- 
sary to  pass  the  legal  estate,  strongly  preponderate.  {Den  v. 
Dlmon,  5  Halst.  [N.  J.]  156;  ^Vardrn  v.  Adams,  15  Mass.  233; 
Jaclcson  v.  Myers,  11  Wend.  533,  539 ;  Morrison  v.  Mendenhall,  18 
Minn.  232;  Cottrell  v.  Adams,  2  Bissell,  351;  Olds  v.  Cummings, 
31  111.  188;  Partridge  v.  Partridge,  38  Penn.  St.  78;  Graham  v. 
Newman,  21  Ala.  497:  Lyford  v.  Ross,  33  Me.  197;  Smith  v.  Kel- 
ley,  27  id.  237;  Givan  v.  Tout,  7  Blackf.  210;  2  Washburn  on  Real 
Property  [3d  ed.],  page  113,  paragraphs  12  and  16,  and  cases 
cited.)  Such  cases  as  Green  v.  Hart,  1  J.  R.  590;  Jackson  v.  Blod- 
get,  5  Cow.  202,  and  Jaclson  v.  Willard,  4  J.  R.  43,  do  not  affect 
this  question,  as  the  matter  of  passing  the  legal  title  to  the  mortgage 
Avas  not  in  controversy.  Johnson  v.  Hart,  3  J.  Cas.  322,  only 
decides  that  by  the  transfer  of  the  debt  an  equitable  title  to  the 
mortgage  passes. 

It  is,  however,  not  our  intention  to  hold  that  the  legal  estate, 
under  the  present  law  of  this  State,  ever  does  or  can  pass  from 
the  mortgagee  to  the  assignee.  On  the  other  hand,  it  is  now  set- 
tled law  that  the  mortgage  is  but  a  lien  upon  the  land.  The  mort- 
gagor, both  in  law  and  equity,  is  regarded  as  the  owner  of  the  fee, 
and  the  mortgage  is  a  mere  chose  in  action,  a  security  of  a  personal 
natur(\     An  assignment  of  a  mortgage,  in  this  view,  cannot  pass 


^t'*-  "1  DAvrs  V.  in;cnsTi:[v.  •;'.•! 

thf  titlr.  {.f<n},-st,ii  v.  }fi/n:<.  11  Wi-nd.  :i^.V^,  r»;'{0 ;  Korlriijhl  v. 
rmJij,  -n  .V.  V.  :U:?;  7V/mm  v.  .U^irs/t,  ."it  id.  ')!)•),  (101;  Stoddard 
V.  //^/r/.  '.*"!  I'/.  .").')!),  ,')(;();  I'oirrr  v.  Lostpr,  id.  o'iT.)  Uulcs  ouin;; 
their  existence  to  a  eontrast  ))otween  law  and  e(|uity,  ami  ;:ivin;,' 
the  later  hohlor  of  a  lejjal  title  a  pr(>ference  over  an  earlier  holder  of 
an  equitahlo  title,  arc  not  to  ho  aj)i)lio(l  to  a  state  of  the  law  so  en- 
tirely difTerent  from  that  which  prevailed  when  the  law  of  inort- 
^'ages  first  oriizinated.  In  other  words,  the  power  of  a  vendee  of 
land  to  convey  to  a  second  purchaser,  so  as  to  shut  out  the  ecpiities 
hetween  himself  and  the  original  vendor,  is  not  to  i)e  referred  to 
for  the  purpose  of  ascertaining  the  eapaeity  of  a  mortgagee  when 
he  makes  an  assignment  of  the  mortgage  to  shut  out  the  c(iuitics 
hetween  himself  and  the  mortgagor,  and  those  whom  the  mortgagor 
rt^presents.  If  that  rule  were  ever  a  part  of  the  law  of  mortgages, 
the  deve]oj)ment  of  that  l)raneh  of  jurisprudence  in  this  State  de- 
mands that  it  should  he  discarded 

The  motion  for  reargument  is  denietl. 

All  concur. 


DAVrS  V.  RKCIISTFJX. 

Court  of  Ai'I'F.vi.s  ok  Xi:\v  Voi;k.  1S77. 

(r,9  .V.  }'.  I  to.) 

This  was  an  appeal  from  a  judgment  of  the  General  Term  of 
the  Court  of  Common  Pleas  for  the  city  and  county  of  New  York, 
modifying  the  jud<iment  in  favor  of  plaintifT  entered  upon  a  de- 
iision  of  the  court  on  trial  at  Special  Term,  and  as  modified  atTirm- 
ing  the  same. 

This  action  was  hrought  to  have  a  bond  and  mortgage  on  lands 
belonging  to  plaintiff  set  aside  and  eaneelle<l.  The  bond  and  mort- 
gage were  executed  by  jdaintlT  and  her  husband  to  Lawrence  .\. 
Kiley,  and  delivered  to  him  as  an  accommodation,  to  be  used  as 
collateral  security  for  the  payuu'nt  of  a  note,  which  he  contem- 
plated getting  discountiHl,  and  uiuh'r  an  agreement  with  him  that 
he  should  not  have  it  recorde<l.  IJiley  faih'd  to  pnuure  the  dis- 
<-ount  and  plaintiff  repeatedly  requested  the  return  of  the  bond 
and  mortgage:  Hilev  promised  to  return  the  same  fnnn  time  to 
time.  )>ut  failed  to  do  so.  had  the  mortgage  recorded,  and  assigned 
the  l>ond  and  mortgaije  for  a  valuable  consideration  to  the  defend- 
ant, Bivhsti'in.     riainlilT's  hu-band  was  not  nuidc  a  partv  to  this 


602  ASSIGNMENT    OF    MORTGAGE.  [CHAP.  IV, 

action.  It  did  not  appear  that  he  had  any  interest  in. the  real  estate 
covered  hy  the  mortgage.  A  judgment  was  entered  in  favor  of  the 
plaintiff,  declaring  the  bond  and  mortgage  in  suit  void,  and  direct- 
ing that  defendant  Bechstein  surrender  and  deliver  up  the  same. 
The  General  Term  modified  this  judgment  so  as  to  declare  the 
bond  and  mortgage  void  only  as  against  plaintiff,  and  that  the 
register  of  the  city  and  county  of  Xew  York  be  required  to  enter 
upon  the  record  of  the  mortgage  that  it  was  adjudged  void  as 
against  plaintiff,  striking  out  the  provision  in  the  judgment  direct- 
ing the  mortgage  to  be  surrendered  up  and  cancelled. 

Church,  Ch.  J.  Neither  the  decision  in  McNeil  v.  The  Tenth 
National  Bank,  46  N.  Y.  325,  nor  in  Moore  v.  Metropolitan  Naf. 
Bank,  55  N.  Y.  41,  affect  the  question  involved  in  this  case.  Those 
cases  hold  that  the  owner  of  a  chose  in  action  is  estopped  from  as- 
serting his  title  against  a  bond  fide  purchaser  for  value,  ^dlo  pur- 
chased upon  the  faith  of  an  apparent  absolute  ownership  by  assign- 
ment, conferred  by  the  owner  upon  the  assignee  and  seller,  but 
neither  of  them  intimated  an  intention  to  interfere  with  the  well 
settled  principle,  that  a  purchaser  of  a  chose  in  action  takes  it  sub- 
ject to  the  equities  between  the  original  parties,  and  that  the  as- 
signor can  give  no  better  title  than  he  himself  has.  On  the  con- 
trary, G  rover,  J.,  in  the  last  case  declared,  in  answer  to  the  sug- 
gestion that  these  principles  might  be  impaired  by  the  decision, 
that  "  no  one  pretends  but  that  the  purchaser  will  take  the  former 
(non-negotiable  choses  in  action)  subject  to  all  defences  valid  as  to 
the  original  parties,  nor  that  the  mere  possession  is  any  more  evi- 
dence of  title  in  the  possessor  than  is  that  of  a  horse."  It  is  only 
where  the  owner,  by  his  own  affirmative  act,  has  conferred  the  ap- 
parent title  and  absolute  ownership  upon  another,  upon  the  faith  of 
which  the  chose  in  action  has  been  purchased  for  value,  that  he  is 
precluded  from  asserting  his  real  title,  and  this  conclusion  was  ar- 
rived at  by  the  application  of  the  doctrine  of  estoppel. 

At  the  time  Riley  transferred  the  bond  and  mortgage  to  the 
defendant  Bechstein,  as  between  him  and  the  plaintiff,  the  mort- 
gagor, he  had  no  title  or  interest  Avhich  he  could  transfer.  The 
mortgage  was  executed  and  delivered  to  him  as  an  accommodation, 
to  be  used  as  collateral  security  for  the  payment  of  a  note  of  $2,000, 
Avhich  he  contemplated  getting  discounted  at  the  New  Y'ork  Na- 
tional Exchange  Bank,  and  under  an  agreement  not  to  have  it  re- 
corded. He  failed  to  procure  the  discount,  and  the  plaintiff  re- 
peatedly requested  the  return  of  the  bond  and  mortgage,  and  Eiley 
promised  to  return  the  same  from  rime  to  time.  It  is  very  clear 
that  the  l)ond  and  mortgage  in  hi^  hands  were  of  no  value,  and 
that  he  could  not  have  enforced  tbcin.  and  the  defendant,  when  Iv^ 


j^Ki'.  II.]  DAVIS  r.  v.K(\]srv.\s.  C>'.)^ 

puii-lins«(l.  occupicil  no  l»oltor  position.  Hiloy  ooiild  not  sell  any 
lu'tlcr  titU'  tlinn  he  had,  which  was  none,  and  the  dcft'iuUint  (•f)ul<l 
not  acquire  hy  thf  purchase  from  liim  any  l)ettcr  titl«\  Tho  cpecifio 
transaction  in  which  the  niort<,M<^'  was  to  he  used  havin;;  failed, 
Itiloy\<  possession  and  ri<;ht  to  the  iuort<,'a;.je  after  that  was  no  dif- 
ferent tluin  if  it  had  heon  delivered  to  him  without  any  a<jreement 
for  its  use  at  all.  He  was  then  the  j)osscssor  of  the  l)ond  and 
mortga<ro  executed  and  delivered  without  con.sideration,  and  with- 
out authority  to  use  it  for  any  j)urj)ose.  I  have  examined  the  evi- 
d»Mue  and  am  of  the  o]>inion  that  it  is  sunicieut  to  sustain  the 
findings  of  the  Jiulge,  and  therefore  the  findings  are  conclusive. 
The  hushand  was  not  made  a  party,  and  a  mis-trial  is  claimed  for 
this  reason.  He  had  no  interest,  as  it  appears,  in  tho  real  estate, 
and  the  def«'ct  should  have  heen  taken  hy  answer  or  demurrer.  Oth- 
erwise it  is  deemed  waived.      (Code,  §  14S.) 

The  General  Term  modified  the  judgment,  so  as  to  preserve  all 
the  rights  of  the  defendant  against  the  hu-^hand.  and  he  cannot  in 
any  event  he  injured. 

The  judgment  must  he  afrirmed. 

All  concur;  Kai'.m.lo,  J.,  not  voting. 

Jiiihiiiicnl  dffinned} 


\e\v  .Tkhsky  (\v.s.  Stat..  18!H;.  Mortovofs  ^  ^l  (p.  2108). 
[It  is  enacted]  That  all  mortgages  on  land  in  this  State,  and  all 
covenants  and  stipulations  therein  contained,  shall  l)e  assignal)le 
at  law  hy  writing,  whether  sealed  or  not.  and  such  assignments  shall 
pass  and  convey  the  estate  of  such  assignor  in  the  mortgaged  prem- 
ises, and  the  assignee  may  sue  thereon  in  his  own  name;  hut  in 
such  suit  there  shall  he  allowed  all  just  ofF-sets  and  other  defenses 
against  the  assignor  that  would  have  heen  allowed  in  any  action 
Itrought  hy  him  and  existing  hefore  notice  of  such  assignment.  .  .  . 

§  32.  That  tlie  clerks  of  the  several  counties  of  this  State 
lie  and  thev  are  licrehv  authorized  to  record  in  suitable  hooks  to 
h«'  ])rovid(^d  for  that  pur])ose  anv  assignment  of  auv  mortgage  upon 

\V,stf<ill  V.  Jones,  23  Barb.  (  N.  Y.(  '.)  (IKAO).  ami  Hill  wHuuIr,  11(5  N. 
^.  2!t!»  (1HS!»),  acronl.  But  .sco  First  \iil.  Itmik  of  Cony  v.  SliUn,  11 
llun.  339  (18S0).  in  whicli  it  was  lit-ld  that  a  mort;;at'«'  in  tlu-  usual  form. 
;.'ivpn  to  raise  money  for  the  mort;;af;or.  I)ut  impro|>crly  ne^rotiatcil  ami 
assioiiod  l)V  tho  mortuapop  for  his  own  purposes,  "by  the  very  form  of  tho 
morti^MLTO  itsolf"  (•roato<l  an  ostnpj><'l  apiinst  tho  niortv'ap>r  and  those 
I  laimin^'  iintler  him.  To  the  same  eir«>ft  ««•«•  Comiuonirtullh  v.  CtmntiU  oj 
I'lltshuKjh,  .U  Pa.  St.  t'.Ui.  .".-JO  (  1S.">1M.  and  compare  /)rtii.i  v.  Utirr,  it  S.  and 
R.    (Pa.)    137  (1822)    and   McMasltrs  v.   Wilhrlm,  85  Pa.  St.  218    (1877). 


G94  ASSIGNMENT    OF    MORTGAGE.  [CHAP.  :v. 

lands  within  their  respective  counties.  .  .  .;  and  such  record- 
ing sliall  be  notice,  from  the  time  such  assignment  is  left  for  that 
purpose,  to  all  persons  concerned  that  said  mortgage  is  so  as- 
signed. ... 

§  34.  That  when  any  assignment  hereafter  made  is  not  re- 
corded, as  in  this  act  provided,  any  payments  made  to  the  as- 
signor in  good  faith,  and  without  actual  notice  of  such  assignments 
and  any  release  of  said  mortgaged  premises  or  any  part  thereof, 
to  a  person  not  having  actual  notice  of  such  assignment,  shall  be 
as  valid  as  if  said  mortgage  had  not  been  assigned. 


New  York  Real  Prop.  Law,  §  271  (1  R.  S.  763,  §  41).— The 
recording  of  an  assignment  of  a  mortgage  is  not  in  itself  a  notice 
of  such  assignment  to  a  mortgagor,  his  heirs  or  personal  representa- 
tives, so  as  to  invalidate  a  payment  made  by  either  of  them  to  the 
mortgagee. 


CHAl'TKH  V. 

DISCHAKCiK  OF  .MORTGAGE. 

Section  1.    Tknuku  and  I'avmkn-t. 

(a)      In  (icnrrql. 

Lit.  §§  334,  335,  337,  338,  339,  and  Co.  Lit.  209, 
reprinted  at  pages  9-11,  supra. 

Lit.  §  340.  Also,  upon  such  ease  of  feoffment  in  morgage,  a  ques- 
tion liath  been  demanded  in  wliat  place  the  feoffor  is  bound  to 
tender  the  money  to  the  feoffee  at  the  day  appointed,  &c.  And 
some  have  said,  upon  the  land  so  holden  in  morgage,  becau.-se  the 
condition  is  dcjH'nding  upon  tiie  land.  And  they  have  said 
that  if  the  feoil'cr  he  ujjon  the  land  there  ready  to  pay  the  money 
to  the  feoffee  at  the  day  set,  and  the  feoffee  bee  not  then  there,  then 
the  feoffor  is  quit  and  excused  of  the  payment  of  the  money,  for  that 
no  default  is  in  him.  But  it  seemeth  to  .>;ome  that  the  law  is  con- 
trary, and  that  default  is  in  him  ;  for  he  is  hound  to  seeke  the  feoffee 
if  he  bee  then  in  any  other  place  within  the  realm  of  England.  As 
if  a  man  be  bound  in  an  obligation  of  20  pound  ujmn  condition  on- 
dor.sed  uj^on  tln'  sam«>  ol)ligation,  that  if  lie  j)ay  to  him  to  whom  the 
obligation  is  made  at  such  a  day  10  pound,  then  the  obligation 
of  20  pound  shall  lo.se  his  force,  and  bee  holden  for  nothing; 
in  this  ca.se  it  behooveth  him  that  made  the  obligation  to  .seek  him  lo 
whom  the  obligation  is  made  if  he  be  in  England,  and  at  the  day 
set  to  tender  unto  him  the  said  10  pound,  otherwise  he  shall  for- 
feit the  summe  of  '20  pound  comprised  within  the  obligation,  &c. 
And  so  it  seemeth  in  the  other  case,  &c.  And  albeit  that  some  have 
said  that  the  c(mdition  is  depending  upon  the  land,  vet  this  prov.'S 
not  that  the  making  of  the  condition  to  bee  performed,  ought  to  bee 
made  ujmn  the  land,  &c.,  no  more  then  if  the  condition  were  tliaf 
the  feoffor  at  such  a  day  shall  do  some  speciall  corporall  .service  t«> 
the  feoffee,  not  naming  the  place  where  such  corporall  .service  shall 
be  done.  In  liis  case  the  feoffor  ought  to  do  such  corporall  service 
at  the  day  limited  to  the  feoffee,  in  what  place  soever  of  England 
that  the  f«^itfee  bee,  if  he  will  have  advantage  of  the  condition,  i^e. 
So  it  seenu'th  in  the  other  ca.se.  And  it  .<eemes  to  them  that  it  shall 
bee  more  properly  said  that  the  estate  of  the  land  is  dependim: 


r»9<j  DISCTTARGE    OF    ^lOlITGAGE.  [CHAP.  V. 

upon  the  condition,  then  to  say  that  the  condition  is  depending  upon 
the  land,  &c.     Scd  qiuerc,  &c. 

Co.  Lit.  210.  "Item,  sur  liel  case  clc  feoffment  en  morgage, 
question  ad  este  demande,  &c."  Here  and  in  other  places,  that  I 
may  say,  once  for  all,  where  Littleton  maketh  a  douht,  and  setteth 
down  severall  opinions  and  the  reasons,  he  ever  setteth  downe  the 
better  opinion  and  his  owne  last,  and  so  he  doth  here.  For  at 
this  day  this  doubt  is  settled,  having  beene  oftentimes  resolved,  that 
seeing  the  money  is  a  summe  in  grosse,  and  collaterall  to  the  title 
of  the  land,  that  the  feoffor  must  tender  the  money  to  the  person 
of  the  feoffee  according  to  the  later  opinion,  and  it  is  not  sufficient 
for  him  to  tender  it  upon  the  land ;  otherwise  it  is  of  a  rent  that 
issueth  out  of  the  land.  But  if  the  condition  of  a  bond  or  feoffment 
be  to  deliver  twenty  quarters  of  wheat,  or  twenty  load  of  timber,  or 
5uch  like,  the  obligor  or  feoffor  is  not  bound  to  carry  the  same  about 
and  seeke  the  feoffee,  but  the  obligor  or  feoffor  before  the  day  must 
goe  to  the  feoffee,  and  know  where  he  will  appoint  to  receive  it,  and 
there  it  must  bee  delivered.  And  so  note  a  diversitie  betweene 
money  aifd  things  ponderous,  or  of  great  weight.  If  the  condition 
of  a  bond  or  feoffment  be  to  make  a  feoffment,  there  it  is  sufficient 
for  him  to  tender  it  upon  the  land,  because  the  state  must  passe  by 
liver  ie. 

'■  Deins  Ic  roialni  d'Engletcrre."  For  if  he  be  out  of  the  realmo 
of  England  hee  is  not  bound  to  seeke  him,  or  to  goe  out  of  the 
realme  unto  him.  And  for  that  the  feoffee  is  the  cause  that  the 
feoffor  cannot  tender  the  money,  the  feoffor  shall  enter  into  the  land 
fis  if  he  had  duly  tendered  it  according  to  the  condition. 

"  De  tender,"  or  tendre,  is  a  word  common  both  to  the  English 
and  French,  in  Latine  offer  re;  and  in  that  sense,  and  with  that 
Latyn  word  it  is  alwayes  used  in  the  common  law. 

Lit.  §  342.  And  therefore  it  wil  be  a  good  and  sure  thing  for 
him  that  will  make  such  feoffment  in  morgage,  to  appoint  an  espe- 
cial place  where  the  money  shall  be  payd,  and  the  more  speciall  that 
it  bee  put,  the  better  it  is  for  the  feoffor.  As  if  A.  infeoffe  B.  to 
have  to  him  and  to  his  heires,  upon  such  condition  that  if  A.  pay  to 
B.  on  the  Feast  of  Saint  Michael  the  Arch-Angell  next  comming, 
in  the  cathedrall  church  of  St.  Paul's  in  London,  within  foure 
houres  next  before  the  hour  of  noone  of  the  same  Feast,  at  the 
Iiood  loft  of  the  Rood  of  the  Xorth  doore  within  the  same  church, 
or  at  the  tombe  of  Saint  Erkenwald,  or  at  the  doore  of  such  a  chap- 
])ell,  or  at  such  a  pillar,  within  the  same  church,  that  then  it  shall  be 
lawfull  to  the  aforesaid  A.  and  his  heires  to  enter,  &c.,  in  this  case  he 
ncedeth  not  to  seek  the  feoffee  in  an  other  place,  nor  to  bee  in  any 


^"     '  Tiri.KY    1.    DAVIS.  G97 

oihcr  plnoo,  but  in  tlio  jjlafc  <'ninj)riso(l  in  tlic  in<lonturo,  nor  to  be*; 
iluTt'  iidiirtT  tlian  ibc  time  >|tt'<ifi('(l  in  tbf  <iiiiic  inili-nturc,  to  tondor 

•  •r  pay  Ibc  in<»ncy  to  Ibc  ffitircr.  Xc. 

jj  'M'-\.  Also,  in  siub  case,  wbcic  tbc  jibuc  ol'  paynicnl  i:>  limited, 
ilir  fi'ofTcc  is  not  l)(>und  to  rrccivc  tbu  payment  in  any  otber  plaee 
liiit  in  tilt'  same  plaei-  >o  limited.  Miit  yet  if  be  doe  receive  tbe  pav- 
nieiit  in  anotber  |)laee.  ibis  is  '^(hh\  enon^di  and  a.->  stron;,'  for  tbi- 
JeotVor  ;i<  if  tbe  reeeipt  bad  l>eene  in  tbe  same  plaee  so  limited,  iSre. 

vj  0}  t.  Also,  in  tbe  i-ase  of  feolTment  in  morj^a^e,  if  tbe  feolTor 
payetb  to  tbe  ft'oU'ee  ;i  borse,  or  a  enp  of  silver,  or  a  ring  of  gobi, 
<ir  any  sueb  (>tber  tiiin^r  in  fnl  satisfaetion  of  tbe  money,  and  tbe 

•  itber  reeeivetb  it,  tbis  is  ^^ood  enou<:b,  and  as  strong  as  if  bee  bad 
received  tbe  sumnie  of  inom-y,  tbongb  tbe  borse  or  tbe  otber  tbing 
were  not  of  tbe  twentietb  j)art  of  tbe  value  of  tbe  sum  of  ni(»ney, 
bocauao  tliat  tbe  otber  batb  accepted  it  in  ful  satisfaction. 


BuRGAiXE  V.  Spurlixg,  Cro.  Car.  284  (King's  Bcncli,  1G33). 
JJjeciment.  All  tbe  Court  agreed  tbat  wbereas  in  tbe  principal  ca-se 
ibe  condition  was  for  tbe  payment  of  1  ()(!()/.  upon  tbe  first  of  July, 
and  tbe  j)ayment  was  made  before  tbi'  first  of  July,  viz.,  upon  dcc- 
liii',  sixlo  J iinii,  and  an  acceptance  tbereof.  it  i.>  a  good  performani-u 
of  tiie  condition. 


TiTi.i:v  V.  Davis.  -2  Kq.  Cas.  Abr.  (iOl  (Cbanccry,  UM)).  A. 
mortgages  two  estates,  viz.,  Blaekaere  and  Wbiteacre,  to  B.,  and 
afterwards  mortgages  Blaekaere  to  ('.and  after  tliat  Wbiteacre  to  D. 
Tbe  question  was,  wlietber  tbe  Court  can  decree  a  redemption  of 
H.'ri  mortgage,  wbo  was  tbe  original  mortgagee,  by  proportionable 
<ontributions  of  ('.  and  1)..  tbe  two  ])uisne  mortgagees. 

.\iid  Loitn  Cii ANCiM.i.oi;  I  JiAitDwic'Ki:],  after  consideration, 
was  of  opinion  tbat  tbe  Court  could  not  deeree  sucb  a  redemj)tion ; 
lliat  tbe  original  mortgage*'  ougbt  not  to  Ih'  intangled  witb  any  cpies- 
tions  tbat  may  arise  among  subse«pient  mortgagees;  tbat  be  bas  a 
rigbt  to  be  redeemed  intire  and  not  by  parcels;  and  bis  rigbt  un- 
douiitedly  stood  so  witb  regard  to  tbe  mortgagor,  and  et)ns»'quently 
witii  regard  to  tbe  subseipuMit  mortgagees;  for  tbe  mortgagor  could 
not  burt  bim  by  playing  bis  rigbt  into  anotber's  bands,  iior  is  tbere 
;iny  precedent  wbere  sucb  a  redemption  was  ever  allow«'d.' 

^Hinct  V.  linil,  in  In.  OS  ( ISOl  )  ;  Coffin  v  Parkti,  U:  N.  Y.  117  (  ISOl  ), 
.ind  the  autlioritii-s  ;jciurully,  accord. 


698  DISCHARGE   OF   MORTGAGE.  [CIIAP.  V. 

BROWN  V.  COLE. 

High  Court  of  Chancery^  1845. 

{U  Sim.  4:27.) 

Bill  to  redeem  a  mortgage  for  a  term  of  years  made  on  the  1st 
of  April,  1844. 

The  proviso  for  redemption  stipulated  that  the  mortgagee  should 
re-assign  the  mortgaged  premises  on  being  repaid  the  money  lent  on 
the  1st  of  April,  1845,  with  interest  in  the  meantime,  by  quarterly 
payments. 

The  mortgagor,  having  had  an  advantageous  offer  for  the  pur- 
chase of  the  premises  shortly  after  the  mortgage  was  made,  tendered 
to  the  mortgagee  the  amount  of  the  principal  and  of  the  interest  up 
to  the  1st  of  April,  1845,  together  with  a  re-assignment  of  the  mort- 
gaged premises;  but  the  mortgagee  would  neither  accept  the  money 
nor  execute  the  deed ;  in  consequence  of  which  the  bill  was  filed. 

The  defendant  demurred  to  the  bill  for  want  of  equity. 

The  Vice  Chancellor  [Shadwell]  allowed  the  demurrer  on 
the  ground  that  it  was  contrary  to  the  practice  of  the  Court  to  de- 
cree the  redemption  of  a  mortgage  before  the  day  appointed  for  that 
purpose  had  arrived.^ 


GIBSON  v.  CREHORE. 

Supreme  Judicial  Court  of  Massachusetts,  1837. 

{5  Pick.  146.) 

This  was  a  bill  in  equity,  in  which  the  plaintiff,  as  widow  of  Abra- 
ham Gibson,  claimed  the  right  to  be  let  into  her  dower  in  two  par- 
cels of  real  estate  in  Boston,  in  the  occupancy  of  the  defendant. 

The  bill  alleges  that  on  the  10th  of  July,  "1816,  A.  Gibson  died, 
leaving  the  plaintiff  his  widow;  that  he  was  then  seised  of  the 
premises,  subject  to  a  mortgage  to  P.  C.  Brooks,  dated  November 
18,  1814,  to  secure  the  payment  of  15,000  dollars  in  two  years  with 
semiannual  interest;  that  his  estate  was  represented  as  insolvent, 
and  that  Brooks  proved  the  debt  before  the  commissioners  of  in- 
solvency; that  the  assets  of  the  estate  were  sufficient  to  pay  90 

'Able  v.  Goodivin,  7  Conn.  377,  384  (1829),  accord. 


8KC.  I.]  GIBSON    V.  CllV.UonE.  (J'Jl) 

cents  on  the  dollar;  tliat  on  the  '■^(itli  of  N<»vcinl)('r,  IHIT,  the  prem- 
ises were  sold  by  the  administrators,  subject  to  tiic  mortga^'c, 
and  were  purchased  l)V  the  defendant;  that  the  defendant,  as  a 
condilion  of  the  sale,  ijavc  his  bond  to  the  administrators  to  pay, 
take  up,  and  tlisfhari^c  the  mort<,M<,a'  as  his  proper  debt,  and  that  Im 
entered  under  his  deed  from  the  administrators,  which  eontainc<l 
a  stipulation  that  he  should  discharge  the  mortgage;  that  he  after- 
wards, on  the  8tli  of  .launaiy,  1818,  ])rocured  from  Brooks  an 
assignment  of  the  mortgage  and  diverti'd  the  assets,  holding  tin? 
mortgage  as  a  subsisting  incundirance,  instead  of  discharging  il 
according  to  his  obligation.  The  plaintilf  further  alleges  that,  as 
to  her,  the  assignment  is  ino])erative  and  the  mortgage  discharged, 
or  if  not.  that  the  assignment  ought  to  stand  for  so  nnich  only  as 
would  remain  due  on  the  mortgage  after  deducting  what  the  assets, 
if  properly  applied,  would  have  paid.  She  further  states  that  the 
defendant  pretends  that  her  rights,  if  she  ever  had  any,  were  fore- 
closed by  an  entry  under  the  mortgage  on  the  l.'Uh  of  February. 
1818,  and  subsequent  jiossession,  but  she  avers  that  no  such  right 
of  entry  then  existed  in  the  defendant,  he  iiaving  before  that  time 
conveyed  the  estate  by  deed  of  mortgage  to  one  Parker,  and  the  as- 
signment being  inoperative,  and  that,  if  any  such  right  did  then 
exist,  there  has  been  no  foreclosure,  because  at  the  titne  of  the  sup- 
posed entry  the  defendant  was,  and  for  a  long  time  before  had  been, 
in  the  actual  occupancy  of  the  premises,  having  entered  under  his 
deed  from  the  administrators;  that  the  supposed  entry  was  made 
in  the  absence  of  the  plaintiff  and  entirely  without  her  knowledge; 
that  tlie  defendant  had  never  given  her  any  notice  of  it,  and  that  she 
was  wholly  ignorant,  until  shortly  before  the  tiling  of  her  bill,  that 
the  mortgage  was  treated  as  having  any  force  whatsoever,  and  that 
as  soon  as  it  came  to  h(>r  knowl(>dge  that  it  was  set  up  by  the  de- 
fendant as  a  subsisting  incumbrance,  she  offered  to  redeem  and  re- 
quested the  defendant  to  stati'  an  account. 

The  defendant,  in  his  answer,  alleges  that  the  plaintiff  joined 
in  the  execution  of  the  mortgage  and  thereby  releaseil  jier  right  of 
dower,  and  he  denies  that  she  is  entitled  to  dowjT.  He  denies  that 
the  as.«ets  in  the  hands  of  the  administrators  should  have  been  ap- 
plied to  the  payment  of  the  mortgage  debt,  or  that  he  was  bound 
to  sec  to  the  aj)plication  of  the  a.«!.><ets.  He  admits  that  he  entered 
into  a  bond  to  pay,  take  up,  and  discharge  the  debt  secured  by  the 
mortgage,  so  far  as  to  save  the  intestate's  estate  harmli>ss  from  the 
same,  but  denies  that  he  engaged  to  release  or  extinguish  the  mort- 
gage, and  also  denies  that  the  administrators,  in  taking  the  l)on<l. 
represented  in  any  respect  the  plaintilV  in  her  capacity  of  widow, 
or  that  the  bond  had  anv  reference  to  her  rights  as  widow.     He  al- 


Too  DISCIIAKGE    OF    MORTGAGE.  [CHAP.  V. 

leges  that  about  the  8th  of  January,  1818,  for  the  sum  of  1G,54:0  dol- 
lars paid  by  him,  he  procured  an  assignment  of  the  mortgage,  and 
continued  to  hold  it  as  a  valid  security  for  the  original  debt  and 
interest, until  it  was  foreclosed  by  virtue  of  an  entry  made  by  him  on 
the  13th  of  February,  1818,  in  the  presence  of  two  witnesses,  and  a 
subsequent  possession  for  three  years;  but  that  if  the  foreclosure 
cannot  be  sustained,  the  whole  amount  of  the  original  debt,  with  in- 
terest computed  semiannually,  is  still  due  to  the  defendant,  after 
deducting  such  rents  as  he  may  have  received  beyond  the  amount 
of  repairs.  He  alleges  that  at  the  time  of  his  entry  for  foreclosure 
on  the  13th  of  February,  1818,  he  had  good  right  of  entry  for  the 
])urpose  of  foreclosing  against  all  persons,  excej^t  Parker,  and  that 
the  mortg-age  to  Parker,  who  never  entered  by  virtue  thereof,  has 
been  discharged. 

The  opinion  of  the  Court  was  drawn  up  by 

WiLDE^  J.  That  the  widow  of  a  mortgagor  is  entitled  to  redeem 
the  mortgage  is  a  necessary  inference  from  the  doctrine  repeatedly 
laid  down  as  the  law  of  Massachusetts,  that  a  widow  is  dowable 
of  an  equity.  It  is  a  familiar  principle  in  courts  of  equity,  that 
every  person  interested  in  an  estate  mortgaged  is  entitled  to  redeSm  ; 
and  this  principle  is  confirmed,  if  it  requires  confirmation,  by  St. 
1  798,  e.  77,  by  which  it  is  enacted,  "  that  the  mortgagor  or  vendor, 
or  other  persons  lawfully  claiming  under  them,  shall  have  right  to 
iT'deem."  If  therefore  a  widow  can  lawfully  claim  under  her  hus- 
l)and,  of  which  there  can  be  no  question,  she  has  a  right  to  redeem, 
))y  the  express  words  of  the  statute. 

The  objection,  therefore,  to  the  plaintiff's  right  to  redeem  is 
clearly  unfounded,  unless  it  can  be  maintained  that  a  legal  assign- 
ment of  dower  is  an  essential  requisite  to  complete  her  title.  It  is 
true  that  before  such  assignment  she  cannot  enter  on  any  part  of 
tlie  land,  for  it  cannot  be  ascertained  in  what  part  her  dower  will  be 
assigned ;  nor  can  she  maintain  a  writ  of  entry,  for  her  legal  right 
is  inchoate.  But  an  assignment  of  dower  is  not  necessary  to  enable 
her  to  maintain  a  suit  in  equity  for  the  purpose  of  redeeming  the 
mortgage,  because  the  assignment  of  dower  does  not  affect  her  equi- 
table right  of  redemption,  and  because  she  has  no  right  to  demand 
sucli  assignment  as  against  the  mortgagee  before  she  redeems  the 
juortgage.  Nor  is  an  assignm.ont  of  dower  by  the  heirs  necessary, 
because,  as  will  be  shown  hereafter,  she  could  not  redeem  a  part  or 
])arcel  of  the  mortgaged  premises  without  redeeming  the  residue 
also,  if  required  so  to  do  by  the  mortgagee.  The  assignment  of 
dower,  therefore,  is  of  no  importance,  and  is  not  necessary  to  per- 
fect her  title  to  redeem  the  mortgage. 

[The  Court  then  proceeds  to  consider  various  objections  to  de- 
creeing a  redemption  by  the  plaintiff,  and  holds,  1st,  that  the  Court 


^i-c-  !•]  Giiisov  V.  riii:ii()i(i;.  '       '         T'>1 

lias  pli'iinrv  jiiri>(li(tioii  to  makr  -inIi  a  ilccnr;  Jd,  thai  the  as.si;:M- 
iiicnt  of  the  niorl^'a-^c  t<>  tin-  (lifciidaiit,  when  lio  was  possessed  of  tli'- 
equity  of  n-demptiun,  did  not  o|M'rate  as  a  mer^'er  and  ex tin;jui ali- 
ment of  the  inoit^'a|,'e ;  '.U\,  that  the  phiiiitilF  is  not  entitled  to  havi^ 
the  mortgage  discharged  out  of  the  personal  estate  of  the  intestate; 
4th,  that  the  jilaintifT,  not  hein.i:  a  jiarty  to  the  Itond  of  indemnity 
given  to  the  administrators,  cannot  take  advanta^'e  of  it;  -"ith,  that 
the  entry  and  possession  of  the  defendant  are  not  -ullieieiit  in  law 
to  foreclose  the  mortgage;  and  proceeds  as  follows: — 

Considering,  then,  that  the  jjlaintitT's  right  to  redeem  i>  iioi  t\- 
tinguished  hy  the  defendant's  entry  and  possession  under  the  mort- 
gage, we  are  to  decide  u])on  what  terms  ami  to  what  extent  sln> 
is  now  entitled  to  redeem. 

As  the  defendant  has  purchased  the  equity,  as  well  as  the  mort- 
gage, it  would  seem  equitahle  to  allow  the  plaint itT  to  redeem  a 
third  part  of  the  mortgaged  premises,  hy  paying  her  equitahle 
portion  of  the  mortgage  deht.  according  to  the  valu"  of  iier  right 
of  dower  as  compared  with  the  residui'  of  the  estate.  But  this  can- 
not he  done  without  infringing  the  defendant's  rights  as  assignee 
of  the  mortgage'.  He  stands  in  tlie  place  of  the  mortgagee,  and  has 
an  undouhted  righ.t  to  insist  (Ui  his  whole  deht.  .Vor  can  he  ho 
compelled  to  he  redeemed  hy  ])arcels,  for  hy  thus  di\  iding  the  «*state 
the  income  or  value  of  the  whole  may  he  reduced.  The  rule  there- 
fore is,  when  several  are  interested  in  an  cfpiity  of  redenq)tion  and 
one  only  is  M'illing  to  re(leem,  he  must  pay  the  whole  mortgage 
deht;  and  the  others  interested  in  the  eepiity.  who  refuse  to  redeem, 
are  not  conipellahle  to  contrii)ute;  for  it  would  he  unreasonahle 
to  compel  a  jiarty  to  redeem,  when  perhaps  it  might  he  for  his 
benefit  to  suffer  the  mortgage  to  he  foreclosed.  The  mortgagee, 
however,  is  not  to  he  entanglecl  with  any  question  which  may  arist; 
between  the  owners  of  the  e(|uitv  '••  n-lation  t<»  cont rihution.  luit 
has  the  right  to  insist  on  an  entire  redemption.  If.  therefore.  >ev- 
eral  estates  are  mortgaged  hy  one  mortgage,  and  the  mortgagor 
afterwards  conveys  the  estates  separately  to  dilferent  j)ersons. 
although  each  owner  of  the  se|)arate  estates  may  redeem,  yet  it  can 
only  he  allowi-d  by  payment  of  the  whole  mortgage  debt.  .Vnd  the 
party  so  redeeming  will  be  entitle<l  to  hold  over  the  whole  e>tate 
mortgaged  until  he  shall  be  reindiursi-d  what  he  has  In-en  thus  <-om- 
pelled  to  j)av  bevond  his  due  proportion.  He  is  considered  a-< 
assignee  of  the  juortgage,  and  stands,  after  such  redemption,  in  the 
place  of  the  mortgagee  in  relation  to  the  other  owners  of  the  «H|uitv. 
So  if  there  be  tenant  for  life  antl  remainderman  of  an  equity,  either 
may  redeem,  but  not  without  paying  the  whole  mortgage.  In  like 
manner  a  dowress  or  jointress  of  lan<l>  mortgaged  may  redeem,  she 


703  DISCHARGE   OF   MORTGAGE.  [CIIAP.  V. 

paving  the  mortgage  debt,  and  may  hold  over,  if  the  heir  refuses 
to  contribute,  until  she  and  lier  executor  shall  be  repaid  with  inter- 
est. {Palmer  v.  Danby,  Free.  Ch.  137;  Saville  v.  Saville,  2  Atk. 
463;  Banl's  v.  Sutton,  2  P.  Wms.  716;  Elwys  v.  Thompson,  9  Mod. 
,396;  15  Viner,  447;  Ex  parte  Carter,  Ambl.  733;  Powell  on  Mortg. 
392,  708,  709,  in  notis.) 

If  the  defendant  had  redeemed  the  mortgage,  the  plaintiff  would 
liave  been  let  in  by  contributing  her  portion  of  the  mortgage  debt, 
according  to  the  value  of  her  life  estate  in  one-third  part  of  the 
mortgaged  premises,  in  conformity  with  the  rule  adopted  in  the  case 
of  Suminc  v.  Ferine,  5  Johns.  Ch.  Rep.  482.  But  as  the  defendant, 
being  assignee  of  the  mortgage,  insists  on  the  payment  of  the  whole 
mortgage  debt,  the  plaintiff  cannot  redeem  on  any  other  terms. 
After  redemption,  she  will  hold  as  assignee  of  the  mortgage,  but 
will  be  bound  to  keep  down  one-third  of  the  interest  during  her  life, 
and  may  hold  over  for  the  residue  of  the  mortgage  debt.  The  de- 
fendant must  be  held  to  account  for  the  rents  and  profits  from  the 
time  of  his  entry  under  the  mortgage;  for  although  this  entry  can- 
not operate  by  way  of  foreclosure,  for  want  of  notice  to  the  plain- 
tiff, yet  it  is  sufficient  to  charge  him  with  the  reception  of  the  rents 
and  profits. 

The  case  must  be  referred  to  one  of  the  masters  in  chancery  to 
take  an  account  accordingly,  and  redemption  will  be  decreed  upon 
payment  of  the  debt  which  remains  due  on  the  m.ortgage  after  de- 
ducting the  rents  and  profits. 


GEOVEE  V.  FLYE. 

Supreme  Judicial  Court  of  Massachusetts,  1863. 

(5  Allen,  543.) 

Writ  of  En-try.  The  demandants  claimed  title  under  the  levy 
of  an  execution  by  selling  the  equity  of  redemption  of  the  premises. 

At  the  trial  in  the  Superior  Court,  before  Lord,  J.,  it  appeared 
that  at  the  time  the  levy  was  made  the  premises  appeared  on  record 
to  be  subject  to  a  mortgage  to  the  Blackstone  Loan  and  Fund  Asso- 
ciation, to  secure  certain  sums  of  money,  a  portion  of  which  was 
not  then  due;  that  full  payment  of  said  sums  had  l)een  made  and 
a  discharge  of  the  mortgage  and  release  of  the  premises  by  the  said 
association  e.^cccuted  before  the  levy,  but  the  discharge  and  release 


«Ef.  l]  CltOVIMl   r.    FI.YK.  703 

wrrr  not  recorded  until  aftrrwanls ;  and  that  neither  the  judgment 
iTcditor  nor  the  olliccr  hatl  actual  or  const riictivc  notice  of  such 
4lis(har^n'  until  the  record  thereof.  The  jud^'e  ruh'd  that  it  was 
immaterial,  for  the  i)ur|)(>si>s  of  this  action,  whether  the  mortgage 
u|K)n  the  premises  had  heen  discharged,  unless  the  creditor  or  otTi- 
<  rr  had  actual  or  constnictivo  notice  thereof  before  the  seizure  of 
the  land  on  the  execution,  and  that  a  sali'  of  the  e(|uity  without  such 
notices  was  regular  and  pniper. 

The  jury  returned  a  verdict  for  the  demandants,  and  the  tenant 
iilleged  exceptions. 

BiOELOW,  C.  J.  It  is  admitted  that  the  sums  due  on  the  mort- 
gage to  the  Tioan  Fund  Association  were  jiaid  before  the  sale  of  the 
right  in  e(piity  to  redeem  was  made  l)y  the  olliccr;  and  that  these 
])ayments  were  made  at  or  before  the  times  when  the  several  instal- 
nu'nts  became  due  according  to  the  stipulation  set  forth  in  the  con- 
4lition  of  the  mortgage  and  the  bond  which  accompanied  it  and 
roniK'd  part  of  the  transaction.  By  such  payment,  on  familiar 
jirincii)ks,  the  condition  was  saved  and  the  mortgagor,  the  tenant, 
was  in  of  his  old  estate.  No  conveyance  or  discharge  of  the  mort- 
gage was  necessary  to  revest  the  estate  in  the  niortsrasror.  or  to  de- 
feat the  title  of  the  mortgagee.  {Merrill  v.  Chat^p,  3  Allen,  330, 
and  cases  cited.  JosJi/n  v.  Wi/man,  ante,  G2.)  The  argument,  there- 
fore, of  the  demandants,  founded  on  the  lu'cessity  of  recording  a 
release  or  discharge  of  a  mortgage  in  order  to  defeat  a  title  acquired 
by  a  judgmcnit  creditor  by  a  sale  on  executitui  of  a  right  in  equity 
made  after  such  release  or  discharge  but  without  actiuil  notice 
thereof,  falls  to  the  ground.  The  act  of  payment  in  the  country 
ante  rel  apud  diem  saves  the  forfeiture  of  an  estate  held  by  a  con- 
veyance defeasible  on  a  condition  subsequent.  No  record  of  such 
an  act  is  necessary  to  make  the  estate  a  fee  simple  estate  in  the 
grantor  or  mortgagor,  as  against  all  persons  claiminjr  bv  a  subse- 
quently acquired  title.  The  release  of  the  Tjoan  Fund  .\ssociation 
to  the  mortgagor  was  a  useless  and  sujierfluous  act,  which  added 
nothing  to  the  strength  of  the  title  which  be  had  ac(|uire<l  l)y  a 
])erformance  of  the  condition  of  the  mortgaiic  before  a  breach. 

It  follows  that  the  title  of  the  demandants  und(>r  the  sale  of 
the  right  in  equity  to  redeem  the  estate  is  invalid.  Tht>  jiremises 
being  unincumbered  and  hebl  by  the  iudgment  debtor  as  an  estat<' 
in  fee  at  the  time  of  the  senice  of  the  execution,  could  be  legally 
levied  on  only  by  an  aiipraisement,  and  set  off  in  the  mode  pn'- 
scribed  bv  law.  (Fnrster  v.  }fr]len.  10  "Nfass.  121.  Freeman  v. 
M'Gdic.  1>)  Pick.  82.    Perrii  v.  Ifni/n-nrd.  12  Cush.  344.) 

Exceptions  stuftointd. 


T04  DISCHARGE   OF   MORTGAGE.  [ClIAr. 


(b)  After  Default 


Emanuel  College  v.  Ewens,  1  Ch.  Rep.  18  (Chancery,  1625). ^ 
That  the  Earl  of  Himtington,  seised  in  fee  of  the  Manor  of 
North-Cabury,  with  advowson  appendant,  and  for  paynieat  of 
debts  by  way  of  mortgage,  25  Eliz.,  made  a  lease  for  500  years  of 
the  said  manor,  with  appurtenances,  not  mentioning  the  advowson 
by  express  name,  with  a  clause  of  redemption,  and  for  advance- 
ment of  learning  and  religion,  of  his  free  disposition  in  38  Eliz. 
by  deed  granted  the  said  advowson  to  Sir  Francis  Hastings,  and 
others,  and  their  heirs,  to  the  use  of  the  said  Earl  for  life,  remainder 
to  the  Master,  Fellows,  &c.,  of  the  said  college,  and  their  successors 
forever;  and  shortly  after  in  the  same  year  paid  his  said  debts. 
And  this  court  conceived  the  said  lease,  being  but  a  security,  and 
that  2noney  paid,  the  said  lease  being  void,  as  well  against  the  said 
college  as  against  any  other;  and  though  the  money  not  paid  at  the 
day,  but  afterwards,  the  said  lease  ought  to  be  void  in  equity  as 
well  as  on  a  legal  pajment,  it  had  been  void  in  law  against  them. 


Manning  v.  Burges,  1  Ch.  Cas.  29  (The  Eolls,  1663).  A 
mortgage  was  forfeited;  the  mortgagor  afterwards  meeting  the 
mortgagee,  said,  "I  have  moneys;  now  I  will  come  and  redeem 
the  mortgage."  The  mortgagee  said  to  him  he  would  hold  th(> 
mortgaged  premises  as  long  as  he  could;  and  then  when  he  could 
hold  them  no  longer,  let  the  devil  take  them  if  he  would.  And 
afterwards  the  mortgagor  went  to  the  mortgagee's  house  with  money 
more  than  sutFicient  to  redeem  the  mortgage,  and  tendered  it  there ; 
but  it  did  not  appear  that  the  mortgagee  was  within,  or  that  the 
tender  was  made  to  him ;  and  it  was  decreed  a  redemption,  and  the 
defendant  to  have  no  interest  from  the  time  of  the  tender,  because 
of  his  wilfulness. 

A  like  case  between  PccJcliam  and  Legay  about  a  year  since. 


LuTTON  v.  Rood,  2  Ch.  Cas.  206   (Chancery,  1675).— A  deed 
in  the  nature  of  a  mortgage  and  covenant  to  reconvey  on  pay- 
ment :   the  money  was   tendered   at   the   day   and   place,   and   re- 
'A  portion  only  of  the  case  as  reported  is  liere  given. 


^^^'-  'J  wii/rsiiiKK  V.  sMriii.  70."i 

fused:  Decreed,  the  money  without  interest  from  the  time  of  tlie 
tender,  and  to  reecmvey,  thoii«rh  that  the  j)Iaintiir  ouglit  to  make 
oath  that  the  money  was  ke])t  and  no  profit  made  of  it.' 


WILTSIIIKK  v.  SMI'l'Il. 

High  Court  of  Chancery,  1744, 

(3  Alh:  89.) 

A  bill  was  brou<,dit  to  redeem  a  mortgage  on  the  8th  of  May, 
1742,  in  whieh  the  piaintilf  insists  upon  a  redemption  on  paying 
the  principal  money  only,  for  that  the  interest  ought  to  end  the 
20th  of  February,  1741,  because  the  plaintilT  had  given  six  months' 
notice  to  pay  otf  tiie  mortgage,  and  on  that  day  tendered  the  princi- 
pal and  interest  and  a  deed  of  assignment,  but  the  defendant  abso- 
lutely refused  to  take  the  money. 

The  defendant  .swears  that  he  offered  to  take  tiie  money,  pro- 
vided he  might  liave  time  to  consider  of  it  and  to  advise  upon  the 
deed  of  assignment,  as  tliere  are  covenants  in  it  on  his  part,  upon 
which,  as  he  is  not  of  the  profession  of  the  law  himself,  it  is  reason- 
able he  should  ask  tlie  oj)inion  of  some  attorney,  whether  they  were 
such  as  he  juight  safely  execute. 

Lord  Ciianckllor  [  Hardwickkj  :  There  is  not  one.ca.se  in 
twenty  ujwn  the  fact  of  an  al)S()lute  refusal  after  a  tendei  that  is 
ever  made  out,  lor  they  are  generally  attendi'd  with  circumstances 
that  explain  the  refusal,  and  are  nothing  more  than  cau.-^es  cooked 
\i])  by  country  attornies  to  make  themselves  business.  The  plain- 
tiff did  not,  as  he  ought  to  have  done,  send  a  draft  of  the  assignment 
to  the  defendant  any  time  before  the  moni-y  was  tendered. 

The  j)laintilf  insists  that  the  defendant  absolutely  refu.sed  to 
take  his  money  or  execute  the  deed  of  assignment.  If  this  had  l)cen 
the  fact,  it  woidil  have  been  uneonscional)le  and  unreasonaltje  in  the 
defendant. 

But  the  person  who  was  to  take  an  a.'ssignment  of  the  mortgage 
swears  that  the  defendant   desired  further  time  or  to  that  efT»'et 
The  (pieslion  is.  Who  was  in  the  wrong?      The  plaintilT  certain! v 
was.      For  where  there  are  covenants  on  the  j)art  of  the  mortgagee. 
it   is  verv  reasonable  that   lie  shouM   have  some  time  to  look  them 

'Oylrs  V.  //«//.  *2  P.  Wins.  :{7S  (17'2rt),  Stoic  v.  h'u.ss,U,  :U1  111.  18  (ISiUK 
and  the  uuUnuitirs  gfiuTullj,  accord. 


706  DISCHARGE  OF  MORTGAGE.  [CHAP.  V. 

over;  and  the  plaintiff's  attorney  ought  to  have  left  the  deed  for  a 
week  with  the  defendant,  that  he  might  have  an  opportunity  to 
advise  upon  it,  and  the  plaintiff's  attorney  should  have  appointed 
n  time  to  pay  the  money  after  the  defendant  had  hcen  allowed  a 
sufficient  time  to  advise ;  or,  as  I  said  before,  he  should  have  sent  a 
to})y  or  the  ingrossment  of  the  assignment. 

But  the  subsequent  transaction  and  what  passed  before  the  filing 
of  the  bill  explains  it.  Did  ever  a  mortgagor,  as  is  the  case  here, 
after  he  was  put  under  this  difliculty,  lie  by  a  year  and  quarter 
Avithout  bringing  a  bill  to  redeem?  What  could  be  the  reason? 
Why,  the  plaintiff,  the  mortgagor's  attorne}^  told  him,  You  have 
made  a  tender  of  your  mortgage  money,  and  the  defendant's  refusal 
has  forfeited  his  interest ;  for  that  you  may  keep  the  money,  and  by 
a  bill  compel  the  defendant  to  take  the  principal,  without  interest, 
from  the  time  of  the  tender. 

Lord  Hardwicke  ordered  that  it  be  referred  to  a  master  to  take 
an  accoLint  of  what  was  due  to  the  defendant  for  principal,  interest 
and  costs  on  the  mortgage,  and  on  the  plaintiff's  paying  to  the  de- 
fendant what  the  Master  shall  certify  to  be  due  within  six  months 
after  he  has  made  his  report,  it  was  decreed  the  defendant  should 
assign  the  mortgaged  premises,  as  the  Master  should  direct ;  but 
in  default  of  the  plaintiff's  paying  as  above  directed,  it  was  ordered 
the  plaintiff's  bill  do  stand  dismissed. 


MAYNAEI)  V.  HITXT. 

Supreme  Judicial  Court  of  Massachusetts,  1837. 

(5  Pick.  2-40.) 

Writ  of  Entry.  The  defendant  declared  upon  his  seisin  in  fee 
and  in  mortgage  and  a  disseisin  by  the  tenant. 

The  tenant  pleaded:  First,  itnl  disseisin. 

Secondly,  that  Nathaniel  Maynard,  the  mortgagor,  assigned  the 
premises  to  the  tenant,  with  warranty  against  all  incumbrances, 
and  that  the  tenant,  after  condition  broken,  but  before  action  was 
brought,  tendered  $400  for  the  discharge  of  the  mortgage.  The 
demandant  took  issue  on  the  tender. 

Thirdly,  that  in  consideration  that  the  tenant  would  forbear  to 
make  the  tender,  the  demandant  promised  that  the  tenant  should 
hold  the  land  discharged  of  the  mortgage,  and  that  he   (the  de- 


*'»^f-  '■]  MAYNAIM)    r.    HUNT.  707 

iii;iiul;mt)  Would  rcsoit  to  \;it liMiiii'l  Maynard  I'lir  payment  of  tln" 
iioti',  wliirli  was  sci'uri'd  hy  the  iiiort^M<,'»'.  J^.siic  was  taken  on  this 
j>lea. 

Fourthly,  a  jilca  liko  the  second,  t'.\c»'i)t  that  it  alleged  a  tender 
«(  $4")0.      Issue  was  taken  on  the  tender. 

The  cause  was  tried  before  Putnam,  .1.,  and  a  verdict  was  found 
tor  the  tenant  upon  all  the  issues. 

The  demandant  thereui)on  moved  in  arrest  of  judgment,  because 
the  three  last  is.sues  were  immaterial,  and  the  first  issue  was  found 
only  for  fonn's  sake  and  as  a  consequence  of  the  finding  on  the 
•other   issut's. 

lie  further  moved  that  if  any  of  these  three  issues  should  be  ad- 
judged ininuiterial  the  Court  would  grant  a  new  trial,  because  no 
evidence  bad  been  introduced  sufficient  or  i)roper  to  maintain 
-•■itiier  of  them  on  the  i)art  of  the  tenant,  and  because  all  the  evi- 
ilence  in  the  case,  the  three  last  pleas  and  the  admission  of  the 
tenant's  counsel  show  that  the  finding  of  the  first  issue  for  the 
tenant  was  a  conse(;uenee  of  finding  the  other  issues  in  his  favor, 
and  that,  if  that  issue  had  stood  alone,  it  would  have  been  found 
for  tbe  demandant. 

At  the  trial  .1.  W.  Hunt,  the  l)rother  of  the  tenant,  testified  that, 
at  the  tenant's  request,  be  called  on  the  demandant  and  inquired 
bow  mucli  was  due  upon  the  note.  Tiie  demandant  replied  $400. 
The  witness  asked  bim  if  be  intended  to  call  upon  tbe  tenant  for 
liie  land,  if  Xatlianiel  Maynard  (wbo  was  tbe  defendant's  son) 
>li()uld  be  unable  to  pay  tlu'  note.  He  answered  in  the  affirmative. 
The  witness  said  he  would  pay  him  $100;  that  be  came  for  tbe 
jiurpose  of  settlii.g  with  bim;  that  be  bad  the  money  with  bim  in 
iiank  bills,  and  that  be  would  get  the  specie  if  it  would  make  any 
(lilVerence.  Tbe  (b'lnaiKbint  said  it  would  not.  He  also  said  that 
if  lu'  took  tbe  money  the  tenant  would  immediately  sue  Nathaniel. 
The  witness  told  bim  that  he  could  e.\pcct  nothing  else.  The  de- 
mandant then  said  that  be  would  not  take  tbe  money;  be  would 
rather  it  should  lie  as  it  was  on  interest;  he  was  secure;  but  be 
assured  the  witness  that  his  brother  should  not  be  hurt. 

Tbe  question  wlietber  this  evidence  was  sutficient  to  warrant  thi» 
finding  of  tbe  jury  was  reserved  for  the  determination  of  the 
j.vbol(>  court. 

r.vKKKU.  ('.  .1.  It  is  very  clear  that  all  the  i<sues  oxi-ept  tbe  fir-t 
tire  immaterial,  and  that  tbe  first  was  found  for  tbe  defendant 
against  all  the  evidence  in  tbe  case  which  could  legally  b»'ar  upon 
it.  The  mortgage  d<'ed  produced  by  tbe  demandant  entitled  bim 
to  a  verdict  on  tbe  first  issue,  there  being  no  payment  or  tender 
of  ])ayment  of  tbe  money  (\\n\  according  to  tbe  condition,  until 


708  DISCTIAKGE    OF    MORTGAGE.  [CIIAP.  \\ 

four  years  after  the  condition  broken,  so  that  the  demandant's 
title  at  law  was  perfect,  subject  only  to  be  defeated  by  a  process  ia 
equity,  founded  upon  payment  or  tender  of  payment  after  condition 
broken  and  before  foreclosure. 

If  judgment  should  be  rendered  on  the  verdict  in  favour  of  the. 
tenant,  the  demandant  would  be  entirely  deprived  of  his  security 
and  probably  of  his  debt,  without  any  consideration  or  equivalent,, 
for  we  cannot  consider  that  the  loose  conversation  testified  to  by 
the  brother  in  regard  to  his  claims  has  proved  any  intention  to  give 
up  his  security,  or  that  it  can  have  the  effect  of  a  release  or  dis- 
charge of  the  mortgage  in  law  or  in  equity. 

Whether  a  tender  or  any  fact  equivalent  was  proved  is  wholly 
unimportant,  as  the  tenant's  right  at  that  time  subsisted  wholly  in 
equity,  and  he  could  not  otherwise  enforce  it  than  by  a  bill  in 
equity.  The  tenant's  counsel  has  reminded  us  since  the  argument 
that  no  objection  was  taken  at  the  trial  to  the  time  of  the  sup- 
posed tender,  and  he  refers  us  to  the  case  of  A  nns  v.  Ashley  (4  Pick.: 
71)  to  show  that  it  could  not  afterwards  be  raised.  But  the  cases  arc 
wholly  different.  In  the  case  cited  the  point  was  that  a  fact 
capable  of  proof,  but  omitted  to  be  proved  or  called  for  at  the 
trial,  was,  on  the  hearing  of  the  questions  reserved,  stated  as  a 
ground  of  objection  to  the  verdict.  In  his  case  the  point  on  which 
the  cause  turns  appears  on  the  record  and  in  the  proceedings,  and, 
from  the  tenant's  own  showing,  no  other  evidence  touching  it 
could  have  been  produced  had  the  question  been  made  at  the  trial,, 
for  the  tenant's  right  to  tender  it  did  not  exist  until  long  after  tln^ 
tender  could  have  defeated  the  demandant's  title  at  law.  Ad- 
mitting that  payment  tendered  and  received  after,  condition  broken 
and  before  foreclosure  would  be  a  sufficient  defence  to  an 
action  brought  by  the  mortgagee  for  possession,  it  would  not  follow, 
that  a  tender  not  accepted  would  be.  The  first  might  operate  as  a 
discharge  of  the  debt  and  waiver  of  the  breach  of  the  condition,  and 
it  might  be  unreasonable  to  allow  the  mortgagee  to  recover  pos- 
session, when,  by  another  suit,  he  would  be  immediately  obliged  to 
surrender  it.  But  the  case  of  a  tender  is  different.  The  debt  is  not 
discharged,  and  it  is  only  in  equity  that  the  mortgagor  can  avail 
himself  of  it. 

The  proper  course  in  this  case  is  for  the  plaintiff  to  recover  the 
conditional  judgment,  as  in  the  case  of  mortgage,  unless  the  tenant 
has  a  better  defence  than  is  shown  by  the  report  of  the  case. 

Verdict  set  aside  and  new   trial  granted.^ 
^  Rowcll  V.  Mitchell,  68  Me.  21   (1870),  accord. 


6EC.I.]  STKWVKT    V.    CUOSUY.  709 


s'l'iiWAirr  \.  cifosi'.v. 

SriMMCMi:  .llDKIM.   CdII;)'  (t|     MviNK,    ISC;}. 

(.".o  M'\  1 ;{().) 

Tlii.-;  Wii-  nn  action  of  a.-simipsit  to  recover  back  money  paid  to 
ilu'  lU't'ciidani  lor  his  ri'lease  of  an  eijuity  of  redemption  of  certain 
jiri'inisi's,  wliicli  the  di'ffiidanl  rrpnscnied  to  the  plaintifT  he  had 
jMiifhased  and  owned. 

At  .V/.s/  J'riiis,  '!'(  Miiev,  ('.  .1.,  for  the  i)iirpose  of  giving  progress 
t«»  the  cause,  ruhd  upon  ei-rtain  questions  cd'  hiw,  and  a  verdict  by 
<-onsent  was  taken  for  the  j)hiintitr  for  a  sum  agreed  upon  by  the 
jtarties.  Tiie  (piestions  raised  by  the  defeiulant's  exceptions,  and 
the  facts  in  the  case,  siitlicicntly  appear  from  the  ojtinion  of  the 
Court. 

The  opinion  coneurrcd  in  by  n  majni-ity  u(  ilic  Court  was  drawn 
up  by 

Davis,  J.  'I'he  (b'fi'ndant.  having  ebiims  against  one  Charles 
Hanson,  eonimenced  suits  thereon,  and  caused  Ids  right  of  redeem- 
ing certain  real  estate,  previously  mortgaged  l)y  him.  to  be  attached, 
Septendjer  15,  18-18.  Judgments  were  recovered  Fei)ruary  17, 
1S54;  executions  were  is-ued  March  17,  and  Hanson's  right  of  re- 
dem|)tion  seized  thereon  the  sanu'  day:  and,  on  April  22  of  the  same 
y«'ar,  the  ollicer  duly  sold  to  tlu'  defendant  all  of  Hanson's  right 
to  redeem  which  he  had  at  the  time  of  the  attachment. 

October  i^^,  IS.')!,  the  defendant  sold  to  the  plaintifT,  by  a  quit- 
claim deed,  "all  the  right,  title,  ami  interest  ac(|uind  by  him  by 
virtue  of  his  deed  "  given  to  him  by  the  sherilf  u|>on  the  sale  referred 
to.  The  i)laintifT,  upon  iiKpiiry,  afterwards  ascertained  that 
Hanson,  after  the  attachment,  and  before  the  seizure  of  his  right 
«tf  redemption  upon  the  executions,  had  fully  paid  the  mortgage 
debt.  But  the  mortgage  had  not  l)een  di.-charged.  cither  by  an 
«ntry  upon  tlu-  record  or  in  any  other  nuinner. 

The  plaintiir  claims  that  such  payment  was  itself  a  discharge  of 
the  mortgage,  .so  that  Hanson's  title  was  no  longer  a  right  of  re- 
dcinjitiun.  which  could  be  snhl  bv  the  sherilT,  but  a  fee.  upon  which 
the  execution  should  have  been  crtcntlcl.  And  he  has  brought  this 
suit  to  recover  back  the  purchase  money,  on  account  of  the  failure 
vf  title. 

The  defendant  docs  not  concede  that  tlu-  plaintifT  would  be  en- 
titled to  rvcover.  if  there  was  a  failure  of  title,  as  he  has  alleged, 
:is  he  gave  a  meiv  release,  with  no  covenants  of  title.  But  he  eon- 
liuds  that  the  mortgage  was  not  discharged  by  payment  merely; 


710  DISCHARGE    OF    MORTGAGE.  [CIIAP.  V, 

and  that,  if  the  mortgage  debt  had  been  paid,  it  was  a  benefit,  and 
not  an  injury,  to  tlie  plaintiff. 

In  the  case  of  Martin  v.  Moivlln,  2  Burrow,  978,  Lord  Mansfield 
is  reported  to  have  said,  "  a  mortgage  is  a  charge  upon  the  land,  and 
whatever  would  give  the  money  will  carry  the  land  along  with  it, 
to  every  purpose.  The  estate  in  the  land  is  the  same  thing  as  the 
money  due  upon  it.  It  will  be  liable  to  debts.  It  will  go  to  execu- 
tors. .  .  The  assignment  of  the  debt,  or  the  forgiving  it,  will 
draw  the  land  after  it,  as  a  consequence,  though  the  debt  were  for- 
given only  by  parol,"  &c.  The  case  under  consideration  was  a  suit 
at  law;  and  the  confounding  of  principles  of  law  with  those  which 
prevail  in  equity,  only,  is  probably  due  to  the  reporter,  whose  lan- 
guage it  is.  For  he  admits,  in  publishing  his  notes  of  cases,  that  he 
did  not  always  take  down  the  restrictions  with  which  a  proposition 
was  qualified,  "  to  guard  against  its  being  understood  universally, 
or  in  too  large  a  sense."'     (1  Burr.  9.) 

It  is  worthy  of  notice  that  in  that  case,  as  generally  in  English 
mortgages,  the  condition  was  that,  upon  performance,  the  mort- 
gagee should  reconvey  the  premises,  and  not,  as  in  this  country, 
that  the  deed  should  be  void.  It  would  seem,  therefore,  to  be  cer- 
tain that  payment  on  the  law  day  would  not  have  revested  the  title 
in  the  mortgager  without  such  reconveyance.  Harrison  v.  Owrti. 
I  Atk.  526 ;  2  Cruise  (London  ed.)  110.  Upon  mortgages  to  be  void 
upon  performance,  such  as  are  usually  given  in  the  LTnited  States, 
it  is  everywhere  conceded  that  payment  before  condition  will  divest 
the  mortgagee  of  his  title,  without  reconveyance,  or  other  discharge. 
(1  Washburne  on  Eeal  Prop.  543;  Whitcomh  v.  Simpson,  39  Maine. 
21 ;  Holman  v.  Bailey,  3  Met.  55.) 

In  this  country  there  has  been  a  constant  tendency  to  apply  the 
views  attributed  to  Lord  Mansfield  indiscriminately,  at  equity 
and  in  law.  Sustained  by  such  jurists  as  Chancellor  Kent,  Judge 
Story,  and  Mr.  Greenleaf,  it  is  not  strange  that  the  weight  of  au- 
thority should  turn  in  that  direction.  But  in  Maine,  Massachu- 
setts, Connecticut,  and  in  several  other  States,  the  old  doctrines 
of  the  common  law  still  prevail.  Though  in  equity  the  mortgage 
is  an  incident,  and  the  debt  the  principal  thing,  at  law  the  mort- 
gage is  a  conveyance  of  the  title,  to  be  defeated  upon  a  condition 
subsequent.  Unless  thus  defeated,  the  legal  title  is  in  the  mort- 
gagee. He  may  assign  the  debt  without  the  mortgage,  in  which 
case  he  holds  the  mortgage  in  trust  for  such  assignee.  Or  he  mav 
assign  the  mortgage  without  the  debt,  or  the  mortgage  to  one  and 
the  debt  to  another,  the  owner  of  the  mortgasre  alwavs  hold  in?  in 
trust  for  the  owner  of  the  debt.  So  that  the  assignment  of  the  debt 
operates  as  the  equitable,  but  not  as  the  legal  assignment  of  the 


SKC-  I-]  STr-WACT    r.    .IIOSRY.  Til 

niortpi^o.  And  pnyincnt  oT  the  dcht,  aftt-r  ooiidition  broken,  does 
not  dive.st  the  in<)rt^a«j:('i'  ol"  liis  Ici^al  title;  l)ut  the  niort^^as^er  must 
resort  to  e(|uity  for  a  n-leasc.  or  a  rcconveyanoe.  Tlu'se  j)rincij)les, 
thouiih  extensively  denied  in  (his  country,  are  sustained  by  so  many 
decisions  in  the  States  before  referred  to  that  it  is  unnecessary  lo 
cite  them  ( 1  Washburn,  ^)'):\:  1  Milliard  on  Mort.  47(!.) 

Mr.  (Jreeideaf  collects  the  authorities  in  the  first  volume  of  bis 
edition  of  Cruise,  and  in  support  of  the  opposite  doctrine  su^r^ests 
that  the  acceptance'  of  i)ayment,  after  condition  broken,  is  a  waiver 
of  the  condition,  and  has  tlu'  same  effect  as  a  performance  of  it. 
(1  Greenl.  Cruise,  595.)  r)Ut  this  is  more  specious  than  sound. 
A  waiver  of  the  condition  may  operate  to  confer  the  same  ri/^hts 
as  a  performance  of  it.  This  is  the  case  in  regard  to  bonds  for  the 
conveyance  of  real  estate.  But  it  does  not  follow  that  such  a  waiver 
can  operate,  by  our  laws,  to  convey  or  release  a  legal  title  to  real 
estate.  It  cannot  do  so,  in  the  case  of  a  mortgage,  any  more  than 
of  a  bond.  So  that  this  theory,  like  all  others  in  support  of  the 
doctrine,  rests  ui)on  a  denial  tliat  the  mortgagee  has  the  legal  title, 
until  after  foreclosure. 

But  another  answer  to  it  is,  that  such  an  acceptance  of  payment 
is  not  a  waiver.  A  waiver  is  a  voluntary  relinquislnnent  of  some 
right.  But  the  mortgagee  relincpiislies  nothing  in  such  a  case. 
The  mortgager  pays  it  as  a  matter  of  right ;  and  it  is  not  at  the 
option  of  the  mortgagee  whether  it  shall  be  paid  or  not,  until  th'^ 
right  of  redemption  expires.  A  receipt  of  payment  after  that  would 
be  a  waiver  of  the  forfeiture  ;  but  ])efore  forfeiture  the  mortgager,  by 
payment,  acquires  a  riglit  to  a  release,  or  a  reccniveyance,  not  on  the 
ground  of  waiver,  but  of  contract,  and  of  law. 

But  though  it  is  well  settled  in  this  State  that  upon  payment 
after  condition  broken,  the  legal  estate  renuiins  in  the  mortgagee 
until  it  is  released,  so  that  the  mortgager  cannot  maintain  a  writ 
of  entry  against  him;  it  is  equally  well  settled  that,  in  such  case, 
the  mortgagee,  not  being  in  i)ossession,  cannot  maintain  such  an 
action  against  the  mortgager.  {UniUorl-  v.  Bulfhirh.  31  Maine. 
247;  Williams  v.  Thiirloir.  31  "Maine,  392.)  The  reason  as^igne.l 
for  this  is  that,  by  our  statutes,  in  all  actions  upon  mortgage's,  there 
must  be  a  conditional  judgment;  and.  if  the  del)t  has  been  paid,  so 
that  there  cannot  b(>  such  judirment.  the  demandant  cannot  n'cover 
at  all.  {WaJr  v.  Ifmninl.  11  Pick.  2S9 :  Wrhh  r.  Flnn<iers,  32 
;Maine,  175  ;  (Inii/  v.  Jrnls,  3  Ala^on.  520.)  When>  tlvre  js  no  pro- 
vision of  statute  to  ])revent,  as  in  an  action  of  forcible  entry  anil 
detainer,  it  has  been  held  that  a  suit  for  possession  may  lx>  main- 
tained bv  the  mortgagcv,  after  payment,  (ffoirnri!  v.  Howard.  3 
Met.  548,  557.) 


712  DISCHARGE    OF    MORTGAGE.  [CIIAP.  V. 

The  mortgagee,  after  such  payment,  hokls  but  a  naked  trust, 
AvithoLit  any  interest.  As  in  other  like  cases  of  holding  in  trust, 
he  can  derive  no  benefit  from  it,  and  can  convey  no  title  except  as 
subject  to  it.  And  the  estate  cannot  be  taken  for  his  debts,  though 
it  can  be  taken  for  the  debts  of  the  cestui  que  trust.  As  the  mort- 
gagee's title  in  such  case  is  of  no  value,  there  can  be  no  motive  for 
transferring  it  to  a  third  party;  and  therefore  it  is  seldom  done  in 
this  country.  That  it  may  be  done  would  seem  to  admit  of  no 
doubt.  (Dudley  v.  Cadivell,  19  Conn.  218.)  Such  a  deed,  says 
Wilde,  J.,  in  TFacZe  v.  Hoicard,  before  cited,  conveys  "  the  legal 
estate,  or  a  satisfied  mortgage;  such  an  estate  as  is  frequently  pur- 
chased in  England  to  be  tacked  to  a  subsequent  mortgage."  Numer- 
ous cases  of  this  kind  may  be  found  cited  in  the  English  editions 
of  Cruise,  vol.  3,  c.  5,  which  Mr.  Greenleaf  has  omitted,  because  the 
doctrine  of  tacking  mortgages  does  not  prevail  in  the  United  States. 

There  is  no  difficulty  in  applying  these  principles  to  the  case  at 
bar.  When  the  executions  against  Hanson  were  issued  he  had  paid 
the  mortgage  debt,  but  the  mortgage  itself  had  not  been  discharged. 
If  the  payment  had  been  before  the  condition  had  been  broken,  that 
M'ould  have  revested  the  estate  without  any  discharge;  and  there 
would  have  been  nothing  to  seize  on  tbe  execution.  (Grover  v.  Flye, 
5  Allen,  543.)  But  payment  after  breach  of  the  condition  had  no 
such  effect.  His  interest  in  the  premises  was  clearly  liable  to  be 
seized  on  the  executions;  and  the  only  question  is,  how  should  the 
levies  have  been  made — by  a  sale,  or  by  an  extent? 

If,  at  the  time  of  seizure  upon  the  executions,  there  had  been  not 
only  a  payment  of  the  mortgage  debt,  but  a  release  of  the  mortgage, 
recorded  in  the  registry  of  deeds,  then  there  could  have  been  no  sale 
of  an  equity  of  redemption,  though  the  mortgage  was  in  force  at 
the  time  of  the  attachment  upon  the  writs.  (Foster  v.  Mcllen,  10 
Mass.  421.)  In  Pillshury  v.  Smyth,  25  Maine,  427,  the  report  of 
the  case  does  not  show  whether  the  discharge  of  the  mortgage  had 
been  recorded.  And  we  need  not  determine  whether,  if  there  is 
a  release,  but  not  on  record,  the  officer  may  not  proceed  as  if  none 
had  been  made.  For  in  this  case  no  release  had  been  made,  either 
upon  the  record  or  otherwise. 

By  the  E.  S.,  c.  90,  §  14,  "  when  the  amount  due  on  a  mortgage 
has  been  paid  to  the  mortgagee,  or  person  claiming  under  him,  by 
the  mortgager,  or  the  person  claiming  under  him,  within  three 
years  "  from  proceedings  for  a  foreclosure,  "  he  may  have  a  bill  in 
equity  for  the  redemption  of  the  mortgaged  premises,  and  compel 
the  mortgagee,  or  person  claiming  under  him,  to  release  to  him  all 
his  right  and  title  therein."  And,  by  c.  76,  §  29,  "rights  of  re- 
deeming real  estate  mortgaged  may  be  taken  on  execution  and  sold." 


•*<*-^"- 'J  KDitruiciir  c.  t  ADV.  7l:» 

It  Wiis  }n>\  >ii(li  a  ii«,^lit  of  rcdiH-iiiiii;,'  a  paitl  mort^oi^c  wliicli  llaii- 
.>()ii  owned  wlicii  it  was  scizt'd  on  the  cxt'cutioiis.  The  same  title 
passed  In'  the  sale  that  would  have  pass<'d  by  an  extent.  Tlu-  defend- 
;int  therefore  conveyed  a  good  title  to  the  j)laintifT;  and  the  latter, 
liavin^  sufTered  no  loss,  is  not  entitled  to  recover. 

Whetlier,  if  there  had  been  no  right  of  redemption  in  existence 
w  hen  the  phiintifT  purchaseil  of  the  defendant,  he  could  recover  hack 
the  considi-ration  paid,  on  the  ground  of  a  mutual  mistake  of  fact, 
is  ji  question  which  becomes  immaterial.  See  the  case  of  Earle  v. 
Dr  Will,  with  tlu>  able  dissenting  opinion  of  ^fcrrick,  J.,  d  Allen, 

Exrrplioiis  siislnined.     Verdict  set  aside. 
Waltox,  Dickerson,  B.vkhows  and  D.vxfohth,  J.T.,  concurred. 
Applktox,  C.  J.,  and  Clttixg^  J.,  concurred  in  sustaining  the 
exceptions  for  another  cause.^ 


KOirrKKillT  V.  C'.\I)Y. 

CouHT  <>i'  .Vri'KAi.s  OF  Xkw  VoitK.  18G0. 

CM  X.  r.  :u:\.) 

Appeal   from  tlie  Supri'me  Court.     Action  !•>   fcir('cln<(>  m   mort- 
gage 

The  defendant  Cadv  was  a  subsequent  grantee  of  tlic  equity 
<'f  redemptit)!!.  lie  averred  in  his  answer,  and  proved  on  the  trial, 
that,  after  the  money  secured  by  the  mortgage  had  become  due  and 
the  stipulated  day  for  payment  had  passed,  he  tendered  to  the  plain- 
lifT  the  amount  due  for  principal  and  interest.  The  plaintitT  re- 
fused to  receive  it  unless  Cady  would  also  pay  certain  taxes  upon 
the  mortgaged  premises,  which  the  plaintilT  had  discharged.  It 
was  held  that  Cady  was,  for  reasons  unneees.sary  to  ho  stated, 
under  no  obligation  to  pay  the  ta.xes,  and  the  case  stood  upon  the 
naked  tender.  Cady  did  not  in  his  answer  allege  a  n'adiness  still 
to  pay  the  mortgage  debt,  or  that  it  was  j)aid  into  court,  in^r  did 
he  otTer  to  l)ring  it  into  court;  and  it  did  not  appear,  from  the  find 
ing  of  facts  or  otherwise,  that  he  in  any  way  kept  the  tender  good. 

The  plaintitT  bad  the  u.-ual  judgment  of  foreclosure,  and  f<^r  a  sal-' 
'>f  the  mortgaged  premises.      Cpon  appeal  by  the  defendant   Cad\. 

'  Tlic    opinion    <>f    .Vpulcton,    < '.    •>.    in    whirli    ("nttin'r.    T..    (oniMii  rod,    i"« 
•  iniittfd. 


714  DISCHARGE    OF    MORTGAGE.  [CIIAI".  V. 

this  judgment  was  affirmed  at  General  Term  in  the  First  District; 
■whereupon  he  appealed  to  this  Court.  .... 

CoMSTOCK,  Ch.  J.'.  After  the  suit  was  commenced  to  foreclose 
the  mortgage,  Cady,  Avho  had  hecome  the  owner  of  the  land,  ten- 
dered the  amount  due,  with  the  costs,  which  being  refused,  he  set 
up  the  tender  in  his  answer,  in  bar  of  the  further  maintenance  of 
the  action.  The  only  question  in  the  case  is,  whether  a  tender, 
made  after  a  mortgage  is  due,  by  the  owner  of  the  lands  mortgaged, 
discharges  the  lien. 

Forty  years  ago  this  question  was  fully  determined  by  the  Su- 
preme Court  of  this  State,  in  the  case  of  Jackson  v.  Crafts,  AS 
John.  110.  Mr.  Justice  Woodworth,  in  delivering  the  opinion  of 
the  court,  observed:  "From  the  nature  of  the  interest  the  mort- 
gagee has, there  is  no  necessity  of  a  reconveyance  by  him  to  the  mort- 
gagor after  the  mortgage  has  been  paid.  When  that  is  done,  the 
mortgagee  has  no  title  remaining  in  him  to  convey,  and  conse- 
quently, by  our  laws,  on  payment  of  the  money  he  is  not  deemed 
a  trustee,  holding  the  legal  estate  for  the  benefit  of  the  mortgagor. 
The  only  question,  then,  is,  whether  tender  and  refusal  are  equiv- 
alent to  payment."  Having  thus  truly  stated  the  relation  between 
mortgagor  and  mortgagee,  according  to  the  law  as  it  was  then  and 
has  been  ever  since  well  settled  in  this  State,  he  cited  some  of  the 
early  English  authorities,  holding  that  a  tender  of  the  money  duo 
discharged  the  land  from  the  lien. 

Nearly  twenty  years  after  this  decision  was  made,  the  same  ques- 
tion again  arose  concurrently,  or  nearly  so,  both  in  the  Court  of 
Chancery  and  the  Supreme  Court.  The  case  in  each  of  those  courts 
originated  in  the  same  transaction,  which  was  this:  In  1823,  om^ 
Edwards  mortgaged  land  in  Buffalo  to  the  Farmers'  Fire  Insurance 
and  Loan  Company  in  New  York.  The  company  foreclosed  that 
mortgage  in  Chancery  in  1833,  and  at  the  sale  under  the  foreclosure 
Tibbctts,  their  president,  purchased  a  portion  of  the  lands  for  the 
benefit  of  the  company,  so  that  the  company  was  deemed  the  real 
purchaser.  In  1835  they  entered  into  a  written  contract  with 
W.  T.  and  Isaac  Merritt,  whereby  they  agreed  to  sell  to  them  the 
land  so  purchased,  and  the  Merritts  paid  a  part  of  the  price  agreed 
on.  By  a  clause  in  the  charter  of  the  company,  it  was  declared  that 
when  the  corporation  became  the  purchaser  of  any  land  mortgaged 
to  them  the  mortgagor  should  have  the  right  of  redemption  of  such 
lands  on  payment  of  principal,  interest,  and  costs,  so  long  as  the 
same  should  remain  in  the  hands  of  the  corporation  unsold.  After 
the  company  made  the  said  contract  of  sale  to  the  Merritts,  Ed- 
wards, the  mortgagor,  claiming  that  the  lands  in  question  still  re- 
'The  order  of  the  opinions  has  been  changed. 


^^'■•<'-  '•]  K<ii;ri;i(;ii'r  r.  <\i)Y.  715 

iniiincil  ill  ilic  Iimi!iI>  of  ilic  cniiipaiiy  iiii>(i|(|,  ii'iiilinil  lo  iIh'mi  liic 
iiiiioiint  of  tlic  iii(»rt;,M;,'c  dclil  with  iiitcrt'st  ami  cn.-ls,  ami  <|friiaii(lr(l 
a  rclcasi'  or  n-coiivcvaiicc  of  tin'  premises.  Tlie  ten<ier  ami  reloasL* 
Itein^  refused,  lie  l)n)ii<,'lit  i-jeetment  apiinst  the  company  in  the 
Supreme  (^)url.  {h'lhidrds  v.  'I'/iv  Fannrrs'  Firr  hisnrnnrr  and 
Loan  Compani/.  'U  W'eiul.  4(!T.)  The  controversy  in  f'hancery  was 
upon  a  hill  fileil  l)y  the  Merritts  to  enforce  the  specific  performance 
of  a  contract  with  one  Lamhert  for  the  e\chan;,'e  (»f  the  same  lamls 
for  other  real  estate  in  the  city  nf  Nrw  York;  and  the  (|ue>tiou 
was,  whether  they  could  make  title  to  the  saitl  lands  in  HufTalo. 
IVfore  filin«j  that  hill,  the  heirs  of  Tihbetts  had  conveyed  to  the 
Merritts  in  pursuance  of  the  contract  of  tlu'  company;  hut  that  eon- 
\ryance  was  given  after  the  ai)ove-mentioned  tender.  {Merrill  v. 
Lambert,  7  Paige,  344.)  The  question  of  titl(>  in  hoth  of  the.sc  con- 
tioversies  depended  on  two  considerations:  First,  did  the  lands  re- 
main in  the  hands  of  the  company  unsold,  notwithstanding  th«! 
contract  to  sell  them  to  tlie  Merritts?  Second,  if  so,  then  did  the 
tender  by  the  mortgagor  discharge  the  lien  of  the  mortgage? — it  l)e- 
ing,  of  course,  conceded  that,  under  the  said  clause  in  the  charter, 
the  right  to  j)ay  off  or  redeem  the  nuirtgage  existed  notwithstanding 
the  foreclosure  and  purchase  by  the  company.  The  Chancellor  was 
of  opinion  that  the  contract  witli  the  .Merritts  was  in  elTect  a  sale  to 
them,  wliich  cut  olT  all  the  rights  of  the  mortgagor;  in  other  worils, 
that,  hy  reason  of  that  sale  having  been  made,  the  saving  clause  in 
the  charter  had  no  etfect.  lie  was  also  of  o|)inion  that  if  the  right  to 
redeem  was  still  left  in  the  mortgagor,  a  mere  tender  unaccei)ted  did 
not  discharge  the  lien. 

In  giving  iiis  views  upon  tlie  last  mentioned  (pu-slion,  the  Chan- 
cellor criticised  the  opini(»n  of  Judge  Woodwortb  in  Jackson  v. 
Crafls  (stijira),  for  the  reason  that  the  English  authorities  which 
he  referred  to  related  to  a  tender  on  the  <lay  when  tiie  mortgage  dcbl 
became  due.  (  Hac.  .\br.,  tit.  Tender,  K. ;  Co.  Lit..  v*(>'.»  b,  !<  :]:)<; 
20  Viner,  lit.  Tender,  .\.,  >$  4.)  On  this  criticism  I  shall  make  on* 
or  two  observations,  liy  the  ancient  common  law,  a  mortgage  was 
a  grant  of  land  defeasible  on  the  condition  subseiiuent  of  payimr 
the  money  at  the  exact  tiuu"  specified.  (  1  Toweil  on  Mortgages.  I  ) 
On  failure  to  j)erform  tliat  condition  the  grant  was  absolute,  and 
neither  tender  nor  jiayment  mad«'  afterwards  could  have  the  »'IT(  ct 
to  revest  the  title.  The  specified  time  of  payment  was  called  the 
law  day,  because  after  default  the  legal  rights  of  the  mortgagor 
were  gone.  The  estate  became  vested  in  the  mortgagee  absoluteI\, 
because  the  original  grant  was  freed  from  the  condition.  "For 
these  reasons,"  the  Chancellor  bi?nself  renujrke«l.  **  it  is,  that  the 
mortgagor,  or  his  assigns,  or  subsccpient   incumbrancers  upon  the 


716  DISCHARGE   OF   MORTGAGE.  [CHAP.  V. 

mortgaged  premises,  are  driven  to  a  bill  to  redeem,  where  the  mort- 
gagee refuses  to  receive  what  is  equitably  due  to  him.  But  this 
could  not  be  necessar}',"  he  added,  ''if  a  mere  tender  of  the  amount 
due  after  the  mortgage  has  become  forfeited  would  have  the  legal 
t'ffect  of  discharging  the  mortgaged  premises  from  the  lien  of  the 
mortgage."  It  is  a  self-evident  proposition,  which  the  Chancellor 
need  not  have  undertaken  to  prove,  that  when  the  law  was  that  even 
jiayment  after  the  law  day  would  not  discharge  the  mortgage,  a 
mere  tender  could  not  have  such  an  effect.  He  was  probably  quite 
correct  in  saying  that  the  English  authorities  cited  by  Judge 
Woodworth  referred  to  tender  at  the  day,  because  those  authori- 
ties were  of  a  date  when  even  payment  after  the  day  did  not  divest 
the  estate  or  interest  of  the  mortgagee.  But  Judge  Woodworth 
and  the  eminent  men  who  sat  with  him  on  the  bench  of  the  Supreme 
Court  considered,  what  the  learned  Chancellor  seems  to  have  failed 
to  notice,  the  fundamental  change  which  the  law  of  mortgage  had 
undergone  long  before  the  decision  in  Jachson  v.  Crafts  was  pro- 
nounced. In  this  State,  a  mortgage  had  always  been  regarded  as  a 
mere  security  or  pledge  for  the  debt ;  and  the  rule  had  always  been 
that  payment  at  any  time  discharged  the  lien,  so  that  no  reconvey- 
ance of  the  estate  was  necessary.  It  seems  to  me,  therefore,  that  the 
authorities  cited  by  the  Supreme  Court,  on  the  effect  of  tender, 
were  extremely  pertinent  to  the  question,  because  they  showed  very 
conclusively  that  a  tender  at  the  law  day  had  the  same  effect  on  the 
mortgage  as  a  payment  on  that  day.  Underlying  this  particular 
jDroposition,  of  course,  was  the  more  general  doctrine  that  when  a 
certain  effect  must  be  given  to  a  payment,  a  tender  Avill  have  a  like 
effect.  This  was  what  the  Supreme  Court  undoubtedly  meant,  and 
the  authorities  cited  simply  showed  the  application  of  the  principle 
to  the  law  of  mortgage.  The  principle  itself,  or  its  application, 
Avas  not  questioned  by  the  Chancellor;  but  he  did  not  consider,  so 
far  as  appears,  that  the  rule  had  become  entirely  settled,  giving  to 
ji  payment  after  the  day  and  on  the  day  precisely  the  same  conse- 
quences. I  think,  therefore,  with  great  respect  for  a  jurist  so 
learned  and  accurate,  that  he  differed  from  the  Supreme  Court, 
and  criticised  its  opinion,  without  due  reflection  upon  the  real 
ground  of  the  decision. 

I  turn  now  to  the  controversy  which  arose  concurrently  in  the 
Supreme  Court,  and  directly  presented  the  question  for  the  sec- 
ond time  in  that  court.  {Edwards  v.  The  Farmers'  Fire  Insurance- 
and  Loan  Companij.  supra.)  At  the  trial  the  Circuit  Judge  had 
ruled  in  favor  of  Edwards,  the  mortgagor,  upon  both  the  points 
above  stated.  That  is  to  say,  he  held  that,  notwithstanding  the  con- 
tract of  sale  to  the  Merritts,  the  lands  in  question  still  remained  in 


«'^^'- !•]  KournMiiir  /.  (  amy.  717 

the  hands  of  (he  conij)any  iinsohl,  and  that  the  tender  after  the  law 
day  extinguished  the  lien  of  the  niort<^a;;e,  the  foreclosure  itself 
iiaving  no  contrary  effect,  aeeordin«;  to  the  express  provision  of  the 
charter.  The  plaint ilT  had  a  verdict  accord iiij:ly.  A  new  trial  v.a-: 
moved  for  in  the  Supreme  Court  and  denied, — the  ojiinion  of  th<' 
court  being  delivered  Ity  Mr.  .hist ice  C'owen,  who  examined  both 
these  questions,  and  csjuvially  tlie  one  now  |)re-;ente(l  to  us,  at 
great  U'ngtli  and  with  great  al)ility.  hi  the  cnurse  of  the  discussion 
he  also  sjjoke  of  the  provision  in  the  charter  as  nn  extension  of  the 
law  day;  but  to  that  consideration  I  think  only  small  imi)ortance 
should  be  attached,  for  the  charter  only  exti-nded  the  "  right  of  re- 
dcm])tion,"  in  other  \sords,  the  right  to  pay  otT  the  mortgage,  leav- 
ing tiie  effect  of  an  unaccepted  tender  to  depend,  a<  it  did  before  the 
foreclosure,  upon  gencnil  principles  of  law.  If  the  concurrence 
of  Cliief  Justice  Nel.-oii  had  hi'cn  placed  on  this  s|)ecial  and  narrow 
ground,  undoubtedly  he  would  liaxc  so  stated,  ih-.  Justice  Bron- 
^on  dissented  from  the  conclusion;  but  wlietlicr  on  the  ground  thai 
the  executory  sale  to  the  Merritts  had  cut  off  all  the  rights  of  the 
mortgagor,  or  on  th(jground  that  a  mere  tender  does  not  remove  the 
lien  of  a  mortgage,  does  not  ajtpear. 

After  a  decision  so  authoritative  as  that  of  .fnil-snti  v.  ('rnft.<, 
and  the  lapse  of  nearly  twenty  years,  there  bi'ing  in  the  intermediate 
time  at  least  two  distinct  recognitions  of  the  doctrine  in  the  Su- 
[iremc  Court  (5  Wend.  617;  11  Id.  538),  this  question  might  well 
have  been  regarded  as  at  rest.  It  sj)rang,  however,  into  a  new  ex- 
istence under  the  opinion  of  the  riianeellor;  and  althougli  the  Su- 
jtrcme  Court,  with  a  new  bench  of  judges,  realVirmed  its  ])ositiou 
after  a  most  elaborate  and  searching  examination,  the  subject  was 
jterhaps  a  suitable  one  for  final  adjudication  in  the  tribunal  of  la-t 
resort.  The  action  of  ejectment  was  aci'ordingly  carried  to  the  Court 
for  the  Correction  of  Errors,  which  atrirmed  the  judgment  of  the  Su- 
preme Court.  {Farmers'  Fire  Insitniinc  niul  Lonn  Com  pain/  v.  Ed- 
iianls.  2(»  Wend.  .>!!.)  The  cause  was  most  fully  arguecl  l»y  some 
of  the  ablest  gentlemen  at  the  bar,  and  the  decision  of  tlu'  court 
was  pronounced  beyond  all  jmssibility  of  cavil  on  the  very  point 
now  in  controversy.  The  Chancellor,  who  was  a  menilMT  of  the 
court,  and  could  and  did  take  part  in  the  decision,  was  for  re- 
viTsal  on  two  grounds,  whii-h  he  stated:  1.  That  the  written  con 
tract  to  sell  the  premises  to  the  Merritts  was  a  sale  within  the  mean- 
ing of  the  saving  clause  in  the  charter  of  the  company.  After  tliat 
contract  was  made,  and  a  part  of  the  purchase  money  paid,  he 
thought  the  lands  no  longer  nnnained  in  the  hands  of  tlio  company 
unsold,  .-o  as  to  authorize  the  mortgagor  to  n'deem.  2.  On  the 
ground  that  a  tender  of  the  mortgage  money  after  default  in  pay- 


718  DISCIIAKGE    OP    MORTGAGE.  [cHAP.  v. 

mcnt  at  tlio  dav  could  not  in  any  case  have  the  effect  to  extinguish 
the  lien.  With  the  Chancellor  concurred  seven  of  the  Senators. 
Senator  Verplanck  delivered  an  opinion  in  favor  of  affirmance,  dis- 
cussing on  the  other  side  the  same  question,  and  no  others.  He 
made  no  attempt  to  sustain  the  decision  on  the  ground  that  the  law- 
day  of  the  mortgage  was  extended  by  the  charter  in  any  sense  dif- 
ferent from  a  mere  continuation  of  the  right  to  redeem  or  pay  off 
the  debt  after  the  original  default  and  after  the  foreclosure  and 
sale.  Xo  member  of  the  court,  on  either  side  of  the  general  ques- 
tion, so  much  as  mentioned  that  ground  of  decision;  and  most  mani- 
festly the  right  to  redeem  given  by  the  charter,  notwithstanding  a 
foreclosure  and  purchase  by  the  company,  could  not  have,  and  was 
not  designed  to  have,  the  effect  of  enhirging  the  contract  in  respect 
to  the  specified  time  of  paying  the  (lol)t.  With  Mr.  Verplanck  con- 
curred the  President  of  the  Senate  and  a  majority  of  the  Senators. 
We  are  bound  to  say  that  the  judgment  was  pronounced  on  the  two 
propositions  discussed  in  the  respective  opinions,  and  it  necessarily 
affirmed  both  of  those  propositions.  There  is  no  other  conceivable 
explanation  to  the  judgment,  unless  we  sav  that  a  judicial  fore- 
closure and  sale  created  a  now  law  day  of  indefinite  continuance, 
after  the  one  appointed  in  the  contract  had  long  since  passed;  and 
this  we  cannot  say,  because  such  a  position  was  in  itself  wholly  un- 
tenable, and  was  not  even  alluded  to  by  any  member  of  the  court. 
No  one  who  will  read  the  case  with  a  little  attention  can  fail  to  be 
satisfied  that  it  was  a  decision  most  deliberately  pronounced  upon 
the  very  question  now  to  be  determined.^ 

Such  being,  as  I  think,  the  clear  result  of  the  authorities,  a  re- 
newed discussion  of  the  question  may  seem  to  be  unnecessary.  I 
cannot  help  saying,  however,  that  a  decision  by  this  court  in  oppo- 
sition to  the  rule  laid  down  in  the  cases  referred  to  would  introduce 
into  the  law  of  mortgage  an  inconsistency  too  plain  to  escape  obser- 
vation. In  the  early  history  of  that  law"  the  courts  of  equity, 
departing  from  the  letter  of  the  contract,  but  adhering  to  the 
intention  of  the  parties,  adopted  the  just  and  liberal  doctrine  that  a 
mortgage  was  but  a  pledge  or  security,  always  redeemable  until  fore- 
closure. The  courts  of  law  followed  in  the  same  direction.  As 
Lord  Eedesdale  observed  (Mitf.  428):  "The  distinction  be- 
tween law  and  equity  is  never  in  any  country  a  permanent  distinc- 
tion. Law  and  equity  are  in  continual  progression,  and  the  former 
is  constantly  gaining  upon  the  latter.  A  great  part  of  what  is  now 
strict  law  was  formerly  considered  as  equity,  and  the  equitable  de- 
cisions of  this  age  will  unavoidably  be  ranked  under  the  strict  law 

'  ITerp  follows  an  examination  of  ilie  ease  of  Arnot  v.  Post,  6  Hill,  63, 
wliich  is  omitted. 


SEC.  I.] 


KoirntrnnT  v.  »  vdv. 


:  1  'J 


<>'■  tile  next."  Siifli,  jirciTiiiiifiitly,  luis  l)ccii  tlic  coursL'  of  juris- 
jiriidciicc  on  this  suhjfct.  TIh"  doctriiu's  ori;,Miijitin^'  in  the  court.-* 
<)\'  ('(iiiity  n'sjM'ctiii;;  the  ri<;hts  of  inort|,oi;;or  and  niort^a^ce  havr 
Ik'ou  incor|)orat('d  into  the  cndc  of  the  coniinon  hiw,  so  that  then? 
is  now  no  diircrcnic  hctwct-n  the  two  systems.  This  has  Ix-en  trm? 
in  suhstanec  for  nearly  a  ccnttiry  past.  In  Marlin  v.  Moulin.  'I 
Burr.  !>7S,  decided  hy  the  I-]n;zlish  Kinj,''s  liciich  in  1T(»0,  it  was 
lu'ld  that  whatevtr  wdnl-  in  a  will  would  carry  the  money  due  u[)oii 
a  mort,i:a_<:e  would  carry  the  interest  in  the  land.  Liuvl  Man-field 
said:  '*  A  niort<:a_<:e  i.-  a  ehari^e  upon  the  land,  aiid  whatever  would 
jrive  ttie  nu)ney  would  i-arry  the  estate  in  the  land  aloni;  with  it. 
The  estat(»  in  the  land  is  the  same  thin;;  as  the  money  due  upon  it. 
It  will  he  lialtle  to  dehts;  it  will  )n^  to  the  exeeutor;  it  will  pass  hy 
i\  will  not  made  and  exeeuti'd  with  the  solemnitii-s  reipiired  hy  the* 
statute  of  frauds.  The  assignment  of  the  deht,  or  for^riving  it, 
will  draw  the  land  after  it  as  a  eonse(|Uenee ;  nay,  it  would  do  it 
though  the  deht  were  forgiven  only  hy  parol."  So,  in  The  Kiufj 
V.  St.  Michacla.  Doug.  632,  it  was  said  hy  the  same  judge  tiiat  "  a 
n;ortgagor  in  possession  gains  a  settlement,  heeause  the  mortgagee, 
notwithstanding  tjie  fornu  has  l)ut  a  ehattel,  and  the  mortgagi-  i.>? 
only  a  security."  To  the  same  efTect  is  The  King  v.  Kdington.  I 
East.  288,  and  sue)-,  is  the  uniform  tenor  of  the  Hnglish  authori- 
ties.     (See  ()  Conn.  1.")!).) 

In  this  Slate,  the  rules  of  law  and  ('(piity  in  regard  to  mortgag-es 
have  never  dilfered  in  any  degree;  it  heing  the  doctrine  of  hoth  sy.s- 
t(ms  that  a  mortgage  is  hut  a  jiersonai  interest  mendy.  This  prop- 
osition, in  its  fidl  length  and  hreadth,  was  <letermined  in  liunifiin 
V.  ^[crsn•('(^u,  11  Johns.  5:i!,  where  the  (]uestion  arose  in  the  anost 
direct  nuinner  whether  the  freehold  was  in  the  mortgagor  or  mort- 
gagee. The  plaintilT.  deriving  title  iinder  the  mortgagor,  sued  in 
trespass  f<u-  cutting  tiniher.  the  d  feiidant  justifying  under  a 
license  from  the  mortgagee.  It  was  held  that  the  action  wa-  main- 
tainahle,  the  decision  heing  placed  explicitly  on  the  ground  that  the 
former  was  the  real  owner  of  the  land,  while  the  latter  ha<l  a  chattel 
interest  onlv.  So  it  has  h-M-n  held  in  re|H'ated  ih'cisions  that  the 
mortgagee  cannot,  in  any  way.  convey,  devise,  niortgage  or  incum- 
her  the  land,  while  the  mortgagor  can  do  all  thes«'  things;  that  judg- 
ments against  a  mortgage*',  which  are  a  lien  on  all  leg"al  «*states.  do 
not  affect  his  interest  in  the  lands  mortgaged;  that  such  an  interwt 
decs  not  descend  to  heirs,  hut  goes  to  the  |M'rsonal  representative 
as  a  chose  in  action  ;  that  it  is  not  suhject  to  dower  or  curt«sy ;  that 
it  passes  hv  .i  j)arol  transfer,  and  hy  any  transfer  of  the  deht ;  and, 
finally,  that  it  is  extinguished  hv  pavment.  or  hv  whatever  evtin- 
j^uislies  the  deht.     (:i  dohns.  (\m.' 321)";  1  d.  K   VO -.  l  /,/.  .[2,  7  /,/. 


720  DISCHARGE    OF    MORTGAGE.  [CUAP.  V. 

278;  15  Id.  319;  G  7c/.  290;  2  Paige,  G8,  o8G ;  Wend.  (i03 ;  2  Barb. 
Ch.  119.) 

But  it  has  been  said  that  the  mortgagee  could  maintain  eject- 
]nent  against  the  mortgagor  until  our  Eevised  Statutes  abolished 
that  remedy  in  such  a  case,  and  that  even  since  those  statutes  the 
mortgagee,  being  in  possession,  may  retain  it  until  the  debt  is  paid. 
All  this  is  true;  but  it  presents  no  anomaly  or  inconsistency  in  the 
law.  The  mortgagee's  right  to  bring  ejectment,  or,  being  in  pos- 
session, to  defend  himself  against  an  ejectment  by  the  mortgagor, 
is  but  a  right  to  recover  or  to  retain  the  possession  of  the  pledge  for 
the  purpose  of  paying  the  debt.  (6  Conn.  1G3.)  Such  a  right  is 
but  the  incident  of  the  debt,  and  has  no  relation  to  a  title  or  estate 
in  the  lands.  Any  contract  for  the  possession  of  lands,  however 
transient  or  limited,  will  carry  the  right  to  recover  that  possession; 
and  such  was  deemed  to  be  the  nature  and  construction  of  a  mort- 
gage, it  being  considered  that  the  parties  intended  the  possession 
of  the  thing  hypothecated  should  go  with  the  contract.  Ejectment 
was  not,  in  fact,  a  real  action  at  the  common  law.  That  remedy,  in 
its  origin,  was  only  to  recover  possession  according  to  some  tempo- 
rary right;  and  it  was  only  by  the  use  of  fictions  that  the  title  was 
at  length  allowed  to  be  brought  into  controversy.  (3  Bl.  199,  200.) 
When  the  Legislature,  by  express  enactment,  denied  this  remedy  to 
mortgagees,  they  undoubtedly  supposed  they  had  swept  away  the 
only  remaining  vestige  of  the  ancient  rule  of  the  common  law  which 
regarded  a  mortgage  as  a  conveyance  of  the  freehold ;  yet  I  see  noth- 
ing inconsistent  or  anomalous  in  allowing  the  possession,  once  ac- 
([uired  for  the  purpose  of  satisfying  the  mortgage  debt,  to  be 
retained  until  that  purpose  is  accomplished.  When  that  purpose  is 
attained,  the  possessory  right  instantly  ceases,  and  the  title  is,  as 
before,  in  the  mortgagor,  without  a  reconveyance.  The  notion  that 
a  mortgagee's  possession,  whether  before  or  after  default,  enlarges 
his  estate,  or  in  any  respect  changes  the  simple  relation  of  debtor 
and  creditor  between  him  and  his  mortgagee,  rests  upon  no  foun- 
dation. We  may  call  it  a  just  and  lawful  possession,  like  the  pos- 
^^cssion  of  any  other  pledge :  l)ut  when  its  object  is  accomplished 
it  is  neither  just  nor  lawful  for  an  instant  longer. 

There  are  terms  of  the  ancient  law  which  have  come  down  to  us, 
having  long  survived  the  principles  of  which  they  were  the  appropri- 
ate expression.  Thus  the  words  "  law  day  "  once,  and  very  express- 
ively, marked  the  time  when  all  legal  rights  were  lost  and  gone,  by 
the  mortgagor's  default.  There  is  now  no  such  time  until  fore- 
closure by  a  judicial  sentence  or  sale  under  a  power.  But  the  term 
is  still  in  use,  serving  no  other  purpose  than  to  engender  confusion 
and   uncertainty  in   minds   which   derive   their  conceptions   from 


'^'■-•'-  '1  KOKTUKMIT    ,•.    CADY.  ',!\ 

words  rather  than  thing's.  So  we  have  the  terms  "  rwlemption  " 
and  "  eiiuity  of  r»'d('inj)tion,"  whi.-li  belonged  to  a  system  of  law  tliat 
gave  the  legal  istate,  defcasihiy  Ix'ffjre  default  and  absolutely  aftir- 
wards,  to  the  mortgagee,  and  whiih,  while  that  system  j)revailed. 
were  descriptive  of  tiie  mortgagor's  right  to  go  into  e(|uity,  on  tin- 
(ondition  of  paying  his  deht,  to  redeem  a  forfeited  estate  and  di- 
mand  a  reeonve^imee.  These  descriptive  words  yet  survive  ami 
are  in  use,  although  the  ideas  they  once  rei)resented  have  long  sine 
heconie  obsolete.  Even  the  word  "  forfeitui-e,"  still  so  often  u-cd, 
is  no  longer,  in  reference  to  this  subject,  the  expression  of  any 
principle,  as  it  once  was.  There  is  now  no  forfeiture  of  a  mort- 
gaged estate.  The  mortgagor's  riglits  may  be  foreclosed  by  a  sen- 
tence in  the  courts,  or  by  a  sale  had  in  tlie  manner  prescribed  l»y 
the  statute  law,  if  he  has  himself,  in  the  contract,  given  authority 
thus  to  sell;  but,  until  foreclosure,  his  estate  the  day  after  a 
default  is  exactly  what  it  was  the  day  before.  Controversies  like 
tlie  present  would  ce-ase  to  arise  if  the  mere  terms  of  the  law  wm- 
710  longer  confounded  with  its  jirinciples. 

The  proj)osition  that  a  tender  of  the  money  due  on  a  mortgage, 
made  at  any  time  before  a  foreclosure,  discharges  the  lien,  is  the 
logical  result  of  premises  which  are  admitted  to  be  true.  These  an-, 
that  tlie  mortgagor  has  the  same  right  after  as  before  a  default  to 
jiay  his  debt,  and  so  clear  his  estate  from  the  incuml)rance ;  and  that 
l)ayment  being  actually  made,  the  lien  thereby  becomes  extinct. 
We  have,  then,  only  to  apply  an  admitted  princii)le  in  the  law  of 
tender,  which  is,  tliat  tender  is  ecpiivaleni  to  jjaymcnt  as  to  all  thing-; 
which  are  incidental  and  acct'ssorial  to  the  debt.  The  creditor.  l>y 
refusing  to  accejjt,  dws  not  forfeit  his  right  to  the  very  thing  ten- 
dered, but  he  docs  lose  all  collateral  benefits  or  securities.  (;i 
Johns.  Cas.  213:  12  J.  II.  27  \ :  (\  \V«>nd.  22;  O  Cow.  72S ;  Cotjgs  v. 
JU'rnard,  2  \iOVi\  l{ay.  \\.  \Hi\.)  Thus,  after  the  tender  of  a  money 
debt,  followed  by  jiayment  into  court,  interest  and  costs  cannot  be 
recovered.  The  instantaneous  effect  is  to  discharge  any  collateral 
lien,  as  a  j)ledge  of  goods  or  the  right  of  distress.  It  is  not  denied 
that  the  same  principle  applies  to  a  mortgage,  if  th<»  tender  be  made 
at  the  very  time  when  the  money  is  due.  If  the  cre<litor  refus4S, 
he  justly  lo.ses  his  security.  It  is  im|>ossible  to  hold  otherwi.se, 
although  the  tender  hv  nnule  aft«'rwanls,  unless  we  also  .<ay  thit 
the  mortgage,  w  Inch  was  before  a  mere  security,  becomes  a  frtH'hold 
estate  hv  reason  of  the  default.  That  this  is  not  true  has  h(vn  sufTi- 
ciently  shown. 

It  is  said  that  mortgagees  will  be  put  to  great  ineonvenienc* 
if  at  any  period,  however  distant  fnun  tlu»  time  of  maturity,  thev 
must  know  the  amount  of  the  debt  and  acct'pt  a  tender  on  \wt\\  of 


722  DISCHARGE    OF    MORTGAGE.  [CHAP.  V. 

losing  their  security.  The  force  of  this  argument  is  not  perceived. 
As  a  tender  must  be  unqualified  by  any  conditions,  there  can  never 
be  any  good  reason  for  not  accepting  the  sum  offered,  whether  it  bo 
offered  when  it  is  due  or  afterwards.  By  accepting  the  tender,  the 
creditor  loses  nothing  and  incurs  no  hazard.  If  the  sum  be  insuffi- 
cient, the  security  remains.  It  is  only  by  refusing,  that  any  incon- 
venience can  possibly  arise.  But,  whatever  may  be  the  consequences 
of  refusal,  the  creditor  may  justly  charge  them  to  his  own  folly. 

The  judgment  of  the  Supreme  Court  must  be  reversed,  and  a  new 
trial  granted. 

Davies,  J.  [after  a  carefvd  examination  of  the  earlier  authorities, 
proceeded  as  follows]  :  The  rule  in  England  was  therefore  ancient 
and  well  settled,  that  payment  on  the  law  day  extinguished  the  in- 
terest of  the  mortgagee  in  the  lands  mortgaged;  and  tender  and 
refusal  at  the  same  time  produced  the  same  result.  But  payment 
after,  and  acceptance,  did  not  revest  the  estate  in  the  mortgagor 
without  a  reconveyance  from  the  mortgagee;  and  a  tender  and 
refusal  would,  of  course,  not  produce  that  result.  The  mortgagor's 
only  remedy  was  to  avail  himself  of  the  benefit  of  the  rule  in  equity, 
and  file  his  bill  to  redeem.  The  only  question  presented  for  our 
consideration  in  this  case  is,  whether  a  tender  of  the  sum  due  on  a 
mortgage,  after  the  day  appointed  by  it  for  its  payment,  extin- 
guishes the  lion  of  the  mortgage  on  the  land  covered  by  it.  We 
have  seen  that  by  the  common  law  such  tender  and  refusal  upon 
the  law  day  extinguishes  the  lien  of  the  mortgage,  though  the  debt 
remains.  In  this  State  the  law  is  well  settled  that  a  mortgage  is 
a  mere  security  or  pledge  of  the  land  covered  by  it  for  the  money 
borrowed  or  owing,  and  referred  to  in  it,  and  that  the  mortgagor 
remains  the  owner  of  the  estate  mortgaged,  and  may  maintain  tres- 
pass as  against  even  the  mortgagee.  {Runi/an  v.  Mersereau,  11 
John.  534.)  The  debt,  in  the  eye  of  the  law,  thus  becomes  the  prin- 
cipal, and  the  landed  security  merely  appurtenant  and  secondary; 
and  the  rights  of  the  parties  must  be  governed  by  those  principles 
of  law  applicable  to  analogous  cases.  Acceptance  of  payment  of 
the  amount  due  on  a  mortgage,  at  any  time  before  foreclosure,  has 
always  been  held  to  discharge  the  incumbrance  on  the  land;  as 
acceptance  of  the  amount  for  which  personal  property  was  held  dis- 
charged it  from  the  pledge.  Tender  and  refusal  are  equivalent 
to  performance.  {Kemble  v.  Wallis,  10  Wend.  374.)  This  is  to 
be  taken  with  the  reservation  already  stated,  that  the  debt  or  duty 
n-mained,  and  that  the  rejected  tender,  at  oi  after  the  stipulated 
time  of  payment  or  performance,  has  the  effect  only  to  discharge  the 
party  thus  making  it  from  all  the  contingent,  consequential  or  ac- 
cessory responsibilities  and  incidents  of  his  contract,  but  without 


8r-i'-  '•]  K<ti;ri;i»;ii  1    r.  (ADV.  'i'*'\ 

rt'l«'a>in;;  his  |)rior  debt,  {('uit  v.  I/oiislon,  .1  .Folm.  Ci\.  213.)  In 
llunlrr  V.  A/'  Contr.  (•  Cow.  7*.*.S,  the  Suprcnic  Court  lu-M  that  a 
t(  iidcr  of  n-iit  takes  away  th«'  ri;,'ht  to  distrain  till  a  suh.scqucnt  dr- 
iiiand  and  rcfii.-al ;  Imt  it  docs  not  take  away  the  ri;,^^  to  sue  for  the 
rmt  as  for  a  dfht.  It  only  saves  the  interest  and  e<Nts.  And  that 
a  teiKh'r  of  rent  makes  a  distress  wron;iful,  thoiij,'h  the  tender  Ik* 
not  made  till  after  the  rent  day.  It  will  readily  he  perceived  that 
the  principle  of  this  case  hears  directly  iipoil  tlft'  (piestion  now 
under  consideration;  and  it  is  n(»1  j)ereeive<l,  if  it  he  sound,  why  a 
lender  iUid  refusal  <d'  the  amount  due  on  a  luortj^M^f  d<M's  not  c.xtin- 
jruish  its  lien  e(|ually  witii  a  tender  of  rent  and  refu.<al,  which,  as 
we  have  sivn,  e.\tin<,'ui<hes  the  ri^dit  of  distress.  Kut  a  still  closer 
analo»;:y  to  the  present  (pu'stion  is  presented  hy  the  law  of  tender,  as 
to  the  lien  on  «;oods  |)K  dj^ed.  Lord  Cli.  J.  llolt,  in  his  opinion  in  the 
eeli'hrated  ca.se  of  <'(>(/</s  v.  Ilcrnanl.  'I  Lord  Kay.  '.•<>!(,  speaking 
of  the  fourth  class  of  hailnients,  says:  '*  If  the  m<»n«'y  for  which  the 
jroods  are  pawned  he  tendered  to  the  pawnee  before  they  are  lost, 
then  the  pawnee  shall  he  answerable  for  them.  I)eeause  the  pawnee, 
by  detainin<r  them  after  the  tender  of  the  money,  is  a  wron<jdoer, 
and  it  is  a  wrongful  detainer  of  the  goods,  and  the  special  property 
of  the  pawnee  is  determined."  So  also  Comyn :  "By  tender  of 
rhe  money,  the  i)roperty  in  the  goods  is  determiiU'd,  ami  the  pleilge 
tuight  to  be  returned.  Hut  if  the  j)awni'e  refuse  to  rest<tre  the 
]dedge  upon  tender,  trover  lies  against  him."  (Comyn's  Dig.,  tit. 
>rortg..  A,  and  ca.ses  there  cited.)  Holding,  as  we  do.  then-fore,  in 
this  State  that  the  land  mortgaged  is  hut  a  security  for  the  debt  due 
to  the  mortgagee,  in  other  words,  a  jdedge  to  him  to  .<ecun'  its  j)ay- 
ment,  it  is  dillieult  to  .><iv  why  the  princi|»les  enunciated  and  well 
nettled  in  reference  to  the  pledge  of  personal  property  do  not  apply, 
and  why  a  tender  and  refusal  at  any  time  of  the  full  amount  of  the 
debt  due  does  not  extinguish  the  lien  of  the  mortgagei',  or  pleilgtv, 
in  the  one  case  as  it  clearly  k\ok'>  in  the  other. 

But  I  think  wc  are  not  left  at  liberty  to  settle  this  ca.^e  on  princi- 
j»le,  but  are  to  regard  it  as  authoritatively  dispose*!  of  hy  the  courts 
of  this  State.  A  very  careful  cxamimition  of  the  decisions  has 
brought  mv  min.d  to  the  conviction,  contrary  to  my  first  im|)ression. 
that  we  should  regard  the  (piestion  now  jiresented  as  not  o|H'n  to 
further  discussion.  I  shall  recur  t(»  the  cases  in  which  this  (pu*stion 
has  arisen;  and  I  think  an  examination  of  them  will  lead  to  the 
same  conclusions  to  which  I  have  arrived.'     .     .     . 

It  is  not  jHTceived  how  the  mortgagee  is  to  he  emharra.ss«Nl.  or  his 
sivurity  impaired,  by  tiie  adoption  of  this  rule,  as  seems  to  U-  sup- 
posed by  the  Chancellor  in  luhrnnfs  v.  Fnrmrrs'  Loan  Company. 
'  Tlio  exnniinntion  of  tl\««  niitlioritioi*  i>«  oniitt«^l. 


724  DISCHARGE    OF    MORTGAGE.  [CIIAP.  V. 

26  Wend.  552.  If  the  mortgagor  does  not  tender  the  full  amount 
due,  the  lien  of  the  mortgage  is  not  extinguished.  The  mortgagee 
runs  no  risk  in  accepting  the  tender.  If  it  is  the  full  amount  due, 
his  mortgage  lien  is  extinguished  and  his  debt  is  paid.  This  is 
all  he  has  a  right  to  demand  or  expect,  and  all  he  can  in  any  con- 
tingency obtain.  His  acceptance  of  the  money  tendered,  if  in- 
adequate and  less  than  the  amount  actually  due,  only  extinguishes 
the  lien  pro  tanto,  and  the  mortgage  remains  intact  for  the  residue. 
A  much  greater  hardship  might  be  imposed,  and  serious  injury  be 
produced,  by  holding  that  the  mortgagor  cannot  extinguish  the  lien 
of  the  mortgage  by  a  tender  of  the  full  amount  due.  It  has  never 
occurred  to  any  judge  to  argue  that  a  pawnee  was  in  great  peril, 
and  in  danger  of  losing  the  benefit  of  his  pawn,  by  the  enforcement 
of  the  well  settled  rule  that  a  tender  of  the  amount  of  the  loan  and 
interest,  and  refusal,  extinguished  the  lien  on  the  pawn.  Littleton 
well  says,  that  it  shall  be  accounted  a  man's  own  folly  that  he  re- 
fused the  money  when  a  lawful  tender  of  it  was  made  to  him.  The 
only  effect  upon  the  rights  of  the  mortgagee  is,  that  the  land  or  thing 
pledged  is  released  from  the  lien,  but  the  debt  remaineth. 

The  only  remaining  question  to  be  considered  is,  whether  the  ten- 
der in  this  ease  was  well  made,  it  not  being  followed  with  the 
allegation  of  tout  temps  prist,  and  the  money  not  having  been 
brought  into  court.  It  will  be  seen,  by  reference  to  the  authorities, 
that  these  are  not  required  when  the  tender  has  only  the  effect  of 
extinguishing  the  lien,  and  does  not  operate  to  discharge  the  debt 
or  sum  owing.  In  the  latter  case  the  averment  of  tout  temps  prist 
followed  up  by  bringing  the  money  into  court,  is  essential  to  a  good 
plea  of  tender.  (Hume  v.  Peploe,  8  East,  168;  Giles  v.  Hartis,  1 
Lord  Ray.  254.)  But  if  a  man  make  a  bond  for  the  payment  of  a 
loan  of  money,  and  afterwards  make  a  defeasance  for  the  payment 
of  a  lesser  sum  at  a  day,  if  the  obligor  tender  the  lesser  sum  at  tho 
day,  and  the  obligee  refuse  it,  he  shall  never  have  any  remedy  by 
law  to  recover  it,  because  it  is  no  parcel  of  the  sum  contained  in  t\v^ 
obligation.  And  in  this  case,  in  pleading  of  the  tender  and  refusal, 
the  party  shall  not  be  driven  to  plead  that  he  is  yet  ready  to  pny 
the  same,  or  to  render  it  in  court.  (Co.  Lit.,  note  to  §  335.)  The 
same  principle  was  held  by  the  Supreme  Court  of  this  State  in 
Hunter  v.  Le  Conte,  6  Cow.  728,  and  easos  there  cited. 

No  question  in  reference  to  the  taxes  arises  in  this  cause,  upon 
the  facts  found  by  the  referee.  Tlie  referee  found  in  favor ,of  tlie 
appellants  upon  the  question  relating  to  them;  and  to  liis  findiii.u' 
in  that  respect  the  plaintiff  took  no  exception.  It  is  not,  therefore, 
to  k'  reviewed  in  this  court. 


*'^f'   ^3  KORTIIIOIIT    V.    r ADY.  726 

Till*  jii(l<,Miu'nt  aj)j)oal»Kl  from  should  he  rrvrr.-id  iirid  a  new  trial 
urilori'il,  with  eosts  to  al)i(l('  the  event. 

Skluen.  Clkkkk.  WuKiiiT,  Bacon,  and  Dkvio,  .Is.,  conciirn'd; 
iho  hitter  putting'  his  coiiciirn'Mce  on  th<'  ;,M(Mind  that  the  (juestion 
was  so  far  deleniiiiied  hy  authority  in  this  State,  that  it  wouhl 
now  bo  indiscreet  to  reexamine  it  in  the  lij,dit  of  reason  and  the 
analogies  of  the  hiw. 

Wkli.ks.  ,J.  (Dissenting.)  The  only  (|uestion  involved  in  the 
case  is,  whether  the  tender  ma(h'  hy  the  defeiuhint  Cady,  under  the 
<  ire\nnstanees,  was  elTectual  to  extricate  the  premises  in  (juestion 
from  the  lien  created  by  the  mortgage  of  Blunt  to  Miller.  Thi.s 
tender  was  made  after  the  day  provided  in  the  bond  and  mortgage 
for  the  payment  of  the  money,  which  is  called  the  law  day.  If  the 
sum  tendered  was  sufllcient  in  amount,  and  was  made  to  the  proper 
})erson,  the  question  is  reduce<l  to  the  single  point  whether  the  lien 
of  a  mortgage  is, t/Aso  /flf/o,  discharged  by  a  tender  of  the  amount  due 
made  after  the  law  day;  because,  if  it  is,  there  is  no  necessity,  in  an 
answer  setting  it  up,  of  the  allegation  of  tout  innps  prist,  or  of  any 
evidence  to  sliow  that  the  tender  has  l)een  kei)t  good,  neither  of 
which  is  contaiiied  in  the  present  ease;  but  the  defendant  relies 
Kilely  upon  the  fact  of  a  tender  and  refusal  as  etpiivalent  to  pay- 
ment, for  the  jniri)ose  of  extinguishing  the  lien  of  the  mortgage. 

If  a  tender  has  the  effect  in  any  case  to  release  the  lien,  it  pro- 
duces that  effect  the  moment  it  is  made,  whether  accepted  or  re- 
fused. If  accepted,  it  is  a  payment ;  if  refused,  it  is  the  folly  of  the 
holder  of  the  mortgage,  and  the  lien  is  gone  and  cannot  be  restored 
by  his  subscfpicnt  change  of  mind  and  olTer  to  receive  the  money 
tendered.  This  must  be  so;  otherwi.se.  the  tender  would  not  dis- 
charge the  lien.  It  is  quite  different  from  the  case  of  an  ordinary 
plea  of  tender  at  common  law,  for  the  purpo.se  of  stopping  interest 
and  preventing  costs,  in  an  action  for  money  due  on  eontraet.  in 
which  the  plea  must  contain  the  averment  of  dnit  letups  prist,  and 
where  a  replication  of  a  sul)se(|uent  demand,  before  suit,  of  the 
money  tendere(l.  and  refusal  by  the  defendant,  would  l>e  a  good 
answer  to  the  plea. 

In  the  case  of  a  mortgage  which  is  collateral  to  the  delit,  it  is 
agrivd  that  a  tender  nuiy  be  made  by  the  person  owning  the  equitv 
of  redemption,  whicli  will  extinguish  the  lien  of  the  mortgage  for- 
ever, without  alTeeting  the  debt.  The  primary  object  of  a  fon^ 
ilosun^  suit  is  to  enforce  the  lien,  and  if  that  is  met  by  a  suflicient 
tender,  the  cause  of  action  is  srone  and  cannot  U^  restonvl  by  a  sub- 
t^equent  demand  and  ref\i<a1.  It  is  important,  therefore,  to  ron- 
>;der  whdher  (he  tender  in  the  present  ease,  being  made  after  the 


726  DISCHARGE    OF    MORTGAGE.  [CHAP.  V. 

law  day,  if  good  in  otlier  respects,  had  the  ctTcct  to  discharge  the 
lien  of  the  mortgage/     ... 

My  own  opinion  is,  after  a  careful  examination  of  the  cases,  that 
the  weight  of  authority  is  in  favor  of  the  rule  as  it  existed  at  the 
common  law.  If  that  rule  has  not  been  abrogated  or  modified,  all 
will  admit  that  it  is  the  plain  duty  of  the  courts  to  follow  and  en- 
force it.  Clearly  there  is  no  stare  decisis  in  our  way.  It  is  of  iniT 
portance  that  the  rule  be  definitely  settled,  and  its  boundaries  do- 
fined.  Before  we  hold  a  rule  dift'erent  from  what  we  find  it  settled 
by  the  common  law,  we  should  require  evidence  that  the  rule  has 
been  changed  by  competent  authority,  either  expressly  or  by  nec- 
essary implication. 

This  evidence,  the  advocates  of  the  change  of  the  rule  claim,  i* 
found  in  the  changed  character  of  a  mortgage  upon  land,  in  conse- 
quence of  various  legislative  enactments.  We  are  told  that  when- 
the  rule  of  the  common  law  in  question  was  adopted,  a  mortgage 
conveyed  a  conditional  estate  in  the  premises,  which  entitled  the 
mortgagee  to  possession,  and  upon  which  he  could  maintain  eject- 
ment; and  that  a  mortgage  does  not  now  pass  any  estate  in  the  land,, 
but  is  merely  the  creation  of  a  specific  lien  as  security  for  the  pay- 
ment of  a  debt  or  the  performance  of  a  duty;  and  that  the  statute 
has  taken  away  the  right  of  the  mortgagee  to  maintain  ejectment. 
All  this  is  true ;  and  doubtless  other  shades  of  difference  may  be 
found  between  the  legal  effect  of  a  mortgage  at  common  law  and 
as  it  now  exists.  But  they  will  be  found  to  relate  to  the  remedy,, 
or  to  consist  in  collateral  or  incidental  circumstances.  Mortgages 
are  substantially  what  they  always  were.  The  fact  that  they  are 
not  now  regarded  as  transferring  the  freehold,  but  are  merely  spe- 
cific liens,  is  altogether  theoretical  and  ideal,  so  far  as  respects  the 
(juestion  under  consideration.  The  great  object  of  these  instru- 
ments is  the  same  now  as  it  always  was — that  of  security  for  the 
payment  of  money  or  the  performance  of  a  duty.  A  mortgagee 
in  possession  is  now,  as  always  heretofore,  accountable  for  rents 
and  j)rofits,  and  he  may  still  defend  his  possession  with  the  mort- 
gage the  same  as  ever.  I  know  of  no  difference  between  the  right 
of  the  mortgagor,  or  the  person  owning  the  equity  of  redemption, 
to  redeem  the  premises  from  the  lien  of  the  mortgage,  as  that  right 
now  exists,  and  as  it  existed  in  the  time  of  Coke  or  Littleton.  That 
right  is  governed  now  by  substantially  the  same  rules  as  then. 

The  rule  contended  for  by  the  plaintiff  is  reasonable,  convenient 
and  just.  In  the  first  place,  the  parties  to  the  mortgage  have,  by 
agreement,  fixed  upon  the  time  of  payment,  and  if  the  mortgagor 

'  The  learned  judge  then  re  examines  the  New  York  authorities.  This 
portion  of  the  opinion  is  omitted. 


SEC.  I.]  KoKritKiii  r  r.  tAi»v.  7"'" 

fulfills  his  ajjrct'ini'nt  by  paying,'  <>m  tlif  diiy  appointed,  or  ti'mlfriii;,' 
])aym('nt  on  that  clay,  the  lien  is  dischar^'cd.  Tlif  parties  are  tlu'ii 
to  be  ready,  the  niortj^agor  to  j)ay,  and  the  mortga^^ee  to  receive. 
If  the  former  perforins  his  duty,  or  tenders  performance,  and  the 
latter  refuses,  his  lien  is  ;;one  forever;  he  iuis  no  excuse  for  iiis  folly, 
and  is  entitled  to  no  consideration  for  the  loss  of  his  lien.  On  the 
law  day  each  j)arty  is  presumed  to  know  exactly  what  his  duty  is, 
and  the  amount  tlu'  mortgagor  is  bound  to  pay  and  the  mortgagee 
entitled  to  receive. 

If  the  mortgagor  allows  the  law  day  to  pass  without  payment  or 
tender,  he  then  is  a  defaulter.  If  he  can  discharge  the  lien  by  a 
tender  of  payment  the  ne.xt  day,  there  is  no  reason  why  he  may 
not  do  the  same  by  a  tender  after  the  lapse  of  one  year  or  of  ten 
years. 

Suppose  the  mortgagee  goes  into  possession  under  the  mortgage, 
by  consent  of  the  mortgagor,  immediately  upon  default  of  payment, 
and  the  latter  takes  no  steps  towards  payment  for  years  after;  what 
amount  shall  he  tender  when  he  gets  ready  for  payment  ?  what 
abatement  from  the  [M-incipal  and  interest  shall  be  made  for  mesne 
jirofits?  Shall  the  defaulting  mortgagor  be  permitted  to  select 
his  own  time,  and  then  make  a  tender  of  such  an  amount  as  he  shall 
deem  proper,  and  the  mortgagee  be  l)0und  to  accept  it  in  full,  at  the 
peril  of  losing  his  lien  forever? 

Suj)j)ose  again  the  case  of  a  defaulting  mortgagor,  who  claims  t'** 
have  made  j)artial  i)ayments,  or  to  be  entitled  to  a  set-off,  about 
which  he  and  the  mortgagee  in  good  faith  differ:  according  to  the 
rule  claimed  by  the  defendant,  he  must  acci'j)!  in  full  the  amount 
tendered  at  the  ))eril  of  losing  his  lien,  provided,  upon  a  litigation, 
it  shall  be  adjudged  that  the  tender  was  sutlicient  in  amount.  It 
seems  to  me  that  the  old  rule  is  tlu'  (mly  just  and  wholesome  on«' 
that  can  be  recognized.  It  isi|uiteas  favorable  to  the  mortgagor  as 
he  can  in  reason  ask.  If  he  makes  a  s\il1i<ient  ti'iider  after  the  day 
and  before  an  action  is  brought  to  foreclose  the  mortgage,  let  hiiu 
k(>t  p  the  tender  good,  and,  when  he  is  sued,  let  him  set  it  up  us  a 
defence,  bring  the  money  into  court  aJid  offer  payment  as  in  t>ther 
cast^^,  and  the  court  will  in  such  a  case  decn'c  tlu'  mortgage  satis- 
fied and  discharged,  and  adjudge  costs  again>l  the  plaintiff.  Or  if 
for  any  reason  the  mortgagor,  or  the  ju'rson  whose  duty  or  interest 
it  may  be  to  have  the  lien  discharged,  does  not  wish  to  wait  the 
mortgagee's  time  for  foreclosing,  let  him  nnike  his  tender  and  keep 
it  good,  and  then  bring  his  action  to  redeem,  alleging  the  tender 
and  offering  to  |)ay ;  and  if,  upon  the  trial,  it  is  found  that  his  tentler 
was  sufficient  and  the  plaintiff  was  ready  to  pay,  tlu'  court  wouM 
give  him  all  the  relief  which  c«iuity  and  justicv  required.     In  all 


"^28  DISCHARGE    OF    MORTGAGE.  [CIIAP.  v. 

these  eases  the  mortgagee  would  have  the  right  to  have  the  dis- 
puted questions  adjudicated  without  losing  his  lien  for  the  amount 
in  equity  and  justice  due  to  him. 

The  rule  contended  for  hy  the  defendant  would,  in  many  cases, 
oi)erate  as  a  bounty  to  negligent  and  defaulting  debtors,  and  mort- 
gagees would,  under  its  workings,  be  induced  to  purchase  their 
])eaee  at  an  unjust  sacrifice. 

For  the  foregoing  reasons,  I  am  of  the  opinion  that  the  rule  of 
Littleton,  as  expounded  by  Coke,  and  as,  all  now  admit,  was  the  rule 
of  the  common  law  in  relation  to  the  effect  of  a  tender  after  the  law 
day,  is  still  the  law  of  this  State;  and  as  the  tender  in  this  case  has 
not  been  kept  good,  and  the  defendant's  answer  contains  no  offer 
of  payment,  and  the  facts  found  by  the  court  before  whom  the  cause 
was  tried  do  not  show  that  the  tender  has  in  any  sense  been  kept 
good,  or  that  the  defendant  was  ready  to  pay,  &c.,  I  think  that  he 
can  have  no  benefit  by  reason  of  it;  and  that  the  judgment  should 
be  affirmed,  with  costs. 

Judgment  reversed.^ 


SHIELDS  v.  LOZEAR. 

Court  of  Errors  and  Appeals  of  New  Jersey,  1869. 

(34  iV.  J.  L.  496.) 

Li  ejectment.  Error  to  the  Supreme  Court. 
This  was  an  action  of  ejectment  tried  before  the  Chief  Justice  at 
the  Warren  Circuit  (a  trial  by  jury  having  been  waived  by  the 
parties),  to  recover  the  possession  of  a  tract  of  land  situate  in  said 
count}'.  The  action  was  commenced  on  the  13th  of  June,  1869, 
and  the  plaintiff's  right  of  possession  was  alleged  to  have  accrued 
on  the  1st  day  of  April,  LS69.  The  plaintiff  in  error  (who  was  the 
plaintiff  below)  produced  and  offered  in  evidence  a  deed  of  con- 
veyance of  the  premises,  made  to  him  by  the  defendant  and  wife, 
bearing  date  on  the  9th  of  April,  1867. 

'Curu titers  v.  Humphrey,  12  Midi.  270  (1864),  Potts  v.  Phiisted,  30 
Mich.  140  (1874),  Storey  v.  Krewson,  5.5  Ind.  397  (1S76),  aecord.  So 
■\vlioie  mort<^a{,'eo  evades  tender:  Ferguson  v.  Popp,  42  Mich.  115  (1879), 
McClcUan  v.  Coffin,  93  Ind.  456  (1883).  And  see  Brcitenhach  v.  Turner, 
18  Wis.  140  (1864),  and  Ma>ikrl  v.  Belseamper,  84  Wis.  218  (1893), 
ftevibic,  accord.  T5ut  the  authorities  generally  are  contra:  Currier  v.  Gale, 
9  Allen  (Mass.)  522  (1865)  ;  Perrc  v.  Castro,  14  Cal.  519  (1860)  ;  Crain 
V.  Mcdoon,  86  111.  431    (IS77)  ;  Mattluivs  v.  Lindsay,  20  Fla.  962   (1884). 


«K<^-  'J  smiM.KS  c   I.OZKAIt.  72*J 

'I'lir  ilffcinlimt  (lull  (inVicd  ill  r\  idnicf  a  mnrt;,M;,'c  iilkIc  and  cxc- 
<iittt|  Id  liiin  l»v  (lie  pliiinliir  on  the  sainc  jtrcmiscs,  lu-arin;;  datf 
Aj)ril  Isi,  l.S(iT.  to^rilicr  with  tlic  Ixmd  mfiitioncd  in  inul  sirurt'd  l)y 
said  morl<,M^M',  coiidit ioiird  fnr  tlif  iiavincnt  of  tin'  >\\\n  of  $J,00(>  on 
<ir  111  roll'  (III-  1st  of  \|»ril,  1 SCS,  witli  inicn-st  from  date  Tlii'  plain- 
tilT  then  oircird  in  (^  idnicr  a  lease  for  the  same  |)remis('s,  rnad<' 
an»l  t'Xfcntcd  Itv  liiin  to  tlu'  defemlant,  ltcarin<r  date  on  the  !»tli  day 
of  Aj»ril.  lS(iT,  for  a  {eriii  ending'  on  the  1st  <hiy  of  April,  18(j8, 
in  and  hy  which  said  lease  the  dffendant  eovenanted  to  (|iiit  and 
surrender  nj)  the  jireinises  to  the  plaintilT  at  the  expiration  of  the 
said  tei-in,  and  jMoxed  that  the  rent  a;;reed  (»n  was  the  interest  of 
the  inort.i,M^fe  money,  and  ta.\(s  and  water  rates.  It  was  also 
proved  and  found  as  a  fact  in  the  eause,  that  a  lepd  tender  of  the 
money  due  upon  the  said  hond  and  inort<;aj;i'  was  made  hy  the 
plaintilT  to  the  defendant  after  the  first  day  of  April,  ISGS,  and 
hefore  the  eonimeneement  of  this  action,  whieii  tender  tlie  defend- 
ant refused  to  aeeept. 

The  evidence  hein<,f  closed,  the  plainliU",  l»y  his  coun«Oi,  asked  the 
court  to  find  and  to  f,nve  ju(l<,nnent  that  tlie  plaintilT  was  entitled  to 
have  possession  of  the  said  premises  on  the  1st  of  April,  ISdS,  by 
virtue  of  the  said  lease,  and  that  s.iid  lease  required  the  said  defend- 
ant to  deliver  possession  of  said  |»remises  to  tlie  said  ])laintilT,  which 
finding  and  jud<rnu'nt  the  court  refused  to  make  and  give,  and 
theroupim  the  |)laintifT  prayed  an  exception  to  sueh  refusal,  and  that 
his  exception  mi<:ht  l)e  sealed,  and  it  is  sealed  aeeordinglv. 

^r.  Hi:aslky.  C.  J.  i"l.  s.] 

The  .  .  .  plaintilT  .  .  .  asked  the  court  to  find,  as  a  fact,  that  a 
l(^gal  tender  of  all  the  mtmey  due  and  owing  on  the  said  hond  and 
mortgage  was  made  hy  the  plaintilT  to  the  defendant  after  the  1st 
day  of  April,  18(18,  and  hefore  th«'  commencement  of  this  action, 
and,  upon  that  fact,  to  give  judgment  for  tlu-  plaintifT,  on  the 
ground  that  said  tender  «'xtinguished  and  ti-rminatcd  any  and  all 
right  the  said  defendant  might  have  i)reviously  had  to  hold  poss<'S- 
sion  of  the  said  land,  hy  virtue  of  said  mortgage.  And  the  plaintiff, 
hv  his  counsel,  also  asked  the  court,  in  case  the  plaintifT  should  he 
in  error  as  to  his  asking  in  regard  to  the  ctTect  of  the  said  lease,  to 
permit  an  amendment  of  the  declaration  to  he  made,  so  as  to  state 
that  the  plaintifT's  right  to  the  possession  accrued  at  the  time  when 
the  said  tender  was  made. 

Th(>  court  did  find,  as  a  fact,  that  a  legal  tcn<ler  of  all  the  money 
due  upon  the  said  hond  and  mortgage  was  nuide  hy  the  plaintilT  to 
the  defendant  after  the  1st  day  of  April,  18(;8,  and  lH«fon>  the  cora- 
menciMnent  of  this  attion;  hut  the  court  refused  to  adjudge  that 
said  tender  v'xtinguished  and  terminated  the  rigiit  of  the  said  do- 


T30  DISCHARGE    OF    MORTGAGE.  [CIIAP.  V. 

fendant  to  hold  possession  of  the  said  Lmd,  by  virtue  of  said  mort- 
gage, and  did  adjudge  that  said  tender  having  been  made  after  the 
day  named  in  the  said  bond  for  the  payment  thereof,  did  not  ex- 
tinguish or  terminate  the  right  of  the  said  defendant  to  hold  pos- 
session of  the  said  land,  and  that  the  said  defendant  was  and  is  en- 
titled to  hold  possession  of  said  land,  by  virtue  of  said  mortgage^ 
notwithstanding  the  making  of  said  tender,  to  which  refusal  and 
judgment  of  the  court  the  plaintiff,  by  his  counsel,  excepted,  and  he 
prayed  that  his  exception  might  be  sealed,  and  it  is  sealed  accord- 
ingly. M.  Beasley,  C.  J.   [l.  S.J 

The  opinion  of  the  court  was  delivered  by 

Depue^  J.  The  bills  of  exception  sealed  at  the  trial  raise  two 
questions:  First.  Whether  the  defendant,  being  the  tenant  of 
premises  under  the  plaintiff,  could,  at  the  expiration  of  his  lease, 
make  title  under  his  mortgage  without  iirst  yielding  and  surren- 
dering the  possession  to  the  plaintiff.  And,  second,  whether  a 
tender  by  the  mortgagor  of  the  money  secured  by  a  mortgage, 
Avhich  is  not  accepted  by  the  mortgagee,  made  after  the  day  of 
payment  named  in  the  condition,  terminates  the  estate  of  the  mort- 
gagee in  the  mortgaged  premises,  and  extinguishes  the  lien  of  the 
mortgage  on  the  land,^     .... 

The  extinguishment  of  the  lien  of  the  mortgage  by  the  unac- 
cepted tender  of  the  mortgage  money  after  the  day  named  in  the 
condition,  was  contended  for  by  the  plaintiff's  counsel  with  much 
earnestness. 

A  mortgage,  at  common  law,  is  a  conveyance  absolute  in  its 
form,  granting  an  estate  defeasible  by  the  performance  of  a  con- 
dition subsequent.  The  estate  thus  created  was  strictly  an  estate 
on  condition,  and  in  a  court  of  law  was  treated  as  subject  to  be  de- 
feated only  by  the  performance  of  the  condition  in  the  manner  and 
,)  at  the  time  stipulated  for  in  the  defeasance.  If  made  on  condition 
that  the  conveyance  should  be  void  on  payment  of  a  definite  sum 
of  money  on  a  given  day,  and  the  condition  was  performed  accord- 
ing to  its  terms,  the  estate  reverted  back  to  the  mortgagor  without 
any  re-conveyance,  by  the  simple  operation  of  the  condition.  A 
tender  at  the  time  and  place  and  in  the  manner  prescribed  in  the 
instrument  itself  was  equivalent  to  performance,  and  operated  to 
determine  the  estate  of  the  mortgagee,  and  revest  it  in  the  mort- 
gagor. (Lit.  §  335;  Co.  Lit.  207,  a.;  4  Kent,  193;  Coote  ort 
Mortgages,  6;  Merritt  v.  Lambert,  7  Paige,  344.)  But  when  the 
condition  was  discharged  by  failure  to  comply  with  its  terms,  .the 
estate  of  the  mortgagee  became  absolute  in  law,  and  the  title 
of  the  mortgagor  was  completely  divested  and  gone,  and  a  re- 
*  The  opinion  on  tlie  first  jjoint  is  omitted. 


«-C-  I]  SHIKI.DS  c   l.o/.KAU.  731 

conveyaiK'O  was  nccrssarv  to  rrst(»r('  liini  1«>  his  ori;:iii;il 
estate.  (Lit.  .^  HM'-i ;  2  HIack.  ('Ktii.  l.")S ;  Cootc  on  M()rt<^a;;cs, 'J.)  So 
inflexibly  was  tliis  harsh  r\ilc  of  the  hiw  atlhcrrd  to,  that  it  was 
remarked  hy  a  h-arncd  writer  that  if  the  (h'htor  had  no  greater 
merry  sliown  to  him  than  a  court  of  hiw  will  allow,  the  smallest 
want  of  punctuality  in  his  payment  would  eaus4'  him  forever  to 
lose  the  estate  he  had  jiledged.  (Williams  on  Real  Prop.  33:5.) 
The  rigor  of  this  rule  was  somewhat  abated  by  the  statute 
of  7  George  II.,  ch.  20  (1  Evans'  Statutes  243,  re-enacted  in  this 
State  December  3d,  IT!)-!,  Nix.  Dig.,  Uh  ed.,  <;()8),  which  per- 
mitted a  mortgagor,  when  an  action  was  brought  on  the  bond  or 
ejectment  on  the  mortgage,  j)ending  the  suit,  to  pay  to  the  mort- 
gagee the  mortgage  money,  interest,  and  all  costs  exj)ended  in  any 
suit  at  law  or  in  ecpiity;  or  in  case  of  a  refusal  to  accept  the  same, 
to  bring  such  money  into  court  wlu-ri'  such  action  was  pending, 
which  moneys  so  paid  or  brought  into  court  were  declared  to  be  a 
satisfaction  and  discharge  of  such  mortgage;  and  the  court  was 
required,  by  rule  of  court,  to  com|)el  the  mortgagee  to  assign,  sur- 
render, or  re-convey  the  mortgaged  |)remi.s('s  unto  the  mortgagor, 
or  to  such  otiier  person  as  he  should  for  that  purpose  nominate 
and  appoint.  In  cases  strictly  within  the  terms  of  this  statute,  the 
P^nglish  courts  of  law  have  exercised  an  e(|uitabk'  jurisdiction  to 
enforce  a  redemj)tion  on  payment  of  the  mortgage  debt  after 
default  in  payment,  according  to  the  condition,  by  compelling  a  re- 
conveyance. Except  in  ca.ses  within  this  statute,  the  doctrine  of 
the  English  courts  is  in  accordance  with  the  ancient  common  law, 
that  at  law  a  failure  to  j>ay  at  the  day  prescribed  forfeits  the  estate' 
of  the  mortgagor  under  the  condition,  leaving  him  only  an  equity 
of  redemption,  which  chancery  will  lay  hold  of  and  give  effect  to, 
by  compelling  a  re-conveyance  on  e(|uitable  ti'rn\s. 

In  the  United  States,  the  prevailing  doctrine  in  courts  of  law 
as  well  as  in  courts  of  cipiity,  is  to  consider  the  mortgage  as  merely 
ancillary  to  the  debt,  and  to  h<»ld  that  the  estate  of  the  mortgage 
is  annihilated  by  the  extinguishment  of  the  di-bt  se«tired  by  it, 
after  the  day  of  payment  named  in  the  condition.  (2  (Ireenl.  Cruise, 
J)l,  note  1  ;  1  Kent,  l!)3.)  In  fact,  the  latter  conclusion  will  neces- 
sarily follow  whenever  the  mortgage  is  regarded  not  as  a  common 
law  conveyanie  on  condition,  but  as  a  .security  for  tiic  debt,  the 
legal  estate  being  considered  as  subsisting  only  for  tliat  purpo.<e. 
In  this  State  this  is  the  generallv  received  aspect  in  whi<'])  n 
mortgage  is  regarded,  as  a  mere  ."seciirity  for  the  debt.  f/Vr  Chief 
dustice  Green,  in  Oshnrnr  v.  Tunis,  1  Dntcher.  ('>."»l  ;  prr  Justice 
Southard,  in  Mitniifoivmi  v.  fininr.  1  South.  27!>,  who.sc  di.ssenting 
opinion  in  the  Supreme  Court  was  adopted  in  the  Court  of  Ernirs 


'^o2  DISCHARGE    OF    MORTGAGE,  [CIIAP.  V. 

m  reversing  tlio  judgment  of  the  Supreme  Court.  3  South.  865.) 
Consequently,  payment  after  the  day  will  convert  the  mortgagee 
into  a  trustee  of  the  legal  estate  for  the  henefit  of  the  mortgagor. 
In  Harrison  v.  Eldridge,  2  Halst.  407,  Chief  Justice  Kinsey,  speak- 
ing of  payment  after  the  law-day,  says :  "  When  the  debt  is  dis- 
charged according  to  law  the  mortgagee  has  the  legal  seisin  in 
trust  for  the  mortgagor,  and  the  court  will  never  permit  the  trustee 
or  those  claiming  under  him  to  set  up  this  legal  estate  in 
him  or  them,  to  defeat  the  possession  of  the  cestui  que  trust.  This 
principle  is  settled  in  Armstrong  v.  Peirce,  3  Burr.  1898.  The  same 
doctrine  being  applicable  to  all  trustees,  the  court  would  not  per- 
mit a  recovery  upon  a  merely  formal  title,  when  the  cestui  que 
trust  could  have  compelled  a  re-conveyance  immediately,  and  thus 
liave  acquired  the  legal  title."  The  seventh  section  of"  the  act  of 
June  7th,  1799  (Rev.  Laws,  4G3 ;  Xix.  Dig.,  4th  ed.,  Gil,  sec  11) 
which  authorizes  satisfaction  to  be  entered  on  the  registry  of  the 
mortgage,  in  discharge  of  the  mortgage,  gives  a  legislative  sanc- 
tion to  this  eifect  of  payment  in  the  case  of  a  mortgage  which  has 
been  recorded. 

But  a  tender,  though  it  is  equivalent  to  performance  where  the 
question  is  whether  the  party  is  in  default,  is  not  a  satisfaction  or 
extinguishment  of  a  debt.  Tender  of  the  mortgage  de])t  on  the 
day  named  as  performance  of  the  condition,  and  by  force  of  the 
terms  of  the  condition,  determines  the  estate  of  the  mortgagee,  and 
the  condition  being  complied  with,  the  land  reverts  to  the  mort- 
gagor by  the  simple  operation  of  the  condition.  The  courts  of  the 
State  of  New  York  have  given  the  same  effect  to  a  tender,  without 
payment,  after  the  day  prescribed  for  payment.  This  doctrine  was 
first  asserted  in  Jaclson  v.  Crafts,  18  J.  R.  110,  on  a  misapprehen- 
sion of  a  passage  from  Littleton.  (Lit.  §§  335,  338.)  It  was 
denied  by  the  Chancellor  in  Merritt  v.  Lambert,  7  Paige,  344, 
and  re-affirmed  in  the  Supreme  Court  in  Edwards  v.  The  Farmers' 
Fire  Insurance  and  Loan  Company,  21  Wend.  467  ;  and  in  the  Court 
of  Errors,  in  the  same  case  on  error,  26  Wend.  541 ;  and  by  the 
Supreme  Court  in  Artiot  v.  Post,  6  Hill,  65;  and  again  denied 
])y  the  Court  of  Errors  in  reversing  the  last-mentioned  case.  (Post 
V.  Ariiot,  2  Denio,  344.)  Finally,  in  Kortright  v.  Cadij,  21  X.  Y. 
343,  the  question  was  set  at  rest  in  the  courts  of  that  State  by  re- 
aflfirming  the  rule  laid  down  in  Jachson  v.  Crafts,  and  it  seems  now 
to  be  the  settled  law  in  that  State  that  a  tender  of  the  money  due 
upon  a  mortgage  at  any  time  before  foreclosure  discharges  the  lien 
without  payment,  though  made  after  the  law-day.  I  do  not  find 
that  the  rule,  as  finally  established  in  the  courts  of  New  York,  has 
Ixvn  adopted  by  tlie  courts  of  any  other  State.     In  Massachusetts 


SKC.   l] 


siiiri.ns  r.  r.ozrM;.  7.",;; 


the  decisions  Iiavi-  In^cn  to  the  conlrarv.     (  Mni/ii'inl  v.  /funt,  Tt  I'ick. 
240;  Currier  v.  Galr.  *)  Allen,  r>Ti.)      In   an  earlv  ease  in   New 
TIanipsliire   (Sweit  v.  Horn,   1    New   llanip.  332),  the  court  lieM, 
under  a  statute  declarin<,'  that  all  real  estate  ple(|j,'id  hy  rnort;,M^'e 
might  ho  redeemed  hy  payinj;  all  costs,  &c.,  pro\id<(l  such   pay- 
ment or  performann'  or  tend.T  thereof  Im-  made  within  one  year 
after  the  entry  of  the  mort<,'a<ree  for  condition  hroken,  that  tender 
more  than  a  year  after  hreach  of  condition,  where  no  entry  had  hccn 
made  hy  the  mortgagee,  dischar^'cd   the  lands.     In   a  suhse<|ueMt 
case  the  same  court  qualified  the  ruling  of  this  case  hy  denying 
this  etTect  of  the  tender  unless  the  money  was  hrought  into  court. 
(riallci/  y.  Mctcalf,  G  New  Ilamp.   lot;.)      It  may  with  safety  h.» 
said  that  the  doctrine  of  the  New  York  courts,  originating  in  error, 
and  maintained  against  the  opinion  of  .some  of  the  most  eminent 
jurist.^  that  haye  occupied  the  hench  of  that  State,  is  without  the 
support    of  any  judicial   trihunal   in   this  country,   and   it    is   itii- 
possihle  to  perceiye  upon  what  }irinciple  of  law  or  etpiity  it   can 
he  rested.     As  already  oh.seryed,  tender  on  the  day  named  det.r- 
minates  the  estate  of  the  mortgagee,  hecause  it  is  performance  of 
the  condition.     Hegarding  the  mortgage  as  remaining  after  default 
only  as  a  security  for  the  deht,  payment  thereafter,  hy  a  necessary 
sequence,  operates  as  extinguishment:  the  deht   In-ing  the  princi- 
pal and  the  security  the  acct'ssory.     Whateyer  discharges  the  del»t 
extinguishes  the  security.      No   reason,   founded   in   j)rinciple,  can 
he  assigned  for  giying  that  ctfect  to  a  tender  after  forfeiture.     The 
appropriate  office  of  a  tender  is  to  relieye  the  dehtor  from  suhse- 
(jucntly  accruing  interest,  and  the  costs  of  enforcing,  hy  a  suit,  the 
ohiigation  which  hy  the  tender  of  paynu-nt  he  was  willing  to  per- 
form.    The  deht  still  remains.     In  the  case  of  a  common  moiu'y- 
hond,  hefore  the  statute   I  Anne.  ch.   l(i,  5<   12.  re-enacted  in  this 
State  (Ni.x.  Dig.  (131,  i<  0),  payment  after  th.'  day  would  not  he 
pleaded  without  an  ac(|uitlaiiee  hy  deed.     (2  Sauiui.  4S,  c,  note  1  ; 
Rosenrraiitz  \.  Purliinj.  :>  I)ut«lier,  IJM.)      The  >tatute  only  applie-; 
to  payments  actually  made,  and  a  tender  after  the  dav  cannot  he 
jdeaded.     (2  Saund.  48,  h,  note  i.)     And  if  the  tender  is  made  on 
the  day,  it  can  only  Ik*  nuuh'  ayailahle  hy  plea,  accompanied  hy  pay- 
ment into  court.     (Co.  Lit.  2o;,  a.) 

Where,  as  in  this  case,  the  mortgage  is  accompaiii<'<l  hy  a  hond, 
to  hold  that  a  tend«'r,  after  default,  extinguished  the  mortgap',  for 
the  reason  that  after  such  default  it  remains  only  a  s.'curity  for  the 
debt,  will  lead  to  the  incongruity  of  giying  to  the  tender  an  effect 
with  rospe<t  to  the  security,  which  hy  the  rules  <tf  pleading  and 
establislicd  principles  of  law  the  court  must  deny  in  an  action  on 
the  bond,  which   is   the   immediate  evidence  of  the  debt.     If  the 


734  DISCHARGE    OF    MORTGAGE.  [CIiaP.  V. 

fomi  of  the  instrument  which  evidences  the  debt  is  overlooked, 
and  the  question  is  viewed  in  the  aspect  in  which  the  indebtedness 
immediately  arose,  the  tender  does  not  pay  or  discharge  the  debt ; 
and  though  it  will  avail  to  arrest  the  accruing  of  interest  and  to 
free  the  debtor  from  costs,  it  will  be  deprived  of  that  efficacy  by 
a  subsequent  demand  and  refusal.  If  legal  analogy  is  to  be  pur- 
sued, it  could  lead  no  further  than  to  deprive  the  mortgage  of 
operation  beyond  the  amount  due  when  the  tender  was  made,  leav- 
ing the  question  of  subsequently  accruing  interest  and  costs  to  be 
varied  by  the  subsequent  demand  and  refusal. 

The  instances  in  which  a  tender  and  refusal  amount  to  payment, 
and  will  operate  as  an  extinguishment,  are  those  in  which  the  ob- 
ligation is  in  the  nature  of  a  gratuity,  without  any  precedent  debt 
or  duty,  and  the  discharge  is  an  accidental  and  not  a  neces- 
sary consequence  of  the  tender  and  refusal,  there  being  no  debt  or 
duty  remaining  whereon  to  ground  an  action.  (G  Bac.  Abr.  45G, 
title  Tender,  &c.,  F.)  If  there  is  a  precedent  debt,  as  a  loan  of 
money,  which  the  debtor  secures  by  a  mortgage  on  his  land,  condi- 
tioned for  payment,  though  by  a  tender  made  on  the  day  the  land  is 
freed  and  tlie  feotfer  may  enter  according  to  the  condition,  the  debt 
is  not  thereby  discharged,  and  may  be  recovered  by  action  of  debt. 
(Co.  Lit.  209,  a.)  Tlie  effect  of  a  tender  on  the  day  in  termi- 
nating the  estate  of  the  mortgagee  cannot  be  denied,  because  it 
is  a  legal  incident  of  his  estate.  Another  legal  incident  of  that 
estate  is  the  extinguishment  and  discharge  of  the  condition  by  a 
failure  to  comply  with  its  terms.  Upon  this  courts  of  equity  raised 
an  equitable  estate  in  the  mortgagor,  called  an  equity  of  redemp- 
tion, which  consisted  in  his  right  to  have  the  estate  of  the  mortgagee 
continued  as  a  security  for  the  debt,  notwithstanding  tlie  default. 
In  equity,  a  tender  will  stop  the  accruing  of  interest,  and  will,  in 
some  cases,  cast  upon  the  mortgagee  the  costs  of  a  suit  for  re- 
demption. But  until  the  mortgagee  is  actually  paid  off  by  his  own 
consent,  or  by  the  decree  of  the  court,  he  retains  the  character  of  the 
mortgagee,  with  all  the  rights  incident  to  it.  (Grugeoti  v.  Gerrard, 
4  Younge  &  Coll.,  Exch.,  119-128.) 

When  a  court  of  law  undertakes  to  deal  with  this  equitable  es- 
tate it  must  do  so  upon  principles  of  equity,  and  keep  in  view 
the  relief  which  would  be  afforded  in  equity,  and  protect  the  rights 
of  the  parties  accordingly.  The  recognition  of  this  equitable  es- 
tate has  been  obtained  in  courts  of  law  by  the  fiction  of  regarding 
the  mortgagee,  after  his  debt  is  satisfied,  as  a  trustee  of  the  legal 
estate  for  the  mortgagor.  Until  the  debt  is  paid,  the  legal  seisin 
of  the  mortgagee  is  not  a  mere  formal  title,  and  no  trust  will  be 


**'■'<''•'•]  siiii.i,i)>  c.  i.o/.i.vi:.  735 

raised  for  tlic  hcncfit  of  llir  iii(»rt^'a;,'i)r  until  the  purpose  for  which 
the  mortgage  was  made  is  answered. 

It  was  stated  on  the  argument  that  the  nioiiey  <lu('  on  the  mort- 
gage was  hrought  into  euwrt  at  the  trial.  That  fact  does  not  ap- 
])ear  in  the  hills  of  exeejjtions.  It  is  not  necessary.  theref<tre,  to 
<leei(le  wlu'ther  a  ct)urt  of  law  could  enforce  redemj)tion  in  eases 
within  the  equity,  though  not  within  the  strict  letter  of  the  statute. 
The  English  courts  of  law  June  given  a  strict  construction  to  thy 
«(»rre>i>oiiding  statute  of  T  (ieorge  IF.,  eh.  'iO,  and  have  held  the 
circumstances  of  the  litigation  mentioned  in  the  preamhie  and  in 
the  statute  to  he  jurisdictional  facts,  which  the  court  is  not  at 
liberty  to  disregard.  {Doe  v.  Clifton,  4  Ad.  &  Hi.  809;  Good-title 
V.  No-title,  11  Moore,  41)1;  Sutton  v.  UnwUnijs.  3  Exch.  407.) 
The  statute  shouKl  be  strictly  construed,  and  is  not  aj)j)licable  to  anv 
case  in  whicli  the  mortgagor  is  himself  the  actor.  It  was  designed 
to  aj)ply  only  in  certain  cases  mentioned  in  its  preamble  and  in  the 
introductory  words  of  the  statute,  and  was  not  intended  to  sup- 
])lant  bills  for  redemption.  The  subject  is  one  that  falls  peculiarly 
within  the  jurisdiction  of  courts  of  ('(piity.  The  remedy  there  is 
complete  by  bill  for  a  redemption,  and  relief  may  be  speedily 
obtained  by  the  exercise  of  the  undoubted  powi'r  of  the  court,  by 
the  writ  of  assistance  to  carry  into  effect  its  decree,  by  putting  the 
mortgagor  in  j)ossession,  where  the  mortgagee  has  obtained  posses- 
.'ion  under  the  mortgage.  {Yates  v.  Ifiinihlij,  'i  Atk.  ;}(i;5 ;  Green  v. 
Green,  2  Simons,  3^)!),  4<)() ;  Bacon's  Ordinantrs  in  Chancery,  9  ;  Val- 
entine V.  Teller,  Hopk.  C.  1?.  422 ;  Devancene  v.  Devancene,  1  Edw. 
('.  K.  2T2;  Kerslidir  v.  riiompsou,  I  Johns.  C.  R.  ri09  ;  Svhenrk  v. 
Vonover,  2  Beas.  221;  Fnrkler  v.  Wurth,  Ih.,  39.");  Thomas  v. 
l)e  Hnum,  1  McC'arter,  37;  2  Dan.  Chan.  Prac.  12H0.) 

It  is  n(jt,  therefore,  es.sential  to  the  administration  of  justice  that 
courts  of  law  should,  in  the  al)sence  of  th(>  ii!iperative  n'quire- 
menls  of  a  statute,  entertain  a  jurisdiction  thai  pertains  X^^  courts 
of  equity,  in  the  exercise  of  which  cipiitiis  may  arise  that  a 
<-ourt  of  law  may  lie  incompetent  to  deal  with. 

There  is  no  error  in  the  rulings  of  the  eoiit  l>elow.  ami  the 
judgment  should  be  aflirnu'd. 


T36  DISCHARGE    OF    MORTGAGE.  [C'lIAl'.  V, 

TUTHILL  V.  MORRIS. 

Court  of  Appeals  of  New  York,  1880. 

(81  N.  Y.  94.) 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme 
Court,  in  the  Second  Judicial  Department,  affirming  a  judgment 
in  favor  of  plaintiff  entered  upon  a  decision  of  the  court  on  trial 
without  a  jury. 

This  action  was  brought  to  restrain  the  defendant  from  selling 
certain  premises  in  statutory  proceedings  to  foreclose  two  mort- 
gages thereon  and  to  have  the  same  adjudged  to  be  extinguished 
and  to  require  defendant  to  cancel  the  same  of  record,  on  tiie 
ground  that  the  amount  of  the  mortgages  was  duly  tendered  and 
refused. 

The  mortgages  were  executed  by  plaintiff.  The  mortgagees 
commenced  proceedings  to  foreclose  the  same  by  advertisement 
under  the  statute.  Pending  the  proceedings  they  assigned  the 
mortgages  to  defendant.  Defendant  requested  one  Steers,  an  at- 
torney, to  attend  the  sale  for  him.  The  circumstances  and  the 
nature  of  the  employment,  together  with  the  occurrences  out  of 
which  the  alleged  cause  of  action  accrued,  are  set  forth  in  the 
opinion. 

Rapallo,  J.  The  uncontroverted  evidence  shows  that  Mr.  Steers, 
to  whom  the  tender  relied  upon  by  the  plaintiff  was  made, 
was  not  the  attorney  in  the  foreclosure  proceedings  nor  connected 
with  such  attorney,  nor  the  agent  of  Mr.  Morris,  except  for  the 
specific  purpose  for  which  he  was  employed;  that  his  first  and 
only  connection  with  Mr.  Morris  or  the  foreclosure  was  that  he 
Avas  requested,  on  behalf  of  Mr.  Morris,  to  go  to  the  place  of  sale 
and  engage  an  auctioneer,  and  to  attend  the  sale  and  see  that  it  was 
properly  conducted.  It  may  also  be  inferred  from  the  testimony 
that  he  was  instructed  that  the  sale  should  be  for  cash.  It  is  con- 
ceded by  the  respondent's  points  that  Mr.  Steers  had  no  express 
authority  to  receive  a  tender  and  that  none  was  thought  of.  Mr. 
Steers  did  not  know  nor  was  he  informed  of  the  amount  due  for 
principal,  interest,  or  costs,  beyond  such  information  as  was  af- 
forded by  the  notice  of  sale,  nor  does  it  appear  that  he  had  any 
means  of  ascertaining  the  amount  of  the  costs.  He  was  not  empow- 
ered to  receive  the  purchase  money,  for  this  would  be  payable  only 
on  the  execution  of  the  deed  by  the  mortgagee.  When  he  arrived 
at  the  place  appointed  for  the  sale  he  was  presented  with  a  sum- 
mons, complaint  and  order  of  injunction  in  an  action  by  the  plain- 


si^c.  I.]  TiTirii.r.  r.  ^^oI{I!Is.  T;J7 

tifT  a<^ainst  ^fr.  ^lorris,  hut  declined  to  nvi'ive  or  admit  service 
thoivof  on  behalf  of  Mr.  Morris,  on  the  ^'round  that  he  was  not 
his  attorney.  Tiie  injiinetion  order  was  then  reii<l  !•>  him.  It 
ordered  that  the  sale  lie  upon  the  terms,  anion;,'  others,  that  not 
more  than  10  per  cent,  of  the  amount  hid  he  paid  down.  He 
stated,  as  testified  to  hy  the  |)laintiir's  attorney,  that  he  was  in- 
structed to  sell  for  cash,  and  said  that  if  he  could  not  do  that  he 
should  adjourn  the  sale,  and  accordingly  instructed  the  auctioneer 
to  adjourn  the  sale  for  thirty  (hiys.  After  he  had  announced  hi^ 
intention  to  adjourn  tin-  sale,  hut  lu-fore  he  lia<l  instructed  the  auc- 
tioneer, and  as  he  was  ahout  doing  so,  tlie  alleged  tender  was 
made  hy  ^Ir.  Tuthill,  one  of  the  plaintiff's  attorneys,  in  the  follow- 
ing manner,  as  testified  to  hy  Mr.  Tuthill:  ^^r.  Tuthill  testifier 
that  he  tendered  to  ^fr.  Steers  a  quantity  of  greenhacks,  amount- 
ing, in  fact,  to  $(J,300,  and  said  to  Mr.  Ste(>rs  that  he  tendered  the 
money  in  behalf  of  the  plaintiff  for  the  whole  amount  due.  That 
lie  did  not  state  how  much  money  there  was,  hut  tendered  it,  an<l 
said  to  Mr.  Steers:  "I  want  to  j)ay  the  whole  amount  if  you  will 
let  me  know  how  much  it  is,"  and  Steers  re|)lied  that  he  did  not 
know.  Witness  then  said:  "Will  vmi  tak(^  this  money?"  and  hi* 
said  he  would  not,  and  asked  what  witness  wanted  to  pay  for,  and 
witness  .saitl  that  he  wanted  to  pay  for  the  notes,  interest  and 
costs.  Immediately  after  this  conversation,  th(>  auctioneer,  under 
the  instruction  of  Mr.  Steers,  announced  the  adjournment  of  the 
sale  for  thirty  days. 

^Ir.  Steers  testified  that  in  declining  to  receive  tlu^  m<»ney  he 
stated  that  he  was  not  authorized  and  that  the  sale  was  adjourned. 

We  perceive  nothing  in  the  course  pursued  hy  Mr.  Steers  indi- 
cating any  purpo.«e  to  oppress  or  take  any  uikIuc  advantage  of  the 
])laintifT.  By  the  adjournment  of  the  sale  the  i)laintitT  was  re- 
lieved of  all  immediate  pressure,  and  ample  time  was  an'or<led,  if 
he  in  good  faith  desired  to  pay  off  the  mortgages,  to  seek  the 
])roper  party  and  have  the  amount  of  interest  and  costs  asi-ertaimd. 
It  is  apparent  that  the  tender  niadr  was  a  complete  surprise,  and 
that  even  if  ^fr.  Steers  had  authority  to  receive  ))ayment  of  th<' 
mortgages  he  was  not  in  a  situation  to  do  so  at  that  time  or  place. 
It  is  by  no  mean-  cl.ar  that  a  person,  not  the  attorney  in 
the  proceeding,  hut  merely  casually  employed  to  .superintend  a 
mortgage  sale  and  sec  that  it  is  propt>rly  conducted,  is  hy  such 
employment  authorized  to  receive  the  principal  of  the  mortgage; 
hut,  irrespcM'tive  of  that  point,  when  he  announces  that  he  i<  ignor- 
ant of  tlu>  amount  due  for  jirincipal,  inten^st  and  costs.  an<1  if  is 
evident  that  he  has  not  the  means  of  information  at  hand  a<  to  the 
exact  amount,  it  would  he  in  the  highest  degree  unreasonable  to 


738  DISCHARGE    OF    MORTGAGE.  [CIIAP.  V. 

liokl  that  a  person  thus  situated  is  bound  to  take  the  responsibility 
of  accepting  or  refusing  a  tender,  and  that  his  refusal  discharges 
the  lien  of  the  mortgage.  Insisting  upon  the  immediate  accept- 
ance of  a  tender  under  such  circumstances,  and  when  the  sale  is 
iibout  to  be  adjourned,  indicates  rather  a  design  on  the  part  of  the 
mortgagor  to  take  an  unfair  advantage  of  the  mortgagee  than  to 
relieve  himself  from  oppression. 

Furthermore,  there  is  no  evidence  in  the  case  showing  that  the 
sum  tendered  was  the  full  amount  of  principal,  interest  and  costs. 
The  sum  tendered  is  said  to  have  been  $6,300.  The  amount  of 
principal  and.  interest,  according  to  the  notice  of  sale,  was  $6,150 
and  upwards.  What  was  the  amount  of  the  costs  in  no  manner 
appears  in  the  case.  To  this  point  it  is  answered  that  Mr.  Steers 
did  not  object  that  the  amount  tendered  was  insufficient,  and  that 
the  plaintiff  was  ready  to  pay  whatever  amount  was  due.  But 
'Mr.  Steers  did  state  that  he  was  ignorant  of  the  amount,  and  he 
did  not  occupy  such  a  relation  to  the  case  that  it  could  be  presumed 
that  he  knew  or  that  it  was  his  duty  to  know  the  precise  amount. 

;N"either  does  it  appear  that  any  specific  amount  was  tendered. 
The  plaintiff's  witness,  Mr.  Tuthill,  exhibited  a  quantity  of  bills, 
but  he  admits  that  he  did  not  name  the  amount,  though  he  asked 
Mr.  Steers  to  count  them,  and,  taking  the  whole  evidence,  it  is  not 
clear  that  Mr.  Tuthill  offered  to  pay  the  whole  amount  he  had  in 
his  hand,  if  it  exceeded  the  amount  due.  When  asked  what  he 
wanted  to  pay,  he  replied,  "  the  notes,  interest  and  costs."  He  had 
previously  said  that  he  wanted  to  pay  the  whole  amount  if  Mr. 
Steers  would  let  him  know  how  much  it  was,  and  Steers  had  told 
him  he  did  not  know.  The  fair  construction  of  this  testimony 
is  that  he  desired  to  pay  the  amount  due  only,  and  before  pay- 
ing desired  to  be  informed  of  the  amount,  but  that  the  person  to 
whom  he  applied  had  not  the  means  of  giving  the  information. 

We  are  of  opinion  that  the  plaintiff  failed  to  make  out  a  tender 
to  the  defendant  and  a  refusal  which  discharged  the  lien  of  the 
morto-age.  In  view  of  the  serious  consequences  resulting  from 
the  refusal  of  such  a  tender,  the  proof  should  be  very  clear  that  it 
was  fairly  made  and  deliberately  and  intentionally  refused  by  the 
mortgagee,  or  some  one  duly  authorized  by  him,  and  that  suffi- 
cient opportunity  was  afforded  to  ascertain  the  amount  due.  At 
all  events,  it  should  appear  that  a  sum  was  absolutely  and  uncon- 
ditionally tendered  sufficient  to  cover  the  whole  amount  due.  The 
l)urden  of  that  proof  is  on  the  party  alleging  the  tender. 

But  even  if  a  sufficient  tender  had  ])een  made  out,  this  action 
could  not,  in  our  judgment,  be  maintained.  Although  the  au- 
thorities cited  sustain  the  proposition  that  when  a  tender  has  been 


«>•■*■• '1  TrTiin.i.  r.  Moitiiis.  735 

duly  iiuidi'  of  the  full  amount  dur  it  will  di?rlinrp;c  tho  lion  and  ho 
a  ^Doii  dcl'i'iisc  aj^aiiist  its  ciifdrcciiiciit,  witlioiit  llic  tender  boin^ 
kept  jfood,  yet  we  arc  idcarly  of  ojiinion  that  it  should  he  kept  ^ood 
in  order  to  entitle  the  iiiort,<;a;,'or  to  the  allirniative  relief  whioh  he 
seeks  in  this  action  and  which  the  jud<;nient  awards  him,  viz.,  the 
extinguishment  of  the  mortgage.  A  party  coming  into  equity  for 
alhrmative  relief  must  himself  do  ecpiity.  and  this  wouhl  rcfpiire 
that  he  pay  the  dei)t  secured  i)y  the  mort;(a<;e,  an<l  tlie  costs  an«l  in- 
terest at  k'ast  uj)  to  tho  time  of  tho  tender.  There  can  be  no  pre- 
tense of  any  ecpiity  in  dej)rivint?  the  creditor  of  his  security  for  his 
I'utire  debt  by  way  of  penalty  for  havinj;  declined  to  receive  pay- 
ment wlu'U  oll'ered.  The  most  that  could  be  e(|uital)ly  claimed 
woulil  be  to  relieve  the  debtor  from  the  payment  of  interest  and 
costs  subsequently  accruing,  and  to  entitle  him  to  this  relief  he 
should  have  kept  his  tender  good  froni  the  time  it  was  made.  If 
any  further  advantage  is  gained  by  a  tender  of  the  mortgag*-  (U-bt 
it  must  rest  on  strict  legal  rather  than  on  e(iuital)le  principles. 
The  circumstance  that  a  security  has  become  or  is  invalid  in  hiw, 
and  could  not  be  enforced  even  in  equity,  does  not  entith^  a  party 
to  lome  into  a  court  of  ecpiity  and  have  it  decreed  to  be  surren- 
dered or  extinguished  without  paying  the  amount  equitably  owing 
thereon.  Even  securities  void  for  usury  would  not  be  cancelled 
by  a  court  of  equity,  without  payment  of  the  debt  with  legal  inter- 
est, until,  by  statute,  it  was  otherwise  provided.  This  statute  does 
not  change  the  general  principle  of  e<piity,  but  on  the  contrary 
recognizes  it,  by  excepting  cases  of  ustiry  from  its  operation.  On 
this  ground,  even  if  the  alleged  tender  could  be  sustained,  the  ))lain- 
tilT  was  not  entitled  to  a  decree  for  the  unconditional  extinguish- 
ment of  the  mortgage. 

We  are  of  opinion,  however,  as  already  stated,  that  no  sutlicient 
tendiT  was  shown,  and  that  on  both  grounds  the  judgment  should 
be  reversed  and  a  new  trial  ordered,  costs  to  abide  th«'  event. 

All  concur. 

.Judijmcnt  reversed} 

'  V>-.nur  V.  Tuvh,  Vl"  N-  V.  217  (ISitl).  ,V. /.so,,  v.  l.n,Ur,  V.Vl  N.  Y.  288 
(18!)2).  CoxrliH  V.  Marhlr,  M  Mult.  ir)H  (IS77).  arron/.  Ihit  sit  l/<>i/«<i- 
/i<i»i  V.  Moore,  9  Muh.  9  (18U0)  uiul  McrklUtn  v.  ColJin,  93  Ind.  450  (1883), 
ftiutra. 


740  DISCIIAUGE   or   MORTGAGE.  [CIIAP.  V. 


CHAPTER  V.  {continued.) 

Section  II.     Other  Discharge  of  Debt. 

SPEAES  V.  IIARTLY. 

Court  of  Common  Pleas,  1800. 

(3  Espinasse,  81.) 

This  was  an  action  of  trover,  for  a  log  of  mahogany. 

The  defendant  was  a  wharfinger,  and  claimed  a  lien  on  it,  as  well 
for  the  wharfage  as  for  the  balance  of  a  general  account,  which 
balance  was  due  in  the  year  1790;  under  which  lien  he  justified  a 
right  to  retain  it. 

Best,  Serjeant,  for  the  defendant,  contended  that,  admitting  the 
defendant  might  claim  a  lien  for  the  wharfage  due  on  a  particular 
article,  he  was  not  entitled  to  such  lien  for  the  balance  of  a  general 
account. 

Lord  Eldon,  referring  to  the  case  of  Nnylor  v.  Mangles,  ante.  1 
vol.  109,  said:  This  point  has  been  ruled  by  Lord  Kenyon,  that  a 
wharfinger  has  a  lien  for  the  balance  of  a  general  account,  and 
considered  as  a  point  completely  at  rest ;  I  shall,  therefore,  hold  it 
as  the  settled  law  on  the  subject  that  he  has  such  a  lien  as  is  claimed 
in  the  present  case. 

Best  then  contended  that  it  appeared  that  the  balance  which  the 
defendant  claimed  to  bo  due,  and  under  which  he  entitled  himself 
to  a  lien,  had  accrued  in  the  year  1790,  and  so  was  barred  by  the 
statute  of  limitations;  the  debt  being  therefore  discharged  by  opera- 
tion of  law,  the  defendant  could  not  be  entitled  to  any  lien  by  vir- 
tue of  it. 

Lord  Eldon  :  If  what  has  been  stated  by  the  defendant's  coun- 
sel be  law,  that  the  debt  is  discharged  by  the  operation  of  the  stat- 
ute of  limitations,  no  lien  could  be  obtained  by  reason  of  it ;  but  the 
d(»bt  was  not  discharged ;  it  was  the  remedy  only.  I  am  of  opinion 
that  though  the  statute  of  limitations  has  run  against  a  demand, 
if  the  creditor  obtains  possession  of  goods  on  which  he  has  a  lien 
for  a  general  balance,  he  mav  hold  them  for  that  demnnd  bv  virtu<^ 
of  the  lien.     In  this  case  the  defendant  had  a  subsisting  demand 


•**f^< '•  "  1  Dvvis  r.  nATTiS!-:.  711 

when  tlie  goods  caiiK'  lo  Wis  possession  ;  and  I  uni  of  opinion  he  may 
enforce  it  hy  the  lien  whicli  the  hiw  has  ;:i\eii  him  for  his  general 
halanee. 

VtrJi(  I  for  (he  defendant. 


D.WIS  V.  I'.A'I'riM:. 

llli.ll    (   oll.T  of  CilAM  |.|;v.    1S;)0. 

(•-'  l!iis<.  cl-  Mill.  Tii.) 

A  creditor  who  had  a  mortgage  .-einrily  for  his  deht  had  sued  the 
debtor,  and  taken  him  in  eveeiition.  'I'he  debtor  afterwards  took 
the  benefit  of  the  Insolvi-nt  Act. 

On  an  exception  to  the  Master's  report,  thi-  (piestion  was  raiseil 
whether  the  debt  \\a>  not  satislied  l)y  the  body  of  the  debtor  having 
been  taken  in  execution,  -o  a-  to  extinguisli  the  lien  of  \\\v  creditor 
on  the  hmd. 

Mr.  'rreslocf  and  Mr.  M'lrlin.  in  sup|><trt  of  the  exception. — In 
Danuibi/'s  C'dsr.  1  Strange,  (J*).'},  it  was  hcM  that  a  creditor  who  had 
taken  the  body  of  liis  (U-htor  in  execution  could  not  be  a  jjctitioning 
creditor  to  sustain  a  cpmmis-;ion  of  bankrupt,  l)ecause  the  boily  of  the 
debtor  being  in  execution  was,  in  point  of  law,  a  satisfaction  of  the 
debt.  If  the  debt  be  absolutely  .satistied,  how  can  the  creditor  chiim 
further  satisfaction?  No  instance  can  be  achhiced  in  which  a  mort- 
gagee having  taken  the  body  of  the  mortgagor  in  execution  for  thi» 
niortgagc  debt,  has  gone  on  to  foreclo.se.  The  principle  of  the  court 
is,  that  a  moitgagee,  though  lu'  may  have  recourse  to  all  ids  reme- 
dies, cannot  have  a  double  satisfaction.  If  he  forecloses  and  .stdls 
the  estate,  he  will  not  be  jjcrmitted  afterwards  to  sue  on  the  cov- 
enant for  the  (h'ficii'uev.  (/'«'/•///  v.  liarki'i,  13  Ves.  l'.>8;  Tookc  v, 
HaHIci/.  '>  Uro.  ('.  ('.  Vio.) 

y\r.   Wilhriihniii .  (outrn. 

The  Master  of  the  Kolls  fSin  John  Lk.mii]  snid  he  did  not 
remember  to  have  heard  it  ever  suggested  that  a  mortgagiH',  by  pro- 
ceeding to  execution  against  the  body  of  the  debtor,  reiea.st'd  his 
interest  in  the  hmd:  and  he  ovi-rnded  the  exct>ption. 


743  DISCHARGE   OF   MORTGAGE.  [CHAP.  V, 

BRINCKEEHOFF  v.  LANSING. 

Court  of  Chancery  of  New  York,  1819. 

(4  Johns.  Ch.  65.) 

Bill  filed  February  4tli,  1812,  by  Jobn  Brinckerboff,  Natban 
Morey,  and  Aaron  Wilcox  against  Lcvinus  Lansing,  Otis  Bates,  and 
James  Adams  to  restrain  defendants  from  selling  certain  premises 
in  Lansingburgh  under  a  fi.  fa.  levied  tbereon  by  defendant  Lan- 
sing, or  under  a  power  of  sale  contained  in  a  mortgage,  exe- 
cuted September  3,  1803,  by  defendant  Bates  to  said  Lansing,  to 
secure  the  latter  against  loss  on  a  note  endorsed  by  him  for  Bates. 
The  plaintiffs  claim  title  to  the  property  in  question,  and  allege 
that  on  April  3d,  1806,  a  judgment  by  confession  was  entered  up 
against  defendant  Bates  in  favor  of  defendant  Lansing  to  indem- 
nify him  as  such  endorser,  and  that  the  note  or  notes,  to  secure 
which  the  mortgage  was  given,  were  afterwards  discharged.  The 
other  material  facts  are  given  in  the  opinion.^ 

The  Chancellor  [Kent]  :     The  claims  of  the  three  plaintiffs- 
are  entirely  separate  from  each  other,  and  rest  on  distinct  grounds. 

1.  The  plaintiff  Wilcox  claims  as  a  purchaser  under  the  defend- 
ant Bates,  and  seeks  to  be  relieved  from  the  operation  of  a  judgment 
of  1806,  against  Bates,  in  favor  of  the  defendant  Lansing.  The 
counsel  for  the  defendant  Lansing  admitted  at  the  hearing  that 
the  judgment  complained  of  was  satisfied ;  consequently,  the  plain- 
tiff Wilcox  is  entitled  to  the  relief  sought  by  the  bill,  and  to  have 
the  defendant  Lansing  perpetually  enjoined  from  any  proceeding 
upon  that  judgment.  The  plaintiff  Brinckerboff  also  seeks  the 
same  relief,  and  is  entitled  to  the  same  remedy  in  respect  to  that 
judgment. 

3.  The  plaintiff  Morey  claims  title  to  a  lot  in  Lansingburgh, 
under  a  purchase  upon  execution  against  John  Morey,  who  held 
under  a  lease  of  the  defendant  Bates,  given  in  1804,  and  he  seeks  to 
be  relieved  against  the  operation  of  a  mortgage  coverinsj  the  same 
lot,  and  given  by  Bates  to  the  defendant  Lansing  in  1808.^ 

3.  This  case,  then,  turns  wholly  upon  the  question  whether  the 
mortgage  of  1803,  from  Bates  to  Lansing  was,  at  the  time  of  filing 

^This  short  statement  of  facts  is  condensed  from  the  pleadings  set  fortli 
in  the  report. 

^The  opinion  relating  to  the  claim  of  this  plaintiff,  viz.:  that  defendant 
Lansing  is  estopped  by  his  dealings  with  this  plaintiff  from  setting  ii]i  tlie 
mortgage  as  to  him,  is  omitted.  Tlie  learned  Chancellor  reaches  the  con- 
clusion that  there  is  no  estoppel. 


*^*'^-  "-J  HUlNCKDItllorr   I'.  LANSING.  743 

the  l)ill,  to  bo  dct'incd  a  valid  subsist in;^  inort^^Mfjo  for  any  part  of 
the  di'bl  originally  sciurcd  by  it.  In  lhi.s  question  the  plainlilFs 
Brinckoriioir  ajul  Morey  are  wjually  interested,  for  they  both  hold, 
by  purcliasi-  under  iiati-s,  parts  of  ihe  land  eovereii  l)y  Lansing's 
mortgage. 

Jt  does  not  appear  to  nie  tiiat  the  claim  under  this  mortgagi? 
ought  to  be  alfected  by  other  transactions  totally  distinct  from  it; 
any  fraudulent  pretensions  of  Lansing,  under  either  of  his  judg- 
ments, are  not  to  destroy  his  rights  under  tlie  mortgage;  it  must 
gtand  and  be  investigated  upon  its  own  merits. 

There  is  no  doubt  of  its  having  been  a  fair,  valid  mortgage  in 
the  beginning,  and  given  to  indemnify  Lansing,  as  endorser  of  a 
note  drawn  by  Bates  for  1,.500  dollars.  The  only  proper  inquiry 
now  is,  Has  Lansing  I)(>en  injured,  and  is  he  entitled  to  any  indem- 
nity for  the  injury  he  received  by  means  of  that  note? 

The  proviso  in  the  mortgage  was,  that  Bates  v^'as  to  pay  to  Lansing 
1,500  dollars  with  interest,  "according  to  the  condition  of  a  certain 
bond,  or  writing  obligatory,  bearing  even  date  therewith,  executed 
by  Bates  to  Lansing  as  a  collateral  security."  The  bond  here  re- 
ferred to  wa.s,  according  to  the  condition  of  it,  "  to  pay  1,500  dol- 
lars, with  lawful  interest,  on  or  before  the  7th  of  March,  1803,  or 
keep  the  defendant  L.  hannless.  and  pay  up  the  nt>te  endorsed  by 
the  defendant  L.  for  the  defendant  B.,  in  the  Farmers'  Bank,  when 
the  same  should  be  called  for.'' 

The  note  referred  to,  in  the  condition  of  the  bond,  was  of  tlu' 
same  date  with  the  bond  and  mortgage,  and  was  for  L'>00  dollars, 
payable  in  fifty-six  days,  and  discounted  at  the  Farmers'  Bank,  in 
favor  of  Bates.  It  appears  by  the  testimony  t)f  L.  L  Tillman  that 
the  note  was  renewed  at  the  end  of  the  fifty-six  days  by  a  new  note 
made  and  endorsed  in  like  manner,  and  so  it  continued  to  be  tv- 
newed  toties  <iuofi<'s.  for  a  number  of  years.  The  calls  w»'re  all 
paid,  from  time  to  time,  by  Bates,  and  the  sum  was  reduced  grad- 
ually, at  times,  to  !)00  dollars,  to  TOO  dollars,  to  COOclollars,  and 
at  one  time  to  400  dollars,  and  then  it  was  rai.sed  again,  on  tlic  re- 
newal, to  1,000  dollars,  and  at  one  time  to  1,300.  The  debt  of 
1802  was  kejit  alive  in  the  bank  by  these  constant  renewals  and 
alternate  variations  in  the  sum  until  the  Sth  of  October.  18n, 
when  the  sum  was  reduced  to  7'?0  dollars,  and  the  note  then  alive, 
and  for  that  sum,  was  proto^ted  for  non-pa vment.  This  cntnstro- 
j)he  put  a  stop,  according  to  the  u.-Jual  mercantile  phnise.  to  the 
running  of  the  note  in  the  l)ank.  and  the  defendant  TiTn<in<r.  as 
endorser,  w^a.s  obliged  to  take  up  and  pay  the  note,  wliich  he  did 
by  a  note  of  his  own.  as  drawer,  endorsed  bv  the  defendant  Adams. 

I  see  no  good  reason  why  the  bond  and  mortgage  should  not 


744  DISCHARGE   OF   MORTGAGE,  [CUAP.  V. 

stand  as  an  indemnity  and  security  for  the  720  dollars,  which 
Lansing  was  thus  obliged  to  pay. 

The  bond  was  intended  as  an  indemnity  against  the  bank  debt, 
originally  created  by  the  loan  upon  the  note  for  1,500  dollars,  so 
long  as  that  bank  debt  should  continue,  under  the  customary  re- 
newals and  fluctuations  in  the  amount.  The  1,500  dollars  were, 
by  the  bond,  made  payable  in  six  months;  this  fact  shows  that  the 
parties  contemplated  a  continuation  of  the  debt  beyond  the  fifty- 
six  days,  for  which  the  original  note  was  made  payable.  It  was 
evidence  of  an  expectation  that  the  note  was  to  be  repeatedly  re- 
newed. The  other  part  of  the  condition  of  the  bond,  that  the  de- 
fendant Bates  was  to  pay  the  note  in  the  bank  "  when  the  same 
should  be  called  for,"  shows,  also,  the  like  expectation.  Instead  of 
fixing  at  the  precise  period  when  the  first  note  was  made  payable, 
as  would  have  been  done  in  any  other  case,  the  parties  adopt  the 
loose  commercial  phrase  applicable  to  a  note  running  in  the  bank, 
and  evidently  allude  to  the  calls  for  partial,  and  for  final  payment, 
to  be  made  on  the  part  of  the  bank.  There  is  no  doubt  that  this 
construction  of  the  instrument  is  according  to  its  true  meaning; 
and  the  mortgage  continued  a  subsisting  and  valid  security  so  long 
as  the  debt  created  in  September,  1802,  was  kept  alive  in  the  bank, 
either  in  whole  or  in  part,  by  these  customary  renewals.  The  mort- 
gage, with  its  accompanying  bond,  fairly  disclosed  the  nature  of 
this  continuing  security,  and  no  imposition  was,  or  could  have  been, 
practised  upon  any  subsequent  purchaser  or  mortgagee  who  would 
be  at  the  pains  to  examine  into  the  state  of  the  debt  disclosed  by 
the  bond  and  mortgage.  The  mortgage  itself  disclosed  the  nature 
of  the  debt  secured  by  the  bond,  when  it  stated  that  the  bond  was 
taken  as  a  collateral  security.  Such  a  security  for  such  a  debt  might 
subsist  indefinitely ;  but  what  concern  has  the  purchaser,  or  subse- 
quent encumbrancer,  with  the  nature  of  the  security,  provided  there 
be  no  false  lights  held  out,  and  he  be,  by  the  registry,  timely  and 
duly  informed  of  the  character  of  the  lien  ? 

The  only  objection  of  any  force  to  the  validity  of  the  mortgage 
as  a  security  for  these  renewed  notes  is,  that  the  notes  were  occa- 
sionally increased,  which  might  seem  to  be  so  far  the  creation  of  a 
new  debt.  But  I  apprehend  such  an  occasional  increase  of  the 
debt,  on  the  periodical  renewal,  provided  the  debt  was  kept  within 
its  original  limits,  did  not  change  the  character  of  the  debt  or  affect 
the  security.  It  is  not  so  understood  in  the  commercial  world,  and 
was  not  so  intended  by  the  parties  to  the  mortgage ;  and  an  increase 
of  the  sum  on  a  renewal  was  no  more  than  a  return  of  some  of  the 
calls  made  on  the  former  renewals.  The  identity  of  the  debt  re- 
mained, so  as  to  preserve  the  relation  between  that  and  the  pledge. 


''**'-'^'-  "J  )ii(iN(  Ki:i;ii(>j-i    (.  i.w^iNc;.  71*) 

li  woiiKl  l)f  dangerous  and  unjust,  ns  l)Otwoon  tho  partirs,  not  to 
allttw  the  wliolr  note  so  ri-ncwi'd  to  coinr  under  the  protection  of  the 
luorti^age.  'I'liere  wa.s  nothing  here  like  the  novation  of  the  civil 
hiw.  There  was  no  new  debt  created  dilTering  in  quality  or  char- 
acter, or  relation  or  security.  It  was  according  to  mercantile  and 
hank  usage  (in  reference  to  which  the  bond  and  mortgage  wen- 
given)  a  renewal  or  continiuition  of  the  same  debt,  under  the  same 
circumstances,  and  subject  only  to  those  tluctuations  in  amount 
which  arc  customary  in  such  bank  operations.* 

I  shall,  therefore,  decree:  1.  A  perpetiuil  injunction  in  favor 
of  the  plaintilTs  B.  and  W.  against  any  execution  or  other  proceed- 
ing, on  the  judgment  confessed  by  Bates  to  Lansing,  and  docketed 
on  the  3d  of  A])ril,  ISOfi,  and  that  entry  of  satisfaction  of  record 
of  that  judgment  be  made  by  the  defendant  Lansing. 

2.  That  unless  the  plaintiffs  B.  and  ^I.,  or  one  of  them,  bring 
into  court  and  deposit  with  the  register,  for  the  use  of  the  (h-fend- 
aut  L.,  within  thirty  days,  the  sum  of  720  dollars,  together  with 
lawful  interest  thereon  from  the  8th  day  of  October,  IHll,  unto 
tlie  day  of  bringing  in  the  same,  the  injunction  heretofore  issued, 
in  respect  to  any  proceeding  under  the  bond  and  mortgage  in  the 
pleadings  mentioned,  Ih^  thereafter  dissolved,  so  far  as  to  allow  the 
defendant  L.  to  demand  and  collect  under  it,  or  by  virtue  of  it. 
the  sum  of  720  dollars,  with  interest  from  the  8th  day  of  October, 
]811,  until  the  money  shall  be  paid  and  the  costs  and  charges  of  all 
necessary  proceedings  thereon. 

3.  That  the  bill,  as  to  the  defendant  B.,  be  dismis.sed,  and  that 
unless  the  plaintiffs  B.  and  M.  shall  within  thirty  days  elect  to  pro- 
ceed against  the  defendant  .\.,  to  enforce  his  proportion  (if  any) 
of  contribution  to  the  said  debt  and  interest  so  declared  due  to  tlu> 
defendant  Ti.,  and  give  notice  of  such  election  to  the  solicitor  for 
the  def»>ndant  Adams,  that  then  the  bill  as  to  him  shall  stand  dis- 
missed.' 

Derrrr    acrnnh'ngli/. 

'Tlic  rc>?t  of  (lio  opinion,  rolntinp  in  ollior  nsp<'<-ts  of  tho  controversy 
ix'twtpn   llio   partios.   i>»  omitted. 

■Chotinii  V.  Thompso}!,  3  Oh.  St.  424  (1S.')4):  McHuin-  v.  Van  P,lt.  .V. 
.\1;».  .144    (ISTTi).  accord.     Hut   see  ,farnapa»  v.  Oainxi.  h\   ]\]    .W*    (isTi'.i 


746  DISCHARGE   OF   :\IOETGAGE.  [CIIAI-.  V. 

BUTLER  V.  MILLER. 

Court  of  Appeals  of  Xew  Yokk,  1848. 

(1  N.  Y.  496.) 

This  was  an  action  of  trover  brought  in  the  Supreme  Court 
by  Butler  and  Yosburgh  against  Miller  for  a  number  of  horses, 
cattle  and  hogs,  and  a  quantity  of,  farming  utensils,  and  other 
property.  The  cause  was  first  tried  before  Cushman,  late  Cir- 
cuit Judge,  at  the  Columbia  Circuit,  in  September,  1843,  when 
a  verdict  was  had  for  the  plaintiffs,  which  was  set  aside  by  the 
Supreme  Court  and  a  new  trial  ordered.  (See  1  Denio,  407.) 
A  second  trial  was  had  before  Parker,  Circuit  Judge,  in  March, 
184G,  and  on  that  trial  the  case  was  as  follows : — 

The  plaintiffs  gave  in  evidence  a  chattel  mortgage  upon  the 
property  in  question,  executed  to  them  by  one  Abraham  B.  Van- 
derpoel,  dated  April  19,  1842,  which  had  been  duly  filed  in  the 
proper  town  clerk's  office.  The  instrument  recited  that  Yandcr- 
poel  was  indebted  to  the  plaintiffs  in  the  sum  of  $498.72,  being 
the  amount  of  three  promissory  notes  made  by  Yanderpoel,  and 
held  by  the  plaintiffs,  and  the  mortgage  was  to  become  void  if 
Yanderpoel  should  pay  the  debt  by  the  first  day  of  October  then 
next.  Evidence  was  given  tending  to  show  a  just  consideration 
for  the  notes.  At  the  time  the  mortgage  was  given  the  property 
was  on  the  farm  of  the  mortgagor,  and  was  used  by  one  Mosher. 
who  worked  the  farm  on  shares,  under  an  agreement  by  which 
Yanderpoel  was  to  furnish  teams,  stock  and  utensils.  After  the 
mortgage  was  given  the  property  remained  on  the  farm,  and  wa< 
used  as  before.  On  the  15th  day  of  July,  1842,  the  defendant,  as 
sheriff  of  the  county  of  Columbia,  sold  the  property  in  question  by 
virtue  of  an  execution  against  Yanderpoel,  in  favor  of  the  Lafay- 
ette Bank,  which  was  delivered  to  the  sheriff'  on  the  oth  of  May.. 
1842.  The  evidence  tended  to  show  that  the  plaintiffs  asserted 
their  claim  under  the  mortgage  at  the  sale,  and  forbid  the  sale. 

It  also  appeared  that  on  the  7th  of  May,  1842,  the  plaintiffs 
took  from  Yanderpoel  a  bond  and  warrant  of  attorney  for  the 
amount  of  the  notes  secured  by  the  mortgage,  upon  which  judg- 
ment was  entered  in  the  Supreme  Court  on  the  same  day,  and 
execution  thereon  was.  by  Yanrlerpoel's  consent,  issued  immerli- 
atelv  to  one  of  tho  deputif^s  of  the  sheriff  aforesaid.  It  was  also 
provod.  after  obiection  rlulv  made  and  excention  bv  the  defendant's 
counsel,  that  it  Avas  ao-roed  between  the  plaintiffs  and  Yanderpoel 
that  the  judgment  should  be  taken  as  collateral  to  the  mortgage. 


s^f"-  "J  niTi.n;  /•.   mi  1.1.1:1;,  747 

'I'lit'  plaint ifT."*'  cxcfutioii,  smou  after  it  was  issued,  was  levied  upon 
the  property  in  (piestion,  and  the  property  was  advertised  for  sale 
hoth  uiuh-r  that  execution  and  the  t)ne  altove  mentioned  in  favor  of 
the  Liifayt'tte  Hank. 

It  also  ajjjieari'd  that  afhr  llie  .-lieriir's  sale  ai>o\r  nieiil  ioiud 
the  plaintitTs  made  a  m<»tii)n  in  the  Supnine  Cmiri  for  an  order 
requiring;  the  defendant,  as  >uili  >hcriir.  t<>  ajiply  the  proceed-  of 
the  sale  on  tlie  judgment  and  execution  in  their  favor.  This  mo- 
tion was  hased  ujion  an  allegation  that  the  execution  of  the  Lafay- 
ette ]iank,  when  (irst  deliMTcd  to  tlu'  sin  rilT,  was  directed  to  the 
sheriff  of  the  county  of  Hudson  (there  heing  in  fact  no  such 
county),  and  that  the  error  was  corrected  and  the  execution  re- 
deliviTcd  to  the  sherilT  after  the  exeeution  of  the  plaintitTs  was 
issued.     The  motion  was  denie(l  with  costs. 

The  defendant's  counsel  rccpiestcd  the  ( 'inn it  .hidge  to  decide 
and  charge  tlie  jury:  1.  That  the  mortgage  under  wliich  the  phiin- 
tiffs  claimed  was  fraudulent  and  void  ns  against  the  judgment  and 
execution  of  the  Lafayette  Bank.  '2.  That  the  judgment  taken  hy 
the  plaintitTs  on  "the  Tth  of  May,  1SI'^\  for  the  same  notes  secured 
by  the  mortgage,  merged  the  notes  and  extinguished  the  lien  of 
the  mortgage.  ."5.  That  the  issuing  of  execution  upon  that  judg- 
ment, the  levy  ujion  the  mortgage(l  property,  and  the  motion  to 
the  8uj)reme  Court  to  have  the  proi-ecds  of  the  sheritf-  -ah-  applieil 
iijwn  that  execution,  were  severally  acts  inconsistent  with  any  claim 
under  the  mortgage,  and  destroyed  all  right  to  assert  any  such 
claim. 

The  Circuit  .ludge  ruled  that  the  fpi«'stion  of  fraud  was  om*  of 
fact  for  the  jury  to  decide.  That  the  judgment  was  not  a  mergiT 
or  extinguishnu'nt  of  the  mortgage,  if  it  was  taken  as  colhiteral 
merely;  if  not  so  taken,  then  that  it  was  a  merger.  I'lton  the  l\i\ 
proposition  he  refused  to  charge  as  re<piested.  The  defendant  ex- 
cepted, and  the  jury  gave  their  verdict  for  the  idainlilfs.  The  de- 
fendant moved  in  the  Su|)reine  Court  for  a  new  trial  on  Itill  of  ex- 
ceptions, which  was  granted  hv  that  court.  The  plaintitTs  appealetl 
to  tliis  court  under  the  judiciary  act  of  hi'cemlM'r,  1SI7. 

Johnson',  J.  'I'he  <piestion  (»f  the  Imtia  /(</«•.<  of  the  mortgage 
was  projM'rIv  suhmitted  to  the  jury,  and  their  verdict  in  favor  of 
the  honesty  and  fairness  of  th"  transaction  is  conelusivr  a<eiirilinir 
to  all  the  ca.ses  since  Snn'lh  v.  Ark'rr.  '2'.]  Wend.  ().">.1. 

Tlie  Circuit  Judge  was  rcipiested  to  charge  the  jury  that  the 
suhseipient  judgment  nn  the  notes  operated  a<  a  merger  of  (he 
notes  and  conscfjuently  avoide<l  the  mortgage.  The  Judge,  how- 
ever, charged  tliat  the  judgment  did  operate  as  a  merger  of  the 
notes  and  mortgage   tinless   it   was   satisfact.>rily   shown   \ha\   the 


1^48  DISCIIAIJGE   OF   MORTGAGE.  [CHAP.  V. 

judgment  was  taken  as  collateral  to  the  mortgage,  in  which  case 
it  was  not  a  merger. 

The  charge  npon  this  point  Avas  in  strict  accordance  with  the 
rule  laid  down  by  the  Supreme  Court  (1  Denio,  407)  when  this 
cause  was  before  it  on  a  former  trial,  and  must  be  regarded  as  cor- 
rect unless  that  court  was  then  in  error  as  to  the  true  rule  upon 
the  subject.^ 

It  may,  perhaps,  well  be  doubted  whether  the  judgment  was  a 
security  of  a  higher  nature  than  the  personal  mortgage;  and,  even 
if  it  were,  whether  it  would  operate  to  extinguish  the  mortgage 
and  divest  the  mortgagees  of  the  title  they  had  acquired  under  it. 
Tt  will  scarcely  be  contended  that  in  case  the  notes  in  question  had 
been  secured  by  a  mortgage  upon  real  estate,  a  judgment  upon  them 
would  have  extinguished  such  mortgage.  And  yet  a  mortgage 
upon  real  estate  is  a  mere  security  and  incumbrance  upon  the  land 
and  gives  the  mortgagee  no  title  or  estate  therein  whatever.  Where- 
as a  personal  mortgage  is  more  than  a  mere  security.  It  is  a  sale 
of  the  thing  mortgaged,  and  operates  as  a  transfer  of  the  whole 
legal  title  to  the  mortgagee,  subject  only  to  be  defeated  by  the  full 
performance  of  the  condition.  And  if  it  be  conceded  that  a  judg- 
ment u[)on  the  original  indebtedness  would  not  extinguish  a  col- 
lateral security  for  its  payment  upon  real  estate,  I  do  not  see  how 
it  could  divest  a  title  to  personal  property  acquired  by  purchase. 
A  vested  legal  title,  whether  in  real  or  personal  property,  is  the 
highest  of  all  securities — certainly  higher  than  the  mere  lien  of 
a  judgment  upon  land,  or  the  right  of  a  plaintiff  to  personal  prop- 
erty acquired  l)y  levy  under  an  execution. 

Although  it  is  clear  that  the  notes  were  merged  in  the  judgment 
by  operation  of  law,  it  does  not,  as  I  think,  certainly  follow  that 
all  the  collateral  securities  would  be  extinguished.  The  debt  is 
not  yet  satisfied.  The  notes  may  have  been  cancelled,  but  the  debt 
was  not,  and  until  that  is  done  it  seems  to  me  that  all  mere  collat- 
eral securities,  whether  upon  real  or  personal  jjroperty,  should  bo 
allowed  to  stand,  especially  titles  to  property  acquired  under  instru- 

^"  If  tlien  the  judgment  was  intended  as  a  collateral  security  to  the  notes 
and  niort^a^e  before  executed,  it  would  he  clear  that  the  notes  and  mortgage 
were  not  merged  in  or  extinguished  by  the  judgment,  but  remained  a  valid 
conveyance  under  which  the  plaintifTs  could  make  title  to  the  property 
mortgaged  and  sustain  their  action.  [B\it]  the  jiulgnient,  which  is  a 
higl'.ei-  security  than  the  notes  and  mortgage,  or  either  of  them,  was 
between  the  same  parties.  It  was,  so  far  as  the  plaintiffs,  the  mort- 
gagees, are  concerned,  for  the  same  debt,  and  this  appears  on  the  face 
of  the  securities.  Does  not  the  law  presume  that  the  judgment  was  taken 
in  satisfaction  of  the  original  debt?  I  am  of  opinion  that  it  does." — Per 
Jewett,  J.,  in  opinion  in  the  Supreme  Court   (pp.  412,  413). 


SEC.  II.]  BUTLKi;  r.  .Mii.i.ri!.  710 

nients  whore  tlio  parties  stand  in  the  relation  nf  vendor  and  pur- 
(•ha.ser  without  fraud.  The  rule  that  seeurity  of  a  hi{,'her  nature  ex- 
tinguishes inferior  seeurities  will  be  found,  1  apprehend,  only  lo 
apply  t*^  the  state  or  eondition  of  the  deht  itself,  and  means  uo 
more  than  this — that  when  an  account  is  setth'd  hy  a  note,  a  note 
changed  to  a  hond,  or  a  judgment  taken  uj)on  either,  the  del)t  as 
to  its  original  or  inferior  eondition  is  extinguished  or  swallowed  up 
in  the  higher  seeurity;  and  that  all  the  memorandums  or  seeurities 
hy  whieh  sueh  inferior  condition  was  evidenced  lose  their  vitality. 
It  has  never  been  applied,  and  1  think  never  should  Ix',  to  the  ex- 
linguishment  of  distinct  collateral  securities,  whether  superior  or 
inferior  in  degree.  These  are  to  he  cancelled  l)y  satisfaction  of 
the  debt  or  voluntary  surrender  alone.  This  most  obvious  and 
rational  distinction  seems  to  have  Ix'en  overlooked  i>y  the  S\ipreme 
Court  in  the  opinion  to  which  I  have  referred. 

It  is  unnecessary,  however,  to  decide  the  question  here  discussed, 
as  it  wa<  put  to  the  jury  substantially  to  find  whether  it  was  agreed 
or  intended  by  the  jjarties  in  entering  uj)  the  judgment  to  cancel 
the  mortgage:  and  I  admit  that  if  sueh  had  been  the  agreement 
and  intention,  there  was  sutlicient  consideration  to  support  it,  and 
that  the  mortgage  must  have  yielded  to  the  superior  force  of  the 
agreement,  wliether  express  or  imidied. 

The  jury  have  determiiu'd  by  their  vi-rdict  that  the  parties  to 
the  mortgage  did  not  intend  to  cancel  it,  and  that  notwithstanding 
the  judgment  it  remained  a  valid  subsisting  .security. 

Thus  far,  then,  it  seems  to  be  established  by  the  verdict  that,  at 
least  up  to  the  time  of  the  execution  being  placed  in  tlie  hands  of 
the  sheriff  by  the  plaintilTs,  the  mortgage  was  a  valid  instrument  in 
their  hands,  and  vested  in  them  the  legal  title  to  all  the  property 
it  purported  to  convey.  sul)ject  to  be  defeated  only  by  payment  and 
satisfaction,  or  voluntary  waiver  or  surrender. 

It  remains  to  be  seen  whether  the  plaint itTs  have  in  an\  way 
divested  themselves  nf  their  title  to  llu'  property  thus  acquired,  or 
been  guilty  of  any  acts  wliich  would  authorize  the  court  to  estop 
them  from  assert inir  tluMr  rights  under  the  mortgage. 

[The  learn(>d  Judge  examines  this  (|ue<tion  at  lengtli.  and  <'onie;? 
to  the  conclusion  that  the  plaintilTs  have,  by  pursuing  their  remedy 
under  the  judgment,  so  dealt  with  the  |)roperty  in  question  as  to 
preclude  themselves  from  setting  up  their  title  to  it  under  the 
mortgage.] 

New  trial  granted. 


7oO  DESCHARGE   OF   MORTGAGE.  [CHAP.  V. 

BUSH  V.  COOPER. 

High  Court  of  Errors  axd  x\ppeals  of  Mississippi,  1853. 

(26  Miss.  599.) 

On  appeal  from  tlie  Superior  Court  of  Chancery :  Hon.  Stephen 
Cocke,  Chancellor. 

The  bill  was  filed  by  the  appellee,  as  administrator  of  Maborn 
Cooper,  deceased,  for  the  purpose  of  subjecting  lot  No.  1  in  square 
Xo.  9,  in  the  suburb  of  St.  Mary,  of  the  town  of  Port  Gibson,  to 
the  payment  of  two  judgments  held  by  the  intestate  of  appellee  Bush. 
The  bill  alleges  that  the  firm  of  J.  0.  Pierson  &  Co.,  consisting 
of  J.  0.  Pierson  and  the  appellant,  witb  Eli  C.  Briscoe  as  their 
surety,  on  the  IGth  April,  1839,  executed  two  promissory  notes  to 
AV.  T.  and  T.  B.  Dyer,  one  due  in  November,  and  the  other  in  De- 
cember, 1839.  That  on  the  17th  March,  1840,  the  said  J.  0.  Pier- 
son &  Co.,  in  consideration  that  the  said  Dyers  would  extend  the 
time  of  payment  of  said  notes,  executed  to  E.  C.  Briscoe  and  George 
AV.  Elmer,  as  trustees,  a  deed  of  trust,  in  and  by  which  they 
conveyed  said  lot  1,  in  square  9,  to  said  trustees  to  secure  the  pay- 
ment of  said  notes.  That  subsequently  the  two  Dyers  obtained 
judgments  on  said  notes,  and  that  on  the  22d  January,  1845,  they 
sold  and  transferred  said  judgments,  notes,  and  deed  of  trust  to 
Maborn  Cooper  for  $1,000,  and  that  no  part  of  said  judgments  has 
been  paid.  Tbo  bill  then  sets  forth  and  attacks  a  sale  of  said  prop- 
erty, under  a  judgment  of  Thomas  et  al.  v.  J.  0.  Pierson  cO  Co.  The 
bill  then  alleges  that  Pierson  and  Bush  are  discharged  bankrupts, 
and  that  Briscoe  is  insolvent,  and  that  the  only  hope  of  making  any 
thing  rests  upon  the  deed  of  trust. 

The  bill  tlien  alleges  that  on  the  21st  October,  1844,  said  lot  1, 
in  square  9,  was  sold  at  sheriff's  sale,  under  a  judgment  rendered 
in  June,  1838,  in  favor  of  Xelson,  Carleton  &  Co.  against  J.  0. 
Pierson  &  Co.  and  others,  and  purchased  at  said  sale  by  the  appel- 
lant Bush  for  $1,033.  It  is  then  charged  that  Bush,  the  appellant, 
ought  to  have  advanced  the  money  at  once  for  the  protection  of  said 
property  under  the  deed  of  trust ;  that  his  purchase  is  fraudulent 
and  void,  or  at  any  rate  that  it  enures  to  the  benefit  of  the  deed  of 
trust. 

Bush,  the  appellant,  admits  in  his  answer  the  making  of  the 
notes,  and  the  execution  of  tlie  deed  of  trust.  He  then  sets  up  and 
pleads  his  discharge  as  a  bankrupt,  on  the  20th  February,  1843, 
and  files  his  certificate  of  discharge,  as  exhibit  Xo.  1,  to  his  answer. 
He  admits  his  purchase  of  said  property  at  sheriff's  sale  on  the 


'^*-*'-  "•]  m  >ii   r.  ro(»i'i;i;.  T'iL 

\Mst  Optoltor,  1>!11.  .111(1  rclits  on  tin-  >lu'i-ilT's  di-od  to  him.  II»? 
jivcrs  that  he  paid  for  >aid  property  with  nionev  ac«|uirc'd  by  him 
siiiir  his  di>fhjir_iri'  in  Itaiiknipit  \ ,  and  claim-  tillc  to  it  against  all 
ihi'  worhl. 

The  court  l»clo\v  -u-taiiicd  the  jiravcr  of  the  hill,  and  V>nn\\  aj)- 
jicalcd  to  this  court. 

.Mr.  -Tiisticc  IJ.v.Ni)^  delivered  the  o[tinioii  of  the  court. 

This  hill  was  Hle(l  hy  the  appellee  in  the  SupiTi(»r  Court  of 
Chancery,  to  foreclose  a  deed  in  trust  e.vecutod  hy  the  appellant 
on  the  ITtli  March.  1S40,  conveying  certain  real  estate  in  tlio 
town  of  Port  (lil)son  to  trustei-s  to  secure  the  payment  of  two  prom- 
issory notes  made  hy  ihe  aj)pellant,  and  afterwards  transferred  to 
the  apjK'llee.  The  facts  necessary  to  he  taken  into  view  in  con- 
sidering the  (jUL'stions  presented  for  di'termination  are  as  follows: — 

The  notes  secured  by  the  trust  deed  NU-re  due  in  January  and 
Fchruary,  ISll  ;  and  in  Xoveniher,  }Sl'i,  a  judgment  at  law  was 
rendered  upon  them  against  l^usli,  which  judgment  and  the  deed  in 
trust  were  afterwards  transferred  to  the  ajipellee,  and  remain  un- 
jtaid.  The  deeil,  in  conveying  the  jiroperty,  contains  the  words 
"  grant,  bargain,  and  ^ell,"  but  contains  no  other  covenant  of  war- 
ranty in  express  terms. 

Tlie  appellant  was  discharged  as  a  bankrupt  in  Fchruary,  IS  13; 
and  in  October,  1844,  he  jiurchased  the  property  embraced  in  the 
deed  in  trust  at  sherilT's  sale,  under  an  execution  on  a  judgment 
rendered  in  June,  is:?8.  against  the  aiipeliant.  and  whii-h  was  un- 
salisfied,  for  the  sum  of  .$1.0.'?;).  by  mmiis  ac<|uiri'd  by  him  after 
his  di.scharge  as  a  bankrupt ;  and  in  virtue  of  that  purchase,  he  now 
claims  to  hold  the  projierty  by  title  paramount  to  the  lien  of  the 
deed  in  trust.  On  the  contrary,  the  appellee  claims  that  the  prop- 
<'rty  is  subject  to  the  payment  of  the  debt  secured  by  the  deetl  in 
trust,  notwithstanding  the  discharge  of  the  appellant  as  a 
bankrupt,  and  that  the  apivlhint's  jmreha.se,  under  the  prior  in- 
cumbrance, cannot  be  .set  U|)  hy  him  to  defeat  the  security  of  the 
^leeil  in  trust. 

The  first  (piestion  to  be  settled  is,  whether  the  di.scharge  of 
the  appellant  from  the  debt,  by  his  certificate  as  a  bankrupt,  ex- 
tinguished the  d"ed  in  trust. 

.  It  is  insisted  on  his  behalf  that  the  deed  was  but  a  mere  incident 
to  the  debt,  and  that  whatever  discharged  the  debt  mve.ssarily  di^ 
st roved  the  deed,  because  the  security  could  not  e.xist  where  the 
debt,  which  was  its  foundation  and  support,  was  di!«charged.  Thir< 
is  undoubtedly  well  sustained  l)y  modern  decisions,  as  a  general 
rule,  but  it  is  not  without  exceptions.  It  is  held  to  apply 
ill  all  cases  where  the  debt  has  been  actually  paid,  or  where  it  was 


T53  DISCHARGE    OF    MORTGAGE,  [CHAP.  V. 

not  supported  by  a  valid  legal  consideration,  or  where  the  debtor 
ex  cequo  et  bono  is  discharged  from  its  payment.  But  it  is  held 
not  to  apply  to  a  case  where  an  action  upon  the  debt  has  been  barred 
by  the  statute  of  limitations,  and  that  the  creditor  may  proceed 
to  foreclose  his  mortgage,  notwithstanding  the  bar  of  the  debt  by 
the  statute.  {Miller  v.  Helm,  2  S.  &  M.  GOT;  Miller  v.  Trustecfi 
of  Jefferson  College,  5  Ih.  650 ;  Banh  Metropolis  v.  Guttschlich,  li 
Peters,  19;  Thayer  v.  Mann,  19  Pick.  535.) 

In  addition  to  this,  the  objection  is  fully  met  by  the  second  sec- 
tion of  the  bankrupt  act  of  Congress  of  18-11,  which  provides  that 
"  nothing  in  the  act  shall  be  construed  to  annul,  destroy,  or  impair 
any  lawful  rights  of  married  women  or  minors,  or  any  liens,  mort- 
gages, or  other  securities  on  property,  real  or  personal,"  &-c.  From 
this  it  is  manifest  that,  while  the  privilege  was  granted  to  the  debtor 
to  be  personally  discharged  from  the  debt,  any  security  which  the 
creditor  might  have,  consisting  of  a  lien  on  property,  was  left  in  as 
full  force  as  though  the  debtor  had  never  been  discharged  from  the 
debt,  for  the  security  of  which  the  lien  was  made. 

The  second  question,  then,  presented  is,  Whether  Bush  is  estopped 
by  the  deed  from  setting  up  his  title  acquired  under  the  judgment, 
which  was  a  lien  existing  at  the  date  of  the  deed,  in  opposition  to 
the  title  conveyed  by  the  deed?  This  is  a  question  of  great  impor- 
tance in  its  direct  and  collateral  bearings,  and  it  has  been  carefully 
considered  by  the  court. 

[The  Court  then  discusses  at  length  the  question  of  the  effect  of 
the  appellant's  discharge  in  bankruptcy  upon  the  estoppel  arising 
from  the  covenants  in  his  deed  of  trust,  and  concludes  as  follows :] 

It  follows  from  this  view  of  the  subject  that  the  appellant  was 
not  discharged  from  his  covenants  in  the  deed,  and  consequently 
that  he  is  estopped  from  setting  up  his  subsequently  acquired  title 
against  the  claim  of  the  appellee.  As  a  legal  proposition  this  con- 
clusion is  well  sustained  by  expositions  given  to  the  bankrupt  laws 
by  very  high  authorities.  In  an  equitable  point  of  view,  the  po- 
sition of  the  appellant  would  not  be  more  favored.  After  having 
pledged  the  property  as  a  security  for  the  payment  of  the  debt,  he 
would  scarcely  be  heard,  in  point  of  mere  equity,  to  set  up  a  claim 
to  the  same  property,  founded  on  the  existence  of  a  prior  lien  which 
he  had  covenanted  against,  and  thereby  deprive  his  creditor  of  the 
security  he  had  given,  and  appropriate  the  property  to  himself. 

The  decree  of  the  chancellor  is  affirmed.^ 

Whamierlain  v.  Meeder,  16  N.  H.  381   (1844). 


stt'.  n.]  PKATT  r.   ilidclNS.  7'»;i 

I'lIATT  \.  liniClNS. 

Si'i'UKMic  Coriii  or  Nkw  Vouk.  1.s."V.). 

(V.)  Ihirb.  ■.';:.) 

This  was  an  action  to  i'orcelose  a  juorigagc  iii»on  premises  in 
Greene  county,  datid  iH'bniarv  5,  1835,  executed  and  delivered 
liy  the  defendant,  William  T.  llu<rjnins,  to  .Tosi'ph  llii<:jrins,  to  se- 
ture  tiie  sum  of  $•?.")(),  ])ayable  on  the  1st  of  I-Vl>ruary,  18;}(!,  an<l 
assigned  by  the  latter  to  the  plaintitV  on  the  14th  of  March,  is:)(i. 
The  mortgage  was  on  the  same  day  acknowledged,  and  on  the  'Jtb 
day  of  February  recorded  in  the  clerk's  olliee  of  the  county  of 
rjreene.  Contemporaneously  with  the  mortgage  and  to  secure 
the  same  debt,  William  T.  Iluggins  executed  and  ih-livered  to  said 
Joseph  Huggins  a  promissory  note  of  like  date,  amount  and  time  of 
payment  as  the  mortgage,  and  payable  to  Joseph  Iluggins  or  bearer. 
The  mortgage  was  under  seal,  and  the  note  was  not  under  seal. 
The  defendants,  among  other  things,  averred  that  the  note  wa< 
paid  and  satisfied,  and  also  that  the  note  (and  eonse(juently  the 
mortgage)  was  barred  by  the  statute  of  limitations,  by  the  failure 
to  commence  an  action  thereon  within  six  years  after  the  cause  of 
action  acerued.  The  action  was  eommenced  on  the  (Ith  day  of  Sep- 
tember, 18.")').  The  cause  was  tried  by  the  Hon.  Peodatus  Wright, 
then  a  justice  of  the  Supreme  Court,  without  a  jury,  at  a  Circuit 
Court  held  in  the  county  of  Greene  in  Xovember.  \^'u.  Kvidenee 
was  given  tending  to  show  the  consideration  and  object  of  the  bouil 
and  mortgage,  and  on  the  |»art  of  the  defendants,  to  show  that  they 
were  satisfied  and  jiaid  ;  and  on  the  part  of  the  jdaintitT,  that  an  un- 
])aid  amount  of  about  $70 remaiiU'd  due  thereon.  The  justice  came  ti» 
a  conclusion  favorable  to  the  i)lainti(T  on  the  latter  ])oint.  he  finding 
that  a  j>ortion  of  the  amount  secured  by  the  mortgage  was  still  due 
and  unpaid;  but  hobling,  also,  that  the  right  to  recover  was  barn-d 
by  the  statute  of  limitations,  he  gave  judgment  for  the  defendants, 
with  costs;  from  which  judgment  the  plaintilT.  having  duly  ex- 
cepted to  the  rulings  of  the  judge,  appealed  to  the  (leneral  Term. 
The  remaining  facts,  so  far  as  they  are  material,  sullieiently  apj>ear 
in  the  opinions  which  foll«iw. 

Ho(}i;hoom.  J.  The  facts  of  this  case  lie  within  a  narrow  com- 
])ass.  Tht^  plaintilT.  I)y  a<tion  commenced  in  18.")r».  scn-ks  to  fore- 
close a  mortgagt>  under  seal,  e\ecut<'d  in  18;5.'),  for  a  del)t  falling 
due  in  183(i,  which  mortgage  was  accompanied  by  a  prou>i<^ory 
(unsealed)  nott^  to  secure  the  satne  debt.  The  mortgage  contain~ 
no  covenant  to  pay,  but  the  condition  is  that  the  instrument  shall 


754  DISCHARGE    OF   MORTGAGE,  [chap.  v. 

be  void  if  the  above  sum,  with  interest,  is  paid  on  the  1st  of  Feb- 
ruarj',  1836,  "  in  the  manner  particularly  specified  in  the  condi- 
tion of  his  (the  mortgagor's)  certain  bond  or  obligation  bckring 
even  date  herewith."  The  mortgage  was  duly  acknowledged  and 
recorded.  The  answers  interposed  several  defenses;  and  among 
others,  the  defense  of  payment;  and  that  the  plaintiff's  cause  of 
action  was  barred  by  the  statute  of  limitations,  in  consequence  of 
its  not  accruing  within  six  years  before  suit  brought.  The 
justice  before  whom  the  cause  was  tried,  without  a  jury,  came  to 
the  conclusion,  upon  the  evidence,  that  there  was  ar  unpaid  balance 
due  on  the  note,  and  that  he  should  have  given  judgment  for  the 
plaintiff  but  for  the  fact  that  more  than  six  years  had  elapsed  since 
the  said  note  became  due,  and  the  cause  of  action  thereon  accrued 
]-)rior  to  the  commencement  of  this  suit ;  and  for  that  reason  he  gave 
judgment  for  the  defendants.  The  case  therefore  presents  the 
question  whether  a  debt  secured  by  a  sealed  mortgage  and  an  un- 
sealed note  can  be  enforced  by  a  foreclosure  of  the  mortgage,  after 
the  expiration  of  six  but  before  the  expiration  of  twenty  years  from 
the  time  when  the  debt  became  due.  As  has  been  said,  there  is  no 
covenant  in  the  mortgage  to  pay  the  debt ;  but  at  the  same  time  the 
debt,  its  amount  and  the  time  of  payment,  are  specified  in  the 
mortgage ;  and  it  is  provided  that  in  case  "  default  shall  be  made 
in  the  payment  of  all  or  any  part  of  the  said  principal  sum  of 
two  hundred  and  fifty  dollars,  or  the  interest  thereof,  at  the  time 
or  times  when  the  same  ought  to  be  paid  as  aforesaid,  that  then, 
and  in  such  case,"  the  mortgagee  may  sell  and  dispose  of  the 
premises,  &c.  The  true  question,  therefore,  would  seem  to  be, 
has  the  mortgage  been  paid  ?  or,  rather,  in  this  case,  is  the  lapse  of 
six  years  since  the  maturity  of  the  note,  without  any  subsequent 
recognition  or  acknowledgment  of  the  debt,  conclusive  evidence  of 
payment?  The  justice  trying  the  cause  has  come  to  the  conclu- 
sion, upon  the  evidence,  that  a  part  of  the  debt  is  actually  unpaid. 
Is  there  a  legal  bar  to  giving  effect  to  that  conclusion  by  rendering 
judgment  for  the  plaintiff,  in  consequence  of  the  lapse  of  time  before 
mentioned?  If  this  is  substantially  an  action  upon  the  note,  then 
it  is  barred,  for  it  is  an  action  upon  simple  contract  and  must  be 
l)rought  within  six  years.  (Code,  §  90.)  And  the  plaintiff  in 
such  case  fails,  not  because  the  debt  is  in  fact  shown  to  be  paid,  but 
because  the  law  forbids  the  action.  The  remedy  is  taken  away.  But 
this  is  not  in  terms  or  effect  an  action  upon  the  note.  The  mortgage 
would  be  goofl  without  the  note.  If  there  had  been  no  note,  but 
only  the  evidence  of  the  debt  recognized  in  the  mortgage,  is  there 
any  doubt  that  the  mortgage  could  have  been  enforced  after  the 
debt  became  due,  and  for  twenty  years  afterguards  ?    The  only  ques- 


^^'-  "•!  TRATT    C.   TTrfiOTN'S.  765 

lion  would  bo.  was  thoro  a  dt-hl  ninaiiiin^'  iiiiHaid — a  poriirity  upon 
real  estate — and  was  the  lien  enforced  during  the  period  that  tlie 
hiw  irives  it  h'<,'al  existence?  The  additional  n'cof'jnition  of  the 
<leht,  in  the  shaj)e  of  a  jiromissory  note,  oii^rht  not  to  detract  from 
its  fon-e.  It  is  said  that  the  note  is  the  jjrincipal.  and  the  niort- 
ira^e  only  the  incidi'nt ;  that  is,  that  it  is  {^iven  only  as  a  security 
for  the  note.  In  a  certain  sense,  this  is  true.  Rut  in  fact  the 
<lt  Itt  itself  is  the  princi])al  thin<r,  and  the  note  is  one  form  of 
security  for,  or  evidence  of,  the  deht.  and  the  mortpi^re  another. 
Suppose  the  mortjxa;re  contained  a  covenant  to  pay  tlu'  deht.  would 
it  lie  any  the  less  the  principal  thin;;  than  the  note?  Tru(>,  the  note 
(if  negotialjle)  would  have  some  facilitii's  for  an  easy  transfer,  and 
might  be  negotiated  independent  of  the  mortgage.  If  so  trans- 
ferred, it  would  in  law  carry  the  mortgage"  with  it.  and  so  would 
the  mortgage  carry  the  note  with  it.  The  payment  of  either  would 
be  the  paynuMit  of  the  other,  cicejit  so  far  as  a  hona  fide  holder  of 
the  note  for  value  is  eoneerne<l,  who  might,  under  the  law  applicable 
to  commercial  jiaper,  be  protected.  It  is  said  that  the  note,  from 
the  laj)se  of  time,  is  ])resumed  to  be  paid.  Xot  altogether  so;  for 
the  law  allows  a  suit  upon  it  and  a  recovery,  unless  the  statute  of 
limitations  is  pleaded.  It  is  therefore,  at  nio-t.  but  a  jirtsumption  ; 
sutfered  to  be  overthrown,  it  is  true,  only  in  one  way,  and  that  is, 
by  proof  of  ])ayment  thereon,  or  recognition  thereof,  in  the  way 
pointed  out  in  the  statute.  This,  however,  as  before  stated,  only 
acts  upon  the  remedy.  It  is  an  arbitrary  and  an  artificial  nile, 
not  to  be  carried,  I  think,  beyond  the  well-defined  limits  of  the 
statute  itself.  The  case  of  Jarlsni,  v.  Saclrit.  7  Wend.  HI,  is  much 
relied  on  as  decisive  authority  in  support  of  th<^  bar.  That  was 
ejectment  uj)on  a  forfeited  mortgage,  secured  also  by  a  note.  The 
tenor  of  Mr.  Justice  Sutherlaml's  able  oj)inion  is  towards  reganl- 
ing  the  lap.se  of  si.\  years,  unexplained,  as  sullicient  evidence  of  pay- 
ment. But  he  held  that  the  bar  was  not  ab-«»lute.  and  that  eireum- 
stance.«i  tending  to  show  that  the  note  was  un|)aid  were  proj)er  for 
the  consideration  of  the  jury,  and  a  new  trial  was  in  fact  grantinl 
for  withdrawing  the  cas(>  from  the  jury.  We  are  not  pn-cisely  ap- 
prised by  the  ease  at  bar  what  circumstances  here  exist ;  but  we  are 
told  in  the  case  itself  that  the  j)laintilT  gave  (>videiu'e  "tending  to 
sh«)W  that  then*  was  due  ujion  the  mortgage  about  the  siun  of  $70; 
that  no  part  of  the  .«?nid  sum,  or  tlie  interest  thereon,  had  l)een 
]taid."  .\nd  the  judge  al^o  savs,  "  I  am  entirely  satisfied  from  the 
evidence  that  there  is  nn  unpaid  balance  due  on  tlie  note,  and  should 
liave  decided  in  the  jdaintifT's  favor,  exet^pt  for  the  legal  bar  above 
stated."  The  latr'  chancellor  (Walworth)  donbts,  ;ind  even  dimies, 
the  authority  of  the  last  cited  case,  in  Ileycr  v.  Pnnjn,  7  Paifre, 


756  DISCHARGE   OF   MORTGAGE.  [CIIAI'.  v. 

•165,  and  goes  so  far  as  to  say  that  it  "  cannot  be  law."  The  eases 
in  Massachusetts  and  Connecticut,  and  one  in  Kentucky,  hold  that 
notwithstanding  that  ''  the  note  may  be  barred  by  the  statute  of 
limitations,  yet  if  it  has  not  been  paid,  the  mortgagee  has  his 
remedy  on  the  mortgage."  (Thayer  v.  Mann,  19  Pick.  535;  Bush 
V.  Cooper,  26  Miss.  [4  Cush.]  599;  Eastman  v.  Foster,  8  Mete. 
535;  Baldwin  v.  Norton,  2  Conn.  163;  11  B.  Monroe  [Kentucky]. 
307.  See  also  2  Cox's  Chancery  Cases,  125;  Spears  v.  Ilarftij.  3 
Esp.  E.  81,  2;  Hilliard  on  Mortgages,  21,  22.)  The  case  of' the 
Banl-  of  the  Metropolis  v.  Guttschlich,  11  Peters,  19,  declares  a 
kindred  and  nearly  analogous  principle.  The  case  of  Walter  mire 
V.  \Vestover,  11  N.  Y.  R.  16,  has  also,  particularly  in  the  reasoning 
of  Mr.  Justice  Selden,  some  bearing  upon  the  present  case.  In 
that  case  the  lien  of  a  justice's  judgment,  which  according  \o  the 
statute  would  be  barred  after  six  years  for  the  purpose  of  bringing 
an  action  thereon,  was,  when  a  transcript  was  filed  in  the  county 
clerk's  office,  recognized  as  of  equal  validity  and  duration  Avith  that 
of  a  judgment  originally  entered  in  the  common  pleas,  and  ex- 
tended to  ten  years  as  against  subsequent  creditors.  It  is  true 
much  stress  was  laid  upon  the  language  of  the  statute  giving  such 
a  judgment  the  same  force  and  effect  as  a  judgment  of  the  common 
pleas,  but  much  stress  was  also  laid  upon  the  fact  that  there  was 
nothing  to  prevent  the  enforcement  of  such  a  lien,  except  the  lan- 
guage of  the  law  of  limitations ;  and  it  was  considered  that  that 
language  might  be  appropriately  limited  to  cases  directly  within 
its  terms;  that  there  was  reason  for  saying  that  the  debt  still  re 
mained,  notwithstanding  the  statute  had  cut  off  the  remedy  when 
resorted  to  in  the  shape  of  an  action.  A  distinction  was  drawn 
between  the  institution  of  a  suit  upon  the  justice's  judgment  and 
the  enforcement  of  it  as  a  lien  upon  real  estate;  and  I  think  hero 
a  distinction  may  be  drawn  between  an  action  upon  the  note  for 
the  purpose  of  enforcing  a  personal  liability  and  an  action  upon 
the  mortgage  for  the  purpose  of  enforcing  the  lien  upon  the  real 
estate.  This  question,  in  this  State,  may  be  said  to  be  nearly  re< 
nova,  and  I  feel  authorized  to  follow  the  weight  of  judicial  author- 
ity elsewhere,  resting,  as  I  think  it  does,  upon  principle,  especially 
as  the  case  in  7th  Wendell  is  not  directly  hostile  to  the  rule  hen^ 
suggested.  The  judgment  should  be  reversed  and  a  new  trial 
granted,  with  costs  to  abide  the  event, 

Gould,  J.  At  the  December  term,  1858,  this  case  was  sub- 
mitted upon  briefs,  without  oral  argument.  And  on  that  submis- 
sion I  wrote  this  brief  opinion  : 

"  The  mortgage  is  defeasible  on  condition  that  $250  ])e  paid.  The' 
statute  of  limitations  effects  not  the  right  to  the  money,  but  the 


^»^' •  "•]  pirvTT  r.  inf;f;i\R.  757 

vtiiuily  tliorefor.  It  siiys  to  the  cR'ditor,  not  '  vou  are  paid,'  but 
■  vmi  raniiot  cjill  uj)on  ii  court  of  law  to  mforoc  payment.'  And 
the  d«'f('iisi'  ill  iliis  case  is,  not  that  tin-  niort<;a;,'or  has  complied 
witli  the  (oiulition,  \)u\  that,  if  In*  were  sued  at  law  on  the  note,  the 
^lalut^'  of  limitations  (oiild  he  interposed  as  a  le<,'al  har  to  a  re- 
<H)Very.  Very  true;  but  he  is  not  sued  on  the  note,  and  the  plea 
(by  answer)  does  not  pretend  that  he  has  performed  the  condition; 
which,  and  which  only,  would  defeat  the  mortjiapc-title.  He  does 
not  brin<r  himself  within  the  erpiity  of  the  defeasance;  and  the  title 
remains  irond,  iiiidtM*  seal,  it  is  asserted,  within  twenty  years,  and 
it  can  be  defeated  only  according  to  the  tenor  of  the  defeasance. 
This  view  is  sustained  in  Ilri/rr  v.  Pnn/n.  T  Paiire,  -If).*),  and  is 
l>rcciscly  and  very  satisfactorily  covered  bv  the  case  of  Thayer  v. 
>rann,  19  Pick.  535.     There  should  be  a  new  trial." 

As  this  opinion  was  thought  to  overrule  the  case  of  Jackson  V. 
Sack-i'll,  T  Wend.  HI,  my  associates  deemed  it  best  to  have  a  full 
argumi'nt  before  coming  to  such  a  result;  and  on  such  argument 
it  now  comes  up. 

My  views  remain  unchanged,  and  though  it  is  rather  ditlicult  to 
say  what  the  cas(>  of  Jackson  v.  Sackctf  did  decide,  still,  if  to  order 
a  ntw  trial  in  this  case  that  ca.se  must  be  reversed.  I  should  order 
the  ni'W  trial.  That  case  founds  its  reasoning  on  the  basis  that  the 
.-tatute  t)f  limitations  is  a  defen.so,  because  the  law.  from  lapse  of 
time,  presumes  i>ayment.  I  do  not  so  understand  the  statute  of 
limitations.  I  understand  mere  lapse  of  time  to  be  a  full  defense, 
because  the  statute  says  so:  Jta  lex  srripfa:  and  tlu-re  is  need 
of  no  such  ]>resumption  to  help  out  an  absolute  rule.  Rut  that 
case  departs  from  its  premise  of  presumj)tion  of  payment  lu'ing 
merely  the  basis  of  a  positive  statute  bar.  when  it  says  (at  j).  100), 
"  but  the  presum|>tion  arising  from  lapse  of  time  is  but  evidence 
to  tht^  .jury,  from  which  they  may  infer  that  the  debt  has  been  sat- 
isfied."  This,  though  (nu-  on  a  fpu'stion  of  fact  (as  to  actual  pay- 
ment), cannot  be  said  of  a  legal  ])resumption  arising  from  an  ad- 
mitted fact.  The  lapse  of  tinu^  was  either  a  liar  or  no  bar.  If,  by 
the  statute",  a  bar,  it  ]ieeded  no  help  from  jtrcsnmption.  If  not, 
by  the  statute,  a  bar,  no  presum|)tion  could  help  it. 

Rut  since  my  first  opinion  was  written  there  has  l)eeii  published 
a  decision  (given  indeed  in  IS.")?,  but  not  then  printed)  by  which 
the  Court  of  .\ppeals  clearly  takes  the  view  that  1  did.  {Walter- 
mire  v.  Weslorer.  1  Kern.  10.)  .\t  page  '.?0,  **  such  statut«N  act 
upon  the  remedy  merely,  and  not  upon  the  debt."  .\nd  at  page,^ 
?1.  2.  "If  statutes  of  limitation  do  not  discharge  the  debt,  but  act 
fxclusively  upon  the  renu'dy,  upon  what  princijile  of  interpretation 
18  it  to  be  held  that  this  statute,  which  is  in  tcnns  confined  to  the 


758 


DISCHAUGE    OF    MORTGAGE. 


[CIlAr.  V> 


remed}'  by  action,  operates  to  annihilate  a  remedy  by  execution? 
The  statute  does  not  operate  by  producing  any  presumption  of  pay- 
ment, but  is  a  mere  statutory  bar,  founded  in  principles  of  public 
policy." 

In  the  ease  before  us,  the  statute  of  limitations  (where  it  speaks 
of  the  lapse  of  six  years  as  a  bar)  is  in  terms  confined  to  an  action 
at  law  on  the  note,  and  cannot  operate  to  annihilate  a  remedy  on 
the  mortgage,  by  wliich  a  court  of  equity  cuts  off  the  equity  of  re- 
demption. Tlie  decision  in  4th  Kernan  is  abundant  authority  for 
ordering  a  new  trial  in  this  case. 

The  judgment  of  the  circuit  court  should  be  reversed  and  a  new 
trial  ordered,  costs  to  abide  the  event. ^ 

Wkigjit,  J.,  concurred. 

New  trial  granted. 


BOEST  V.  COEEY. 
Court  of  Appeals  of  New  York,  1857. 
(15  iV.  Y.  505.) 

On  the  tenth  of  August,  1837,  the  plaintiff  and  the  defendant^ 
Samuel  Newkirk,  as  executors  of  the  last  will  and  testament  of 
James  Halliday,  deceased,  conveyed  to  the  defendant,  David  P. 
Corey,  a  piece  oi  land  in  Montgomery  county  for  $1,G00,  subject,, 
however,  to  a  mortgage  thereon  for  about  $635,  and  this  action  was 
commenced  August  5th,  1847,  in  the  Supreme  Court,  on  the  equity 
side,  to  obtain  a  sale  of  the  premises,  by  virtue  of  the  equitable  lien 
for  the  purchase  price.  The  complaint  in  the  action  set  forth  the 
conveyance  of  the  premises  by  the  executors,  alleged  that  no  part 
of  the  purchase  price  had  been  paid  by  the  grantee  except  the 
amount  of  the  mortgage,  and  asked  for  a  decree  that  the  premises 
be  sold  and  the  purchase  price  and  interest  he  paid  from  the  pro- 
ceeds of  the  sale.  The  complaint  further  alleged  that  the  executor,, 
^^ewkirk,  had  refused  to  join  with  the  plaintiff  in  the  commence- 
ment and  prosecution  of  the  action,  and  was  therefore  made  a  de- 
fendant. 

The  defendant,  Xewkirk,  suffered  the  bill  to  be  taken  as  con- 
fessed. The  defendant  Corey,  by  his  answer,  alleged  that  prior  to  the 
delivery  of  the  deed  to  him"  be  paid  the  purchase  price  of  the  land 
in  full,  except  the  amount  of  mortgage  thereon,  and  had  subse- 

^BelJcvfip  V.  aicason,  11  Conn.  160  (1830)  ;  Hulhert  v.  Clarh,  128  X.  Y 
295    (1891). 


sKc.  II. J  noitsT  r.  couKY.  T.")!) 

qucntly  jiaid  the  niortiia^'c ;  and  that  lie  had  not,  at  any  time  wiiiiin 
six  yi'ars  lu'xi  ])ri()r  to  tht-  coiiiiiitMui'mcnt  of  the  action,  hrcn  in- 
debted to  the  executors  or  either  of  them,  for  or  on  account  of  the 
purchase  price  of  the  ])rcinises,  or  promised  to  j)ay  the  same;  and 
that  no  cause  of  action  had  accrued  for  the  same  within  the  six 
years.     To  this  answer  a  "^oncral  replication  was  put  in. 

The  action  was  tried  before  referees,  and  tliey  found  that  more 
than  six  years  had  ehipsed  since  tlie  sale  of  the  premises  in  (pieslion, 
prior  to  the  commencement  of  the  action,  and  decided  that  the 
plaintifl"  he  nonsuited,  on  the  ;;round  that  the  cau.se  of  action,  to 
enforce  which  the  suit  was  hroujjht,  was  l)arre(l  hy  the  statuti'  of 
limitations.  \o  bond  or  mortgage,  or  other  written  instrument, 
was  taken  to  secure  the  payment  of  the  purcha.«je  price  of  the  land, 
and  it  does  not  a])i)ear  tliat  any  credit  was  given  then^for. 

Judgment  having  been  enti'red  on  the  rej)ort,  the  plaintiff  aj)- 
pealed  therefrom;  the  Supreme  Court,  at  general  term,  in  the  third 
district,  allirmed  the  judgment,  and  the  plaintiff  aj>pealed  to  this 
court. 

Bo\vi:n',  J.  The  purchase  ])riee  of  the  land  in  ([uestion  was  due 
and  payable  on  the  convi'yance  of  the  land  to  the  defendant  Corey, 
and  as  this  action  was  not  commenced  until  more  than  six  years 
after  the  conveyance,  and  as  no  i)romise  to  ])ay  was  shown  to  have 
been  made  within  six  years,  the  statute  of  limitations  would  have 
been  a  coini)lete  l)ar  to  an  action  at  law  to  recover  the  i)urcha.se 
price.      (2  K.  S.  •>«).■),  ^  18.) 

This  action,  however,  was  one  of  equitable  cognizance.  At  the 
time  of  the  commencement  of  the  action,  the  relief  sought  to  be 
obtained  in  the  mann<'r  applied  for,  that  is,  by  a  sale  of  the  prem- 
ises under  the  efjuitable  lien  thereon  for  the  purchase  price,  could 
have  been  awarded  by  a  court  of  equity  only. 

An  action  at  law,  if  commenced  at  any  time  within  six  years 
after  the  conveyance,  could  have  been  maintained  against  the  de- 
fendant Corey,  in  whiih  a  judgment  against  him  personally  wouM 
have  been  rendered.  The  object  of  such  an  action,  and  the  ndief 
sought  for  therein,  would  have  been  the  recovery  of  the  unpaid  pur- 
chase price  of  the  land.  The  .<ame  relief,  and  no  other  or  difTen-nt, 
is  sought  to  be  obtained  in  this  action,  and  a  court  of  ecpiity  was 
resorted  to  solely  for  the  reason  that  courts  of  common  law  juris- 
dictipn  could  not  award  relief  otherwise  than  by  a  judgment  against 
the  defendant  personally.  The  same  facts  which  would  constitute 
a  defi-nce  to  the  action  at  law  would  also  be  a  defence  to  this  action, 
unless  the  statute  of  limitations  be  an  exception. 

So,  too,  the  cause  of  action,  to  wit,  the  non-jiaymmt  of  the  pur- 
chase price  of  the  land,  i-  the  >ame,  whichever  court  is  reported  to. 

It  is  true  that,  to  s\i-tain  tli«>  suit   in  eipiity,  the  plaintilT  mu-t 


■J  GO  DISCIIAIJGE    OF    :N[OI!TGACiE.  [CUAP.  V. 

bring  to  his  aid  the  equitable  lien  given  by  law,  while  the  action  at 
law  can  be  sustained  without  reference  to  such  lien.  But  the  lien 
is  merely  an  incident  to,  and  ]nust  stand  or  fall  with  the  debt.  The 
<lebt  is  the  basis  or  foundation  of  the  lien.  The  latter  cannot  ex- 
ist without,  or  independently  of  the  former.  In  the  suit  to  enforce 
the  lien,  the  cause  of  action,  and  the  only  substantial  cause  of 
action,  is  the  debt. 

The  forty-ninth  section  of  the  title  of  the  Eovised  Statutes  en- 
titled, "Of  the  time  of  commencing  actions"  (2  R.  S.  301),  pro- 
vides that  ''  whenever  there  is  a  concurrent  jurisdiction  in  the 
courts  of  common  law  and  in  courts  of  equity,  of  any  cause  of 
action,  the  provisions  of  this  title,  limiting  a  time  for  the  com- 
mencement of  a  suit  for  such  cause  of  action  in  a  court  of  common 
law,  shall  apply  to  all  suits  hereafter  to  be  brought  for  the  same 
cause  in  the  Court  of  Chancery." 

I  do  not  see  why  this  case  does  not  come  within  the  letter  of  the 
a1)ove  provision.  It  certainly  does,  if  I  am  right  in  supposing  that 
the  defendant's  indebtedness  for  the  purchase  price  of  the  land 
constitutes,  in  the  language  of  the  statute,  the  plaintiff's  "cause  of 
action." 

It  is  claimed  by  the  plaintiff's  counsel  that  if  the  language  of  the 
fort3'-ninth  section  is  sufficiently  broad  to  include  this  case,  the 
fiftieth  section  excepts  it  therefrom.  This  section  provides  that 
"the  last"  (§49)  "section  shall  not  extend  to  suits  over  the  sub- 
ject matter  of  which  a  court  of  equity  has  peculiar  and  exclusive 
jurisdiction,  and  which  subject  matter  is  not  cognizable  in  the 
courts  of  common  law." 

The  term  "  subject  matter"  of  suites,  as  used  in  this  section,  is 
synonymous  Avith  the  tenu  "  cause  of  action,"  contained  in  the  pre- 
ceding fortj'-ninth  section.  No  other  definition  can  be  given  to 
the  phrase  as  applicable  to  this  case.  It  is  said  that  "  the  subject 
matter"  of  this  suit  is  the  equitable  lien,  of  which  a  court  of  law 
cannot  take  cognizance;  while,  if  a  suit  at  law  had  been  brought 
to  recover  the  purchase  price  of  the  land,  "  the  subject  matter"  of 
the  action  would  have  been  the  debt.  But,  as  before  shown,  the 
lien  is  a  mere  incident  to  the  debt,  being  given  solely  to  secure  its 
payment.  If  the  lien  can  be  said  to  be,  in  any  sense,  the  "  subject 
matter"  of  this  action,  it  is  so  merely  as  incidental  to  the  debt,  the 
latter  being  the  principal  and  fundamental  "  subject  matter"  of 
the  .^iuit,  as  much  so  as  it  would  be  of  an  action  at  law  to  recover 
the  debt.  I  do  not  think  that  the  fiftieth  section  excepts  this  ease 
from  the  operation  of  the  previous  section. 

Trior  to  the  Revised  Statutes  there  was  no  statute  in  this  state 
limiting  the  time  for  commencing  actions  in  courts  of  equity.     Yet, 


SKI-  II. j  ln»l;>l    r.   (  ulJKV.  7(il 

prt'vi«)usly  to  the  a(lt»[>ii<ni  »»l'  tliox'  SuitntcN,  it  was  frinjuciitl}  lu-lil 
that,  in  lascs  wlu-re  there  was  a  coiuurii'iit  jurisdiction  at  law  ami 
in  t.(|uit\,  linu'  was  as  jihsoliiti'  a  dcfi-ncc  to  the  action  in  ('(luity 
as  to  one  at  law;  not  on  th<'  ground  of  cxpcdii-ncy,  or  as  a  matter 
of  disiii'tion  founded  on  analo;:y  to  the  statute  of  limitations,  a- 
■was  the  ease  in  some  actions  of  jiurely  e(|uital>le  co-nizaiico,  but  i:i 
obedience  lo  ihe  statute.  {Hoscrclt  v.  Mi.ik-,  (i  Juhu.  Ch.  R.  2(;(i ; 
Kdiic  V.  Hluodijijod,  T  /'/.  !•<);  Murray  v.  Coaler,  20  John.  oTO;  Saw- 
yvr  V.  Dc  Meyvr,  2  l'ai,i,'e,  oT-l ;  Ihnnhcr  v.  Trinilij  ('Ininh,  ',  iil. 
195;  24  Wend.  oS?  ;  Story's  Eq.,  §  r.V.l) 

I  think  this  ease  comes  within  the  j)rinci])le  established  by  the 
above  authorities,  and  that,  independently  of  the  statutory  provision 
limiting  the  time  of  commencing  actions  in  courts  of  ecjuity,  it 
i-ihould  be  hehl  tliat  the  si.\  yeai's'  limitation  to  actions  at  law  con-ti- 
tiites  a  defence  to  this  action.  The  provision  of  the  Revised  Stat- 
utes limiting  the  time  of  commencing  actions  in  courts  of  equity 
was  ado])ted  as  declaratory  of  the  law  a.'^  it  then  existed,  and  not  as 
introducing  a  new  rule.     (  3  R.  S.  70,"),  revisers'  notes.) 

It  would  be  an  anomaly  if  th.e  ])laintiff  could  recover  his  debt  by 
an  action  to  enforce  the  lien  given  to  secure  the  debt,  when  no 
action  could  be  sustained  to  recover  the  debt  directly  without  ref- 
erence to  the  lien.  There  is  no  reason  why  the  limitation  should 
l)e  applicable  in  the  one  case  and  not  in  the  other. 

It  has,  however,  been  held  that  where  a  mortgage  was  given  to 
Fccure  the  payment  of  a  simple  contract  debt,  the  statute  limiting 
the  time  for  commencing  actions  for  the  recovery  of  such  debts  was 
no  bar  to  an  action  to  foreclost^  the  mortgage,  (lialch  v.  Onion, 
4  Cush.  00*);  Thni/er  v.  }fa,ui.  ]9  Riek.  ."inr) :  Elkin  v.  Kilinir,Is.  8 
Geo.  325;  Heijcr  v.  Prui/ii.  7  Paige,  4(15.) 

But  there  is  a  material  distinction  between  a  mortgage  and  the 
^(piitable  lien  for  the  purchase  price  of  land  given  by  law.  and  also 
between  an  action  to  foreclose  a  mortgage  and  one  to  enforce  such 
a  lien.  The  action  to  fonvlose  a  mortgage  is  brought  upon  an  in- 
strument under  seal,  which  acknowledges  tb^  existence  of  the  debt 
to  secure  which  the  mortgage  is  given  ;  and  by  reason  of  the  seal 
the  debt  is  not  pres\imed  to  have  been  paid  until  the  expiration  of 
twenty  years  after  it  becomes  due  and  payable.  The  six  years'  lim- 
itation has  no  application  to  a  mortgage.  In  fact,  all  instru?nents 
under  seal  are  expressly  excepted  therefrom.  Xo  action  nt  law 
can  be  predicated  upon  the  mortgage,  to  collect  the  debt  .<!»^ure(l 
thereby,  \inless  there  is  contained  therein  a  covenant  to  pay  th»^ 
debt.  A  debt  secured  by  deed  is  said  to  be  of  a  higher  nature  than 
one  by  simple  contract.  On  tbe  contrary,  the  equitable  Hen  i^ 
Jieitber  created  or  evidenced  by  deed,  but  arises  by  operation  of  law, 


763  DISCHARGE    OF    MORTGAGE.  [CIIAP.  V. 

iuid  is  of  no  higher  nature  than  the  debt  which  it  secures.     It  must 
coexist  with  the  debt  and  cannot  survive  it. 

It  is  true,  as  claimed  by  the  plaintiff's  counsel,  that  the  statute 
of  limitations  does  not  extinguish  the  debt ;  it  only  bars  the  remedy. 
But  the  remedy  by  action  at  law  is  no  less  barred  than  that  by  suit 
in  equity  to  enforce  the  lien.  The  Mayor  d-c,  of  New  Yorh  v.  Col- 
gate, 2  Kern.  140,  is  relied  upon  by  the  plaintiff  as  an  authority 
sustaining  his  position.  That  was  an  action  for  the  collection  of 
an  assessment  to  defray  the  expenses  of  improving  a  street  in  the 
city  of  New  York,  under  and  by  virtue  of  a  lien  upon  certain  lands 
in  the  city  deemed  to  be  benefited  by  the  improvement,  and  upon 
which  the  assessment  was  made.  The  action  was  not  commenced 
until  more  than  six  years  after  the  assessment  was  made,  and  had 
become  due  and  payable,  and  the  six  years'  limitation  was  set  up  as 
a  defence  to  the  action. 

The  statute  authorizing  the  assessment,  and  prescribing  the  reme- 
dies for  its  collection,  provided  that  the  sums  thus  assessed  should 
be  a  lien  or  charge  upon  the  houses  and  lots  in  respect  to  which  the 
assessment  was  made,  and  might  be  sued  for  and  recovered  with 
costs,  in  like  manner  as  if  such  houses  and  lots  were  mortgaged  to 
the  corporation  for  the  payment  thereof.  The  assessments  was  thus 
made,  in  effect,  a  mortgage  with  all  its  incidents,  one  of  which  was 
that  payment  was  not  to  be  presumed  until,  the  expiration  of  twenty 
years:  and  it  was  upon  that  ground  that  Judge  Denio  held  that  the 
six  years'  limitation  did  not  apply,  while  Chief  Judge  Gardiner 
based  his  opinion  on  the  ground  that  the  assessment  was  in  the  na- 
ture of  a  judgment.  In  either  view,  the  case  is  distinguishable  from 
the  one  under  consideration. 

I  think  the  judgment  should  be  affirmed. 

Denio^  C.  J.,  delivered  an  opinion  for  affirmance  upon  substan- 
tially the  same  grounds  as  those  stated  by  Bowen,  J. 

All  the  judges  except  Brown,  J.  (who  did  not  vote),  concurring 
in  this  ojjinion.^ 

Judgment  affirmed. 

^Trotter  v.  Erwin,  27  Miss.  772  (1854),  accord.  Lingan  v.  Henderson, 
1  Bland.  CIi.  (Md.)  230  (1827),  contra.  And  see  Hulbert  v.  C7arfc,  128 
N.  Y.  295,  300,  where  it  is  said  of  Borst  v.  Coreii  that  "  the  reasoning 
by  which  the  result  was  reached  in  that  case  is  not  altogether  satisfactory." 


'**^<''-   ^1-3  LUKU   C.   .Moltld.s.  TOJ 


LoK'h  V.  MdlMIIS. 

SurUE.Ml::  t'uiUJT  or  ('Al.lKOIfNI.V,   KSdl. 

(IS  Cal.   is-i.) 

Plaint  iff  appeals.^ 

FiiiLi)^  C.  J.,  (k'livorod  tlic  oj)i)ii()ii  of  tlu'  Court.  PiAldwin-,  J., 
and  Con:,  J.,  concurring. 

The  questions  presented  hy  the  record  I'ur  delt'rniiiuition  are  :  iirst, 
whether,  when  an  action  upon  a  promissory  note,  scoured  by  a  mort- 
gage of  the  same  date  upon  real  i)roperty,  is  l)arred  I)y  the  Statutf 
of  Limitations,  the  mortgagee  has  any  remedy  \\[un\  the  mortgage; 
and  second,  whether  a  party  having  a  subsequent  mortgage  u[)oii 
the  same  premises,  executed  after  the  statute  has  run  against  the 
note,  can  interpose  the  plea  of  the  statute  in  a  suit  to  foreclo.se  the 
first  mortgage,  and  thus  secure  a  priority  of  lieu  for  his  suhseiiucnt 
mortgage.  The  facts  of  the  case  are  these:  On  tlir  fifth  of  May. 
1855,  the  defendants  executed  to  the  plaintilf  a  mortgage  upon  the 
premises  described  in  the  complaint,  to  secure  their  promissory 
note  to  him  of  the  same  date,  for  the  sum  of  four  hundred  dollars, 
payable  in  three  months  with  intt'rest.  The  mortgage  is  not  set 
forth  in  the  record,  nor  are  its  contents  given.  The  complaint  only 
alleges  that  it  is  of  the  premises  in  fee,  and  contains  a  clause  author- 
izing the  plaintifT,  upon  default  in  the  payment  of  the  note,  to 
cause  a  sale  of  the  premises  in  the  manner  providcil  by  hn\,  and  to 
retain  from  the  proceeds  the  amount  of  the  note  and  inti'rest.  We 
shall  as.sume,  therefore,  that  it  is  in  the  common  form  in  use  in 
this  State — that  of  an  absolute  conveyance,  with  ji  condition  under- 
written that  it  is  executed  as  security  for  the  note.  aii<l  will  Inrome 
inoperative  and  void  ujion  its  payment  at  maturity;  otherwise,  re- 
main in  full  force.  The  mortgage  was  duly  recorded  in  the  oWm* 
of  the  Hecorder  of  the  county  where  the  j)remi>e<  are  situated, 
within  two  days  after  its  execution.  On  the  eighth  of  .\ugust,  1S"»'>, 
the  note  matured,  and  on  the  eighth  of  \ugust.  IS.'iO,  the  period 
of  limitation  within  wliieh,  by  the  statute*,  an  action  coidd  be  com- 
menced upon  it,  (^xpired.  Subsequently  to  this,  and  on  tlu'  eleventh 
of  !^^ay,  ISnO.  the  defeiicLints  indorsed  <iver  their  signatures,  upon 
the  back  of  the  note,  a  memorandum  to  the  cfTi^cl  that  for  value  re- 
ceived they  "renew,  revive,  and  agree  to  pay"  the  note  and  di-bt. 
Tt  would  appear  that  sid)si>quent  tf>  the  execution  of  the  mortgage, 
^forris.  oii(>  of  tlie  defendants,  disposed  of  his  interest  in  \ho  prem- 

'Tlio  opinion  only  i-«  lioro  fjivtMi. 


704:  DISCHARGE    OF    MORTGAGE,  [CHAP.  V. 

isr.<,  for  the  petition  of  intervention,  and  the  findings  of  the  Court 
mention  Goodman,  the  other  defendant,  and  two  other  persons  as 
being  the  successors  of  the  defendants.  We  infer  from  this,  and 
shall  so  assume  in  the  consideration  of  the  case,  that  these  parties 
held  the  interest  of  the  mortgagors  in  the  premises,  and  it  matters 
not  for  the  purposes  of  the  appeal  in  what  mode  the  interest  was  ac- 
(^uired.  Having  sucli  interest,  they  executed  on  the  nineteenth  of 
January,  1860,  two  mortgages  upon  the  premises,  one  to  the  in- 
tervenors  to  secure  their  promissory  note  of  the  same  date  for 
$4,894,  payable  on  or  before  the  fiftli  of  June.  1800,  with  interest, 
and  the  other  to  one  Poison  to  secure  their  promissory  note  to  him 
for  $2,185,  payable  three  months  after  date  with  interest.  This 
last  note  and  mortgage  were  assigned  to  the  intervenors,  and  in 
July,  1860,  both  of  the  mortgages  were  foreclosed,  and  the  usual 
decrees  in  such  cases  entered.  In  December.  1860.  the  present  suit 
to  foreclose  the  first  mortgage  was  commenced,  and  the  owners  of 
the  second  and  third  mortgages  filed  their  petition  of  intervention, 
alleging  that  the  remed}^  of  the  jilaintiff  upon  tlie  note  and  mort- 
gage to  him  was  barred  by  the  statute,  and  that  the  lien  of  the  mort- 
gage was  extinct  previously  to  the  nineteenth  of  Januar}',  1860,  and 
if  the  note  had  been  revived  that  such  revival  did  not  affect  the  ex- 
tinct lien  of  the  mortgage,  or  not  in  such  manner  as  to  give  it  any 
priority  over  the  liens  of  the  mortgages  owned  by  them.  The  Court 
held  that  the  liens  of  the  intervenors  must  be  first  satisfied  out  of 
the  proceeds  of  llic  mortgaged  property,  and  the  lien  of  the  plaintiff 
be  postponed  until  such  satisfaction,  and  ordered  judgment  to  that 
effect. 

The  Statute  of  T.iimitations  of  this  State  differs  essentially  from 
the  statute  of  James  I.,  and  from  the  statutes  of  limitation  in 
force  in  most  of  the  other  States.  Those  statutes  apply  in  their 
terms  only  to  particular  legal  remedies,  and  hence  Courts  of  Equity 
are  said  not  to  be  bound  by  them  except  in  cases  of  concurrent  juris- 
diction. In  other  cases  Courts  of  Equity  are  said  to  act  merely  by 
analogy  to  the  statutes,  and  not  in  obedience  to  them.  Those  stat- 
utes as  a  general  thing  also  apply,  so  far  as  actions  upon  written 
contracts  not  of  record  are  concerned,  only  to  actions  upon  simple 
contracts — that  is.  contracts  not  under  seal,  fixing  the  limitation 
at  six  years,  and  leaving  actions  upon  specialties  to  be  met  by  the 
presumption  established  by  the  rule  of  the  common  law,  that  after 
a  lapse  of  twenty  years  the  claim  has  been  satisfied.  Tn  those  stat- 
utes, where  specialties  are  mentioned,  as  in  the  statutes  of  Ohio  and 
of  Georgia,  the  limitation  is  generally  fixed  either  at  fifteen  or 
twenty  years.  The  ease  is  entirely  different  in  this  State.  Here  the 
statute  applies  equally  to  actions  at  law  and  to  suits  in  equity.     It 


•'"••^■-  "•]  r.niji)  /•.  Miiia.is.  ;  .  . 

ij;  (liri'cti'd  to  tlif  >nl)ji'{t  iiiiiltcr  jind  n<i(  to  ilic  Inrm  or  ilif  atliDii, 
or  the  forum  in  wliitli  the  action  is  j)rosc'ciitt'<l.  Ndr  i>  then  any 
distinction  in  the  limitation  j)rcscrib<nl  hctwccn  >im|)I»'  contracts  in 
writing  and  spcciahies.  Tims  the  statute  rcrniins  an  action 
"upon  any  contract,  ohligalion.  or  lial)ility  foimdcd  u|)on  an  in- 
strument of  writinrf,"  cxcejtt  a  Jnd;:mcnt  or  decree  of  a  Court  of  a 
State  or  Territory,  or  of  the  I'nitcd  States,  to  he  commcneed  within 
four  years  after  the  cause  of  action  has  aecnieil.  Jt  matters  not 
whether  damages  be  sought  for  a  breach  of  the  c(»ntr}icl,  and  thus  an 
action  at  hiw  be  brought,  or  a  specific  performance  be  prayed,  and 
thus  a  suit  in  I'quity  be  commenced:  tlie  proceeding  must  in  citlier 
case  be  taken  within  the  limitation  designated.  (See  Pearls  v. 
Covillaud,  (I  C'al.  (ilT.)  The  statute,  after  prescribing  certain 
periods  witiiin  which  actions  upon  judgments,  upon  simj)l(>  con- 
tracts, for  relief  on  the  ground  of  fraud,  and  for  other  causes,  shall 
be  brought,  declares  in  general  terms  that  ''an  action  for  relief," 
not  thus  provided  for,  must  be  commenced  within  four  years  after 
the  cause  of  action  shall  have  accrued — covering  all  cases  where 
equitahle  or  other  relief  may  be  sought. 

A  mortgage  in  this  State  also  dilTers  materially  from  a  mort- 
gage at  common  law,  or  a  mortgage  in  our  sister  States.  .\t 
common  law  a  mortgage  of  real  property  was  n'garded  as  a  con- 
veyance of  a  conditional  estati',  which  i)ecame  al)solute  upon  con- 
dition broken.  It  gave  to  the  mortgagee,  except  as  «thcrwi.se  stip- 
ulated by  provisions  inserted  in  the  instrument,  a  jiresent  right  of 
possession.  Ujion  it  the  mortgagee  could  enter  j>eaceal)Iy.  or  bring 
ejectment,  or  a  writ  of  entry:  and  in  those  States  where  the  com- 
mon law  view  has  been  modified  by  considerations  arising  from  the 
real  object  of  the  instrument  antl  the  nature  of  the  tran<aclion, 
it  is  still  generally  held  that,  as  between  the  parties,  it  pa.sses  th«' 
fee  and  gives  a  remedy  to  the  mortgagee  for  the  possession,  though 
as  to  third  persons  it  constitutes  onlv  a  lien  or  charge,  and  leaves 
the  mortgagor  the  owner  of  the  premis;'s.  Thus  in  A'wr  v.  UoUIk. 
T)  Met.  3,  Chief  .Tustic<>  Shaw,  in  delivering  the  opinion  of  the  Su- 
preme Court  of  Massachusetts,  after  stating  the  object  of  a  mort- 
gage, said  :  *'  Hence  it  is  that,  as  between  mortgagor  and  niortiagtv. 
the  mortgage  is  to  be  regar<l<'<l  as  a  conveyance  in  f«'e.  Iweause  that 
constructioji  bist  secures  him  in  his  remcily.  and  his  ultimate  right 
to  the  estate,  and  to  its  incidents,  the  rents  and  profits.  But  in  all 
other  respects,  until  foreclosure,  when  the  mortgagee  JM^'omes  th«' 
absolute  owner,  the  n\ortgag«'  is  deemed  to  be  a  lien  or  charge,  sub- 
ject to  which  the  estate  niay  be  »'onvcyed.  attacheil.  and  in  other 
respects  dealt  with  as  the  estate  of  the  mortgagor."  .\nd  in  the 
subsequent  case  of  ffoininl  v.  Tittbimton,  '»  Cush.  1 ''3.  the  same  dis- 


706  DISCHARGE   OF   MORTGAGE.  [CHAP.  vl 

tiiiguisiiGcl  Justice  said :  "  Altlioiigli,  as  between  mortgagor  and 
mortgagee,  it  is  a  transmission  of  the  fee  wliich  gives  the  mortgagee 
a  remedy  in  the  form  of  a  real  action  and  constitutes  a  legal  seizin, 
yet  to  most  other  |)ur})0ses  a  mortgage  before  the  entry  of  the  mort- 
gagee is  but  a  pledge  and  real  lien,  leaving  the  mortgagor  for  most 
purposes  the  owner."  The  doctrine  with  respect  to  mortgages  is 
very  diiferent  in  this  State.  Here  a  mortgage  is  regarded  as  be- 
tween the  parties,  as  well  as  with  reference  to  the  rights  of  the 
mortgagor  in  his  dealings  with  third  persons,  as  a  mere  security, 
creating  a  lien  or  charge  upon  the  property,  and  not  as  a  convey- 
ance vesting  any  estate  in  the  premises,  either  before  or  after  con- 
dition broken.  Here  it  confers  no  riglit  to  the  possession  of  the 
premises  either  before  or  after  default,  and,  of  course,  furnishes  no 
support  to  an  action  of  ejectment,  or  to  a  writ  of  entry  for  their 
recovery.  The  language  of  the  statute  is  express  that  it  shall  not 
])0  deemed  a  conveyance,  whatever  its  terms,  so  as  to  enable  the 
owner  of  the  mortgage  to  recover  possession  without  a  foreclosure 
and  sale.  (See  Pr.  Act,  sec.  260;  McMillan  v.  Richards.  9  Cal. 
411;  Nagle  v.  Mary,  id.  428;  Johnson  v.  Sherman,  15  id.  293; 
Goodenoiv  v.  Ewer,  16  id.  -464;  Boggs  v.  JTargravo,  16  i^.  563; 
Fogarty  v.  Saioyer,  17  id.  592.) 

From  this  statement  as  to  the  Statute  of  Limitations,  and  the 
operation  of  a  mortgage  upon  the  right  of  possession  in  this  State, 
it  is  evident  that  the  decisions  cited  frojn  the  reports  of  other 
States,  to  the  effect  that  a  mortgagee  has  a  remedy  upon  his  mort- 
gage after  the  Statute  of  Limitations  has  run  upon  the  promissory 
note  for  the  payment  of  which  the  mortgage  was  executed,  have  no 
application  to  the  questions  presented  for  consideration  in  the  case 
at  bar.  Those  decisions  are  founded  upon  distinctions  made  by 
tlie  statutes  of  limitations  of  those  States  which  do  not  exist  in  the 
statute  of  this  State,  or  upon  the  right  of  possession  which  there 
accompanies  the  ownership  of  the  mortgage.  Thus  in  ER-ins  v. 
Edwards,  8  Geo.  326,  which  was  a  suit  for  the  foreclosure  of  a  mort- 
gage, the  Supreme  Court  of  Georgia  said :  *■'  Because  the  remedy 
on  the  note  is  barred  l)y  the  statute  in  six  years,  it  does  not  follow 
that  the  creditor's  remedy  on  the  mortgage,  l)eing  a  sealed  instru- 
jiicnt,  is  also  barred.  Tbe  creditor's  remedy  on  the  mortgage  is 
]iot  barred  until  twenty  years — the  debt  being  un]iaid."  So  in 
Thayer  v.  Mann.  19  Pick.  535,  which  was  a  writ  of  entry  to  recover 
possession  of  Ihe  mortgaged  premises,  the  Supreme  Court  of  Mas- 
sachusetts said:  ^'' The  creditor  has  a  rlouble  remedy,  one  upon  his 
deed  to  recover  the  land,  another  upon  the  note  to  recover  a  judg- 
ment and  executi(m  for  the  debt;  and  it  does  not  follow  that  he  can- 
not recover  on  one,  although  there  ninv  he  ^ome  technical  objection 


•^t:*-  "J  i.oiin  V.  AronrjiR.  707 

i>i-  (lilliculty  to  liis  iviiu'dy  npon  (lie  otlicr."  These  derisions  are  no 
.iiithority  in  the  ease  under  consideration,  for  the  reasons  already 
LMNcn,  that  the  statute  makes  no  distinction  in  the  period  of  limita- 
tion Ijctween  a  sinii»le  contract  in  writing'  and  a  contract  under  seal, 
and  a  mortgage  deed  here  does  not  confer  any  right  of  possession 
upon  the  mortgagee.  It  is  undoul)tedly  true,  as  stated  hy  the 
('ourt  in  the  case  from  (Jeorgia,  that  the  creditor  st ijiuhitcd  hy  eon- 
tract  for  two  remedies  against  his  (h-htor  to  enforci'  the  eoHection 
of  liis  demand — the  one  hy  action  upon  the  note,  and  the  other  by 
])Otition  and  foreeh)sure  upon  the  mortgage.  Similar  remedies  he 
can  pur-ue  in  this  State.  He  can  jiroceed  upon  the  note,  and  take 
an  orcfinary  money  judgment  for  the  amount  due;  or  he  can  sue  in 
('(piity  upon  the  mortgagf',  and  take  a  decree  for  its  foreclosure  and 
th(>  sale  of  the  ])ri'mises.  The  diirerenee  is,  that  here  the  limitation 
preserihed  to  the  e(piitahle  suit  is  the  same  as  that  prescribed  to 
the  action  at  law.  The  mortgage  is  as  much  within  the  general 
ilesignation  (»f  a  "contract,  obligation,  or  liability,  foundi-d  \\\u)i\ 
.in  instrument  of  writing,"  as  is  the  note  it.self. 

We  do  not  question  the  correctness  of  the  general  doctrine  pre- 
vailing in  the  courts  of  several  of  the  States,  that  a  mortgage  re- 
mains in  force  until  the  debt  for  tlie  security  of  which  it  is  given 
is  paid.  We  only  hold  that  tin*  doctrine  has  no  apjjlication  under 
the  Statute  of  Limitations  of  this  State.  A  mortgage  is  n  specialty, 
and  is  not  within  the  terms  of  the  English  statute,  or  of  the  stat- 
utes of  most  of  the  States.  .\n  action  founded  upon  such  specialty 
can  only  be  met  by  |»roof  of  payment.  The  |)aynu'nt  may  be  estab- 
lished by  direct  evidence  of  the  fact,  and  it  may  be  presumed  frt)m 
tlie  lap.se  of  twenty  years,  when  such  presumption  is  not  counter- 
vailed by  evidence  from  the  mortgagee.  "Thus,"  says  th«'  Su- 
|trcme  Court  of  Maine  in  -/(n/  v.  Adiims,  2'!  Maine,  'XV.\,  "a  mort- 
gage security  has  not  Ix-en  deemed  to  be  within  any  branch  of  the 
Statute  of  Limitation^.  He  who  woidd  avoid  such  securitv  must 
show  payment  :  otherwise,  tlu>  mortgagee  will  not  be  precluded 
from  entering  upon  and  holding  possession  of  the  mortgage«l  prem- 
ises. The  m(»rtgagor  has  not  been  allowed  to  d«>feat  su»'h  right  bv 
-bowing  merely  that  the  pergonal  security,  to  which  the  mortgage 
-c<urity  is  collateral,  has  become  barred  ('I'lii'i/ir  v.  ]fiinn.  1!»  Pick 
•"•.?."))  ;  but  he  has  been  allowed  to  allege  j»ayment.  and  for  proof  to 
rely  u|)on  the  1ap-:e  of  time.  whi'U  it  amo\inted  to  twenty  years  from 
the  accruing  of  th"  indcbtmcnt.  Such  a  lap>;e  of  time  has  been 
'eejued  to  be  sulVicient  for  the  ptir|io«e.  in  the  nbsonco  of  nnv  eoun- 
icrvailing  eonsidenitions.  This  is  admitted  as  a  presumption  of 
law,  which  may  be  removed  bv  «'inMini<tnnees  tejidin^  to  produce 
I  contrary  presumption."  The  view  tluis  stated  is  met  bv  our  -^tat 
lie.   wliiib  mibraci-   a   niorluML'e  >ecurifv  within   it^   term-       IfiT'* 


768  DISCHARGE    OF    MORTCIAGE.  [CIIAI'.  v. 

paj^ment  may  be  pleaded,  and  so  may  the  statute  itself  without 
reference  to  the  fact  of  payment. 

Our  conclusion,  therefore,  upon  the  first  question  presented  is, 
that  where  an  action  upon  a  promissory  note,  secured  by  a  mortgage 
of  the  same  date  upon  real  property,  is  barred  by  the  statute,  the 
mortgagee  has  no  remedy  upon  the  mortgage ;  that  though  distinct 
remedies  may  be  pursued  by  him,  the  limitation  prescribed  is  the 
same  to  both. 

The  second  question  is  one  of  easy  solution.  The  mortgagor, 
after  disposing  of  the  mortgaged  premises  by  deed  of  sale,  loses  all 
control  over  them.  His  personal  liability  thereby  becomes  sep- 
arated from  the  ownership  of  the  land,  and  he  can  by  no  subse- 
quent act  create  or  revive  charges  upon  the  premises.  He  is  as  to 
the  premises  thenceforth  a  mere  stranger.  And  if,  instead  of  sell- 
ing the  premises,  he  execute  a  second  mortgage  upon  them,  he  is 
equally  without  power  to  destroy  or  impair  the  efficacy  of  the  lien 
thus  created.  But  it  is  said  that  the  plea  of  the  statute  is  a  per- 
sonal privilege  of  the  party,  and  cannot  be  set  up  by  a  stranger. 
This,  as  a  general  rule,  is  undoubtedly  correct  with  respect  to  per- 
sonal obligations,  which  concern  only  the  party  himself,  or  with 
respect  to  property  which  the  party  possesses  the  power  to  charge 
or  dispose  of.  But  with  respect  to  property  placed  by  him  beyond 
his  control,  or  subjected  by  him  to  liens,  he  has  no  such  personal 
privilege.  He  cannot  at  his  pleasure  affect  the  interests  of  other  par- 
ties. His  grantees  or  mortgagees,  with  respect  to  the  property, 
stand  in  his  shoes,  and  can  set  up  any  defense  that  he  might  him- 
self have  set  up  to  the  action,  either  to  defeat  a  recovery  of  the 
property  or  its  sale.  In  the  case  at  bar  the  defendant  Morris  had 
sold  his  interest  in  the  mortgaged  premises ;  and  his  grantees,  with 
the  other  defendant,  executed  the  second  and  third  mortgages  after 
the  statute  had  run  upon  the  note  secured  by  the  first  mortgage. 
The  subsequent  revival  of  that  note  continued  the  personal  liability 
of  the  defendants.  Whether  it  also  revived  the  mortgage  executed 
by  them  it  is  unnecessary  to  express  any  opinion,  as  the  defendants 
do  not  appeal  from  the  decree.  The  revival  could  not  affect,  and 
did  not  affect,  the  previously  acquired  liens  of  the  second  and  third 
mortgages  upon  the  property;  and  the  intervenors  holding  those 
mortgages  could  interpose  the  statute  to  the  enforcement  of  the  first 
mortgage,  so  far  at  least  as  to  secure  a  priority  in  their  liens  over 
that  mortgage.  The  ruling  of  the  Court  below,  therefore,  in  post- 
poning the  lien  of  the  first  mortgage,  assuming  that  the  lion  was  re- 
vived, to  the  liens  of  the  subsequent  mortgages,  was  clearly  correct. 

Judgment  affirmed} 

'But  that  the  niortf?agor   is   not   entitled   to   affirmative   relief,   see  Z)f 
Cazara  v.  Oreiia,  80  Cal.  132   (1S80). 


'*'^^'-  "•!  1 1. \  Kit  IS    /•.    MILLS.  709 

jiAi;i;is  \.  MILLS. 

SuPRKMK  Conn  ni-  Illinois,  LS(;*3. 

(2S  ///.  n.) 

The  I'juts  of  this  case  arc  stated  in  tlic  opinion  of  the  court  bv 
^Ir.  .Tu.<li(c  Walker;  the  same  case  was  l)el"ore  the  court  at  a 
prior  time,  and  will  Iv  found  reported  in  volume  2'>  of  these  He- 
ports,  at  ])a<r«'   KJo. 

The  decree  appealed  from  was  rendered  hy  IloIli.>ter,  Jud^'c, 
at  tile  October  term,  LSdl,  of  the  Marshall  Circuit  Court. 

Walkek,  J.  This  bill  was  exhiliited  to  foreclo.se  a  mortgage, 
given  to  secure  a  note  alleged  to  have  been  lost.  The  mortgage 
l)ears  date  the  12th  of  May,  18;>7,  and  recites  a  note  for  .seven  hun- 
dred dollars.  The  note  is  alleged  to  have  been  given  on  the  !)th  of 
.\pril,  183(1,  ])y  Edwin  Mills  to  appellant,  due  on  the  !)th  day  of 
September,  1838.  The  mortgage  was  not  recorded  until  the  8th 
day  of  Xovember,  18.")."),  and  appears  never  to  have  been  acknowl- 
edged. It  also  apj)ears  that  Edwin  ^lills,  on  the  13th  day  of  Jan- 
uary, 183i>,  executed  a  uiortgage  on  the  same  land  to  secure  tw<) 
thousand  dollars  to  Harlow  Mills,  for  indebtedness  due  to  him. 
This  latter  mortgage  was  acknowledged  and  recorded.  Edwin 
Mills,  on  the  17th  day  of  Eebruary,  1842.  conveyetl  the  mortgag;'d 
premi.ses  to  Ilarlow  Mills  for  the  expri'ssed  consideration  of  two 
thousand  dollars.  This  deed  was  reeordi'd  on  the  Ith  of  August. 
1812,  in  the  jn-oper  ollice. 

The  bill  charges  that  this  deed  and  mortgage,  from  Edwin  to  Har- 
low Mills,  are  without  consideration,  and  are  fraudulent  and  voi<l. 
It  is  also  charged  that  they  were  taken  by  Harlow  with  full  notice 
of  appellant's  prior  mortgage.  The  answer  alh'ges  that  a  consider- 
ation was  given,  and  denies  all  notice  of  tlu'  ])rior  mortgage.  The 
answer  also  sets  up,  ami  reliis  upon,  the  lajjse  (»f  more  than  sixteen 
vears  after  the  mat\irity  of  the  note  and  before  the  exhibition  of  tlie 
i>ill,  as  a  bar  to  a  fon^losure.  On  the  hearing,  the  court  below  dis 
missed  the  bill  and  rendered  a  decree  against  com|)lainant  for  eo«:ts, 
to  rever.>e  which  he  prosecutes  this  appeal. 

The  principal  (piestion  j)resented  by  this  record  is  this:  the  stat- 
ute of  limitations  having  barred  a  recovery  by  suit  on  the  note, 
does  it  form  a  bar  to  a  foreclosure  of  the  nuirtgago  by  bill  in 
e(|uity?  Had  this  been  an  action  on  the  note,  over  sixteen  years 
having  elapsed  after  the  maturity  of  the  note,  the  recovery  would 
have  been  barreil.  If  s»nh  :in  action  had  lieen  instituted,  and  a 
recoverv    defeated,    the    judgment    could    have    lieen    interpo.s<»<l 


7;0  DISCHARGE    OF    ^rOI!T(!.^GE.  [CUW.  V. 

;is  a  siK'OGssful  bar  to  a  foreclosuiv.  Or,  had  an  ejectment  been 
lirou^irlit.  and  tlu>  l)ar  of  the  statute  allowed  to  defeat  a  recovery 
against  Harlow  ^lills  or  those  holding  uiuIit  him,  the  judgment 
might  also  have  been  relied  u})on  to  prevent  a  decree  of  foreclosure. 
Oi',  had  a  Nr/zv  facltis  Ix'en  sued,  and  had  the  statute  of  limitations 
heeu  successfully  inlerj)Osed  to  defeat  a  reeoverv,  the  judgment 
might  have  been  ])leaded  to  avoid  a  foreclosure  l)y  bill.  When  the 
party  has  elected  one  of  several  remedies,  ami  it  results  in  a  judg- 
iiiciit  against  llie  niortgagee,  that  judgmenl  becomes  as  complete 
a  l)ar  to  a  proceeding  in  a  different  form  for  a  foreclosure  as  pay- 
ment, release,  or  other  discharge. 

The  question,  howevi-r,  still  recurs,  whether,  after  several  reme- 
dies have  ))een  barred.  l)ut  not  establisluMl  in  a  legal  proceeding,  the 
liar  \nn\  be  relied  u])iin  in  other  and  dilferent  remedies?  As  a 
general  rule,  coui'ts  of  eipiity  follow  tli(>  law  in  allowing  the  de- 
fense of  the  statute  of  limitations.  A  l>ar  of  the  statute,  at  law, 
forms  a  bar  in  equity.  (Story's  E(i.  PI.,  §  •"'*"'.  >5  '^-Jl-)  I"  equity, 
as  at  law.  an  acknowledgnumt  that  a  debt  is  due,  and  a  promise 
to  ])av  it.  will  take  it  out  of  the  o})eration  of  the  statute.  If  the 
mortgagor  is  ])ermitle(l  to  remain  in  possession  twenty  years  after 
a  breacli  of  the  condition,  the  right  to  file  a  bill  to  foreclose  will  be 
generally  considered  as  barred  and  extinguished.  Though  in  cases 
of  this  description,  as  the  law  is  not  positive,  but  is  based  upon  pre- 
sumption of  ]>aynient.  it  is  open  to  be  rebutted  by  circumstance.?. 
(•2  Storv's  Eq.,  §  102S.  1).)  This  court  has  repeatedly  held,  in 
conformity  to  the  general  doctrine  announced  by  the  adjudged 
cases,  that  the  debt  is  the  principal  thing  and  the  mortgage  is  the 
incident.  That  the  latter  follows  the  consideration  of  the  former. 
That  an  assignment  of  the  note  operates  ipso  faclo  to  transfer  the 
mortgage.  That  a  payment,  release  or  other  discharge  of  a  note 
satisfies  and  releases  the  mortgage.  Tf  we  are  to  ])e  controlled  by 
analogy,  no  reason  can  be  perceived  why  a  bar  to  a  recovery  on  the 
note  should  not  produce  the  same  effect  on  the  mortgage. 

In  Oreat  Britain  it  is  usual  to  insert  in  the  mortgage  itself  a  cov- 
enant for  the  payment  of  the  money.  When  such  a  covenant  is 
found  in  the  mortgage,  it  being  under  seal,  and  the  debt  to  secure 
Avhich  it  was  given  is  not.  a  bar  to  a  recovery  of  the  debt,  if  of  a 
shorter  period  than  a  bar  to  a  sealed  instrument,  could  not  affect 
the  ronedy  on  the  covenant  in  the  mortgage.  If  the  statutory 
period  necessary  to  bar  an  unsealed  instrument  be  of  shorter  dura- 
tion than  a  sealed  instrument,  a  mortgage  containing  such  a  cov- 
enant given  to  secure  the  pavment  of  a  debt  evidenced  by  an  un- 
sealed note  would  be  governed  by  the  longer  period  required  to  l)ar 
a  reeoverv  on  sealed  instruments.     The  mortgag(>  in  this  case  con- 


tains  no  sncn  covenant.  This  biMiig  so,  renders  the*  decisions  of 
I  lie  British  courts  on  mortgages  containing  such  covcMiants,  and 
given  to  secure  sini})U'  contracts,  ina])|)licahle  to  tliis  case.  The 
statute  having  Ijari'ed  a  recovery  on  the  note,  because  according 
to  the  theor}'  upon  which  the  statule  is  hased,  the  presumption  is 
that  tlie  debt  has  heen  paid.  There  is  no  cNidiiice  in  this  record 
showing  any  pi'oiiiise  to  take  it  out  of  the  operation  of  ihe  statute. 
These  statutes  are,  emphatically,  statutes  oT  rej>ose.  Without 
their  aid  litigation  would  never  he  harred,  and  titles  and  possession 
of  property  Mould  never  he  -piieted.  By  the  efTlux  of  time,  the  loss 
of  evidence,  the  death  of  witnesses,  and  the  failure  of  memory,  wen; 
it  not  for  the  bar  of  these  statutes,  great  injustice  would  n-sult. 
These  considerations  have  indui-ed  all  civilized  nations  to  ado|)t 
such  laws,  differing  in  detail  and  in  the  period  lu'cessarv  to  operate 
as  a  bar^  but  all  based  upon  the  same  pi'iiu-iples  and  t<i  attain  the 
same  object.  Nor  need  such  enactments  woi'k  injustice.  Persons 
under  disability  have  allowed  to  them  am])Ie  opportunity,  after  the 
disability  ceases  to  exist,  for  the  assertion  of  their  rights,  and  those 
uot  under  disability  have  also  ample  opportunity,  within  the  period 
of  limitation,  to  assert  theirs.  To  avoid  loss  the  creditor  has  only 
to  use  reasonable  diligence,  to  avoid  the  bar  of  the  statute. 

It  has  been  said  that  no  length  of  time  will  bar  a  foreilosure  by 
a  mortgagee  out  of  possession.  This  is  ])laced  upon  the  ground  that 
the  relation  of  landlord  and  tenant  is  su])])0sed  to  exi.st  between 
the  ])arties.  But  such  is  not  the  true  relation  of  the  parties.  For 
some  purposes,  and  to  a  limited  extent  only,  a  portion  of  the  inci- 
dents are  the  same.  To  a  linnted  extent,  and  for  some  purposes, 
the  relation  of  vendor  ami  vendee,  and  trustee  and  cestui  que  trust. 
also  exists.  The  relation  which  the  parties  hear  to  each  other  is 
})eculiar  to  itself,  partaking  in  some  degree  of  the  incidents  of  these 
other  r(>lations,  but  analogous  in  all  ])articulars  to  no  one  of  them. 
Whilst  a  tenant,  until  he  surrenders  the  possession  to  the  landlord, 
cannot  rely  u])on  the  statute, 3'et  the  mortgagor,  by  acquiring  an  out- 
standing title  and  occupying  the  premises  under  it  for  the  period, 
and  upon  the  conditions  imposed  by  the  statute,  may  invoke  its  aid 
to  prevent  a  foreclo.sure.  Xor  i<  he.  like  a  tenant,  required  to  ac- 
count for  rents  and  profits,  bound  to  repair,  nor  is  he  impeachable 
for  waste.  Otlier  courts  have  held,  and  such  is  clearly  the  weight 
of  authority, that  when  the  statutory  period  necessary  to  bar  a  recov- 
ery at  law  has  elapsed,  it  will  bar  a  foreclosure.  (Christophers  v. 
Sparl-e.  2  Jacob  and  W.  234;  Jacl'son  v.  Wood.  12  J.  Jl.  242;  Giles 
V.  Barremore,  5  J.  R.  545;  }Yatermnn  v.  llasl-ins,  ihicl.  283;  Jarl-- 
^'on  V.  Mjiers,  3  J.  E.  383;  Bal-er  v.  Evans,  2  Car.  S.  R.  614:  ITiigh 
V.  E(tiranls,9\yhoa\.  A97  ;  Moore  v.  Coble,  1  J.  Ch.  Vx.  38.5.)   ^Ve  are, 


772  UISClIAJiGE    OF    MOUTGAUH.  [cilAi-.  V. 

therefore,  for  those  reasons,  of  the  opinion  that  when  the  note  be- 
came barred  by  the  statute  the  right  to  foreclose  also  became  barred, 
unless  the  mortgage  had  contained  a  covenant  for  the  payment  of 
the  money,  when  it  might  be  that  it  would  require  twenty  years  to 
produce  that  efE'ect,  as  an  ejectment  would  not  be  barred,  under 
the  general  limitation  law,  before  that  period,  unless  it  be  under 
the  seven  year  limitation  acts.  No  error  is  perceived  in  dismissing 
complainant's  bill,  and  the  decree  of  the  court  below  must  be 

affirmed.^ 

Decree  affirmed. 

^Pollock  V.  Maison,  41  111.  516  (1866);  Neioman  v.  DeLorimer,  10  la. 
244  (1865);  Schmucker  v.  Sibert,  18  Kans.  104  (1877);  Lilly  v.  Dunn, 
96  Iiul.  220  (1884)  ;  Ark.  Dig.  Stat.  L.  (1894),  §  5094;  Miss.  Ann.  Code 
(1892),  §  2733;  Mo.  Rev.  Stats.  (1899),  §  4276,  accord.  Compare  VoH 
Campc  v.  Vlti/  aj  Vhkago,  140  111.  361  (1892). 


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